Sebastian Grady is president of Rimini Street, a global provider of enterprise software products and services.
Enterprise resource planning systems are vital to today’s businesses, and they are no small investment. Gartner said enterprise software spending has risen 13.6% in 2021with another 11.5% growth expected in 2022. At the same time, ERP software is roughly making up for 15% of total IT spend– a significant amount – meaning organizations that don’t get it right will pay dearly later on.
Cloud and software-as-a-service pioneers helped make the current move to the cloud, in part because true multi-tenant (where all customers use the same code) cloud software can be relatively simple and straightforward to manage. This is especially true for functionality such as customer relationship management and human capital management, which most companies across different industries manage in the same way.
While ERP systems include both CRM and HCM, the rest of ERP functionality—manufacturing, supply chain, distribution, and operations, for example—is much more complex. Businesses of all shapes and sizes have different needs and requirements, presenting a multitude of challenges and options.
Three keys to ERP success
Nothing is 100% future-proof, but there are strategies companies can use to focus on efficiency for years to come. How these strategies manifest themselves can look different from organization to organization. But as president of a company that provides software support to businesses, I’ve found that there are three main pillars that just about any business can rely on when going all-in on their ERP of the future:
1. Application rationalization
It may sound like an exaggeration, but I’ve seen organizations that have thousands of software products and interfaces in their application landscape. For example, individual departments can implement new products to meet their specific needs, or new staff can switch applications based on personal preference. These piles of software and permutations and combinations of interfaces keep growing, and suddenly there’s a seemingly uncontrollable mess in your hands.
To gain control, organizations need to start with application rationalization, and that’s exactly what it sounds like: Take a deep look at all applications and interfaces across the company to decide which ones to keep, which ones to destroy, which ones to replace, and which ones to replace. should be consolidated.
Goal setting is necessary during this process. If your organization has 500 or more software applications on hand, a reasonable goal would be to reduce that number to 200; keep 100 applications already in use and consider investing in 100 new best-of-breed apps that meet as many business needs as possible. This allows your organization to modernize and go digital. That same organization with 500 software applications may have as many as 5,000 interfaces; a reasonable goal would be to reduce them to 1,000. Without rationalization of applications, organizations are stuck with an unmanageable web that is inefficient and costly in terms of both time and money.
2. Effective application management
Once an organization’s list of software applications has been efficiently rationalized, the next step is figuring out how to effectively manage the new application landscape. A solid foundation of application management services is a smart path to reduce the number of incidents and outages that occur each year and to achieve root-cause analysis, which serves to prevent a problem from re-emerging.
My company provides application management services (known as AMS) and I have worked with organizations that have seen many benefits in effective application management. For example, a combination of IT and AMS allowed one organization to reduce the number of incidents and reinvest its resources (time, money and talent) in other projects that moved the company forward.
Whether you manage your applications alone or choose to get help from others, invest in root cause analysis to make problems go away for good. The path of least resistance is a short-term solution, but it takes more time to get to the root of the cause.
3. Getting Real About Security
I don’t like scare tactics, but the reality is that impenetrable security is hard to achieve, even for the best organizations. There’s a reason tech professionals understand it’s not a matter of: if a company’s systems will be compromised, but a matter of: when† One of the main reasons this is the case is that major ERP vendors only support their own code for “known” vulnerabilities that have been identified but likely have been in the software for years. These known vulnerabilities can be exploited at any time. Combine that fact with unknown vulnerabilities and the vulnerabilities of a company’s custom code, and the risks become much greater.
Ultimately, taking security seriously almost always comes down to creating a zero-trust layered security or deep defense approach across the organization to minimize risk. IT security that is 100% foolproof may be a myth, but there are certainly best practices that companies can and should use to give themselves the best chance of protection.
The challenge with ERP systems is that there is no one-size-fits-all solution that works for every organization. Varying business goals and needs require different solutions and a layered security or defense approach. That said, organizations looking to optimize their ERP for the future should embrace application rationalization strategies, sound application management practices, and a modernized approach to zero-day and zero-trust security practices. Those who don’t risk falling behind the competition, and that can be a death sentence in today’s era of fast-paced business.