ERP in the Digital Era: How Enterprise Resource Planning Fits into Digital Transformations (Podcast)
This is the Real Digital transformation podcast series, empowering technology and business professionals to succeed with digital transformation. Now, here's your host best-selling author, Thomas Erl. Hello and welcome again to another episode of the Real Digital Transformation Podcast series I'm delighted to have with me today, Kerrie Jordan, the Vice President of Product Management and Data Platform at Epicor Software. Kerrie is here to speak to us today about the relationship and convergence of ERP systems and digital transformation initiatives. Kerrie, welcome. Thank you so much. Very happy to be here. So, ERP's been around for a while. We're
all familiar with its role, what it does, how prominent it has been in business automation environments, and how many organizations have formed a very deep reliance on its functionalities and feature sets. And it's something that a lot of companies need to understand in relation to their goals of transforming digitally, becoming more digitally enabled, adopting new technologies to be more competitive in digital markets. So, I'd like to get into that today with you, but before we do, let's take a step back. You as a subject matter expert in this field, ERP environments themselves,
over time, they've been around for many years. How have they evolved? How do they exist today? What constitutes a contemporary ERP? That is such a good question, and you're right, it really has evolved over time. I mean, we've really seen the ERP industry evolve as you know, organizations and companies have pushed it, because it is needed to solve new interesting, innovative problems. So, you know, in the past we've seen ERPs be very monolithic, you know,
closed technology and organizations had to sign on to that ERP provider and really all of the, you know, needs should be solved within that solution. That's how the ERP providers saw it. But over time, again, companies have really pushed ERP to be much more open, much more modular, composable, integrated, and even move from on premises type of installations to cloud based or SaaS based, you know, be that in public cloud providers, private cloud providers, because we really have seen the push towards, again, that interoperability, more open systems, something much more modular. And also, something that is more easily upgradable, updateable when it was closed off and on premises, too often it was such a major effort and investment that companies needed to make. And of course, you know, with investment comes all of the hassle of making sure the board approves and You know, having the investment set aside and the budget, and then of course all of the resources to go towards the upgrades. But now, you know, with more of these cloud-based, SaaS-based, it's all of that hassle of going through that upgrade process is more avoidable because, you know, when these are running as SaaS solutions, the providers are upgrading these solutions for the companies and why that's important primarily, not only is it you know, they're getting better access to more innovative solutions, right, but also from a cybersecurity perspective.
You know, as I've been working with, with different business leaders, I've definitely seen, that concern around cyber security really drive the investment in more, you know, as we're talking about the more modern evolved ERP solutions, because of those types of concerns. But yeah. What constitutes ERP these days is really interesting because as I said, we've really seen it become more modular. So, organizations can really pick and choose, what solutions they want from an ERP. Typically, that's, you know, operations and financials production. but as it becomes more modular and open, they can use integration services, APIs to plug in, you know, best of breed or different applications that are not provided by that ERP provider. So really to create their own unique landscape of technologies that best serves
their specific business. It's definitely become a more open, you know, multi-cloud, hybrid type of technology landscape. And I think that's a great thing for organizations because they get much more choice, much more flexibility, to really focus in on their business processes, what they do best competitively, and really pick and choose and, and push their providers to be more open, you know, to create more, you know, easy-to-use interfaces so that they don't have to have the kind of development expertise in house if they don't want to have that right, because they'd rather focus in on their competitive advantage. So, you know, really exciting to see how it's evolved over time.
In terms of the modularity, one of the issues that organizations had in the past with ERPs is that of over-reliance on the vendor or vendor lock-in, or however you want to term it. We invested in this and now it's difficult. To evolve our business because we're kind of fully dependent on it and it's difficult to evolve the ERP with where we want to take our business.
That type of issue comes up sometimes in digital transformation initiatives because those types of objectives that lie behind them, they often push an organization to either introduce a new line of business or take existing business areas into new directions, or incorporate new aspects to them. So, with ERPs being more modular now, does that help an organization be a bit more agile in terms of how it utilizes them, in terms of how much dependency it forms on the ERP vendor and so on? Yes, it gives them more control, and it puts them in control of their destiny, because it is much more cost effective, you know, when it comes to these sorts of SaaS ERPs, because of, the subscription nature of it. So, you know, it really is. reliant and, and imperative for the ERP provider to create those sticky experiences, to best serve their customers, so that they choose to stay with that ERP provider. But but I mean, you're absolutely right. It's really fascinating to see how the power dynamic has truly shifted into the reins of the business leaders, they really have now, much more flexibility to choose which ERP provider that they, they want to work with. You know, interestingly enough, this, this reminds me of a, a survey, that I had participated in, in working with, you know, over thousands of, of, industry, business leaders. And actually, found that while 90%. Said that they were loyal to their ERP
provider. Three out of four actually reconsider every one to three years switching ERP providers. So, you know, while they say, you know, again, by and large, many of them are, do feel loyal. They also recognize, and actively look just to make sure that they've made the right decision.
So that kind of leads us to the motivation behind some of these considerations, which is an organization realizing it has to become more digitally enabled, more digitally adept in order to remain relevant and competitive in digital markets that have become quite disruptive for established businesses and demand upon them to basically catch up. Or on the other hand, for an organization wanting itself to be a disruptor and be innovative and be proactive. And, and enter new markets, in order to, establish itself as a pioneer in those markets. So regardless of the scenario, organizations that have ERPs already and are now
looking at bringing in new technologies, data science technologies, perhaps blockchain, IoT, robotic process automation maybe, and definitely having a greater, presence in cloud environments. Organizations looking at all that and then looking at their legacy environment, which will then include an ERP. How does a contemporary ERP fit into that? How does it support an initiative like that? Are there features in more modern ERPs that help an organization become more digitally capable or adopt other digital technologies or integrate with them, where does the overlap lie right now between modern day ERP products and those types of requirements and capabilities organizations need to address when becoming more digitally enabled? Absolutely. Okay. So, it's pretty interesting.
You're right on. When it comes to why does an organization reevaluate their ERP, the number one reason is, you know, functionality. You know, they're looking to bring on those more modern, capabilities into their organization. And that could be for a variety of reasons.
It could be because, you know, business leaders they want to grow through innovation, right? So maybe there is a, an initiative underway to open a new industry or a new target market, generate, create a new revenue model, be that through potentially e-commerce, or maybe they want to launch a new mobile application. And, you know, when it comes to those outdated or, you know, legacy ERPs, potentially, you know, it, it could be very difficult for them to scale, for them to connect in to a, you know, modern eCommerce provider, right? Or that, that perhaps the marketing agency or marketing team wants to connect to. And so that could really push an organization to reevaluate the platform that they are running their business on, which, you know, typically is the ERP. You
know, it's interesting to see the types of investments that. Organizations are making, when it comes to deciding to change their ERP. We mentioned eCommerce. It could be that they, you know, have so much data scattered throughout their business and really no way to consolidate it all to understand at all to really dig into, you know, things that could be happening within their business. And they want to have a better understanding or more insights into inventory management performance of, you know, various sales teams across, across the globe or different regions or different target markets. And so, they're looking to potentially bring on a business intelligence tool to help consolidate that sort of information. It could be that they you know, were going through supply chain disruption. They need to better integrate
and communicate with different suppliers, through, you know, EDI technologies or, you know, again, e-commerce could even help in these kinds of scenarios. And it could be that maybe their customers are pushing them to better communicate. And that could be through supplier portals, it could be through customer portals, it could even be through, depending on the type of business, a configuration tool within the e-commerce site. So, you know, there could be a variety of reasons that would really push an organization to reconsider what kind of experiences they're creating, not only for their workforce and efficiencies and though productivity tools to enable their teams within the organization, but also better serving their customers or interacting with their suppliers. So, it's pretty fascinating to see. and, and you know, we mentioned the interoperability, right? The integration. That's, that's actually another one
of the major reasons why we see an organization reevaluating ERPs, not just for functionality to solve a specific business pain or to help drive a corporate objective around revenue growth or cost containment. It's integration, integration with, you know, different tools within the business that they potentially want to bring on and they don't want to have to you know, be a developer or, a data scientist in order to do that, right? They, are looking for easy tools that are easy to use for even a business user to create those kinds of connections. Now, be that through APIs or, integration platform as a service, those more modern ERPs typically have those kinds of tools to really help business users to do it. And of course, cybersecurity again is another, reason why we see companies reevaluating, you know, wanting to not have to have that risk or cost of running their own ERP and, and securing their own financial information or product IP within the four walls. So, pretty interesting to see the reasons why they change. You mentioned the data processing that occurs in ERP platforms historically have had pretty substantial data reporting capabilities, but with digital transformation environments, with digital enterprise environments that are being built now, there's almost always an element of data science technology that gets incorporated, whether it's machine learning or artificial intelligence, and whether it's there to support human decision making or whether it goes to an extent whereby there's automated decision making carried out by the AI system. Regardless, there's, there's,
more than just traditional type of data reporting that we may be used to with our dashboards and our, our reporting tools, but there's now a level of reporting we have access to that is the result of deep analysis, high quantities of data input that are processed, and we gain access to high quality data intelligence when all that is designed and modeled correctly. So that whole dimension of data science technology, of data intelligence level reporting that organizations need, usually now in order to be successful with digital transformation. How are ERP systems Today supporting that? Is there the concept of an intelligent ERP that has some of that built in, or is that something that's upcoming in the industry? Is that on the horizon? Perhaps in the next three to five years? Will there be intelligent ERPs that have native AI systems that perform in a level of that type of functionality? Where, where do you see that right now in terms of where the industry's going? It is a pretty exciting time. And I would say today we do have some ERPs that are out there. But it is certainly an emerging technology to include AI machine learning within the ERPs. And we see that that data science really being realized through a couple different ways to provide business value to within the organizations.
There's the basic dashboarding and you know, I would say that this is pretty standard now in the modern ERPs where you have descriptive type of analytics or descriptive types of data that really helps business users understand what's happening with within the business. And this really helps you know, maybe on the manufacturing shop floor, you know, you, you wanna control inventory or understand where inventory is, what shipping needs to go out now, you know, and how, how the, the team is performing, you know, Next level I would say is data mining, and that's really your diagnostic types of analytics, right? So, you can understand not only what is happening, but why is this happening. Imagine an example where, you know, maybe sellers are receiving stock level requirements based on market demand or availability, from, from their manufacturers or distributors. A third type would be the predictive type of, of analytics, the auto machine learning for really what might happen given different types of scenarios, right? You know, potentially manufacturers are receiving price change recommendations, based on retail locations. and then the fourth type, which is, you know, I would say maybe, more on the horizon, but certainly we're seeing elements of it appear in different parts of the organization or ERP technology. And that would be the unsupervised learning, you know, the AI,
for what should I do. And it's really helping to serve up insights and, and options or choices to, to business decision makers around, you know, given these different scenarios, these are the different options that you could choose, and here are the potential implications or consequences of choosing one of these options. So, pretty exciting to see. And like you said, it is serving up and really helping, you know, the business decide what to do based on the power of data. That's really, Now being realized with these more modern ERP platforms, given the, sheer amount of data that can be managed, processed, secured, and leveraged across the business, I would say many by and large, many organizations are not yet taking full advantage of what this could mean for their, their business, how they could create competitive advantage, by using this type of data. And, and I think that's for a number of reasons. You know, it feels like this is a data sciency realm, right? that you have to be a data scientist in order to, you know, use this within your business. And certainly, you know, I always encourage business leaders to, you know, look for, for a partner. That may or may not be your ERP provider,
right? That can help break down the potential of data for, for a business, so that, you know, you're not taking this on alone, that you do have a partner in this. But it could be overwhelming and, you know, looking for, advisory services in this kind of area, I think is, is really helpful. And when you actually start to use these kinds of tools, you, again, you don't have to be a data scientist. Certainly, you could have data scientists on staff. You know, everything you just described about
the types of analysis and analytics that could be provided by an ERP environment. How much of that is reality today in the current marketplace for ERP products, how common is it for there to be built in reporting functions that go beyond the traditional feature set into predictive analytics and supervised and unsupervised learning analysis practices, how common is that today? And a second part to that question, if you happen to know is how abstracted is that by the ERP system? Because with ERP environments, one thing that truly benefit organizations with is abstracting much of the complexity that exists within their business operations. There's a lot going on, a lot of data being processed, a lot of activity, and then a well-designed ERP environment allows individuals to access a lot of that data. A lot of the of those features, using user interfaces that are relatively straightforward and don't necessarily require deep understanding of what's going on underneath. So, I wonder if that same level of abstraction is coming in newer ERP environments with regards to data science technology. Can the ERP system itself
have built in data science processing features so that you at the dashboard don't necessarily need to be proficient data scientists in order to use them? The underlying logic has been built to do a lot of that for you based on all the data input it, it already has access to, based on all the other data it's been collecting over time and continues to collect. Do you see that at all or do you still see now and in the foreseeable future, the data science component being a separately, a physically separate part of the enterprise, alongside the ERP platform itself? I would say ERP providers are getting there. Typically, what you would see today is that data science, the business intelligence, the analytics piece would be connected in via APIs integration platform as a service. And you could see your ERP data within that
business intelligence solution if, if that's the, the route that you would choose to go. More and more organizations, ERP providers, I should say ERP providers, are starting to embed those types of technologies within the ERP itself. And that is where it's really game changing, where you can see in context those kinds of unsupervised recommendations. You know,
the learning that's going on in the background, processing the data that's been set up and provided by the ERP provider within that user interface and served up to the user. That is the emerging piece, that only a small portion, I would say of So, ERP technologies are there. That is the vision though, and it's exciting to see, you know, how that could, could potentially just all be an experience. It's very simple, clear but not, not deciding on its
own and then going to, to do that thing, right. Still providing up the recommendations or the suggestions based on all of this data, to the user so that the business user, the business leader, can make those decisions based on data. It's, it's really still and should be all about the people, the users, the, the information that they need to get their job done, you know, to the best, that they can. And it's exciting to see the way that ERP is leveraging data and again,
these business intelligence tools. And soon we'll see it embedded within the ERP itself. The scope of data collection and data processing of a typical ERP has traditionally been internally focused, meaning that it's really concerned with what happens inside the organization, the scope of data being collected and processed within modern, digitally enabled organizations has to go beyond that. They, in order for an organization often to be successful in a digital market, especially if it's entering a new market, it needs data intelligence that factors in what is happening outside of its organizational boundaries. So, meaning what are other customers in the
community doing? What are competitors doing? What data can we collect about them? What data can we collect about the market overall? And that data is then processed in relation to our internal data to give us insights as to how we can best be successful in that market. How does it impact how we adjust our business processes, our pricing, our business practices, our products, our services, and so on? My assumption, and you can tell me if I'm wrong, my assumption is that ERPs being what they are will continue to remain internally focused over time. Would you agree with that? that's an interesting. dynamic. I don't think ER or ERPs could afford to stay so closed off that they could afford to stay so closed in. That they really do need to, especially as we're looking to, you know, the, the, the collaboration, supply chains that are required to enable, you know, real, you know, sustainability and all of the new innovations that are required to, you know, solve for climate change, for example. It’s creating those digital ecosystems that I think will be the realm of ERP as we look to the future. Again, because we just simply cannot afford to,
sustain these kinds of, closed off ERPs. They have to look to the outside. Well, that's good news then, because I think that would allow ERPs to continue to evolve with the requirements of, you know, business automation in regardless of the industry worldwide, because that external focus is becoming essential. And as you mentioned, the data science aspects. Functions that are being built into those systems now, if they can allow an organization to then also pull in external data, then that would put ERPs a level whereby they would not just be a source of input for an external data science system that has to process many sources of input, internal and external, but that would allow the ERP to a reasonable extent to provide data intelligence that would factor external and internal data together would synthesize that data to provide useful data intelligence. I don't know if it'll ever be complete in terms
of an organization's data processing needs, but if it does extend to that, I think it'll be of greater value and again, would allow it to remain, you know, more of a core piece for organizations that are required to move in that direction. Absolutely. And you know, it's an interesting dynamic too because you know, given all of the you know, the shifts in the workforce that we've seen over the past few years. You know, we, we've definitely seen, you know, workforces changing a lot of newcomers into organizations, many people leaving, but still many organizations our family run, you know, and, and, you know, still many people stay with the same organization for, for many, many years. And the way in which to really understand in an impactful way, in a significant way, with the amount of data required to make business decisions on it, ERP has to bring in data from the outside. It has to connect beyond the specific business itself, into the industry, into what customers are doing, what suppliers are doing. Even,
you know, with anonymized data sharing, with competitors and getting their information, you know, it's, it's an interesting world, that we see ourselves marching toward and already a part of, in many ways when it comes to the sharing of data and leveraging it to make business decisions and to create competitive advantages. I have one question, Kerrie. I'm not sure if, if you know much about it, but I'll ask it just in case. ERPs establish a broad environment with regards to business automation. One of the technologies that is commonly associated with digital transformation is robotic process automation where you have these software programs called bots that are designed to interact with user interfaces that were originally designed for humans, so the bots take over from the humans to interact with legacy UIs to carry out data entry tasks and, other administration tasks that the UI is capable of doing. Has there been any discussion around either that type of functionality being part of ERPs, or has there been any exploration into the compatibility of RPA and ERPs? Yes, and it happens in a couple different ways now it could be again, through, you know, the robotic process automation. You know, it also is happening with, with basic workflow automation and that is
happening with modern integration platform is a service tools, those that are recipe based, that are easy for workers to use or business users to, to, you know, connect the different systems and even content management has these automated workflows, that, you know, move, processes and tasks from one user to the next, but it is fascinating to see the way robotic process automation is being used to streamline workflows, to really help organizations be more flexible and responsive. It's important to though know what types of, business problems you want to solve before you look to add on or connect robotic process automation to an ERP. And just like business intelligence, we see RPA technologies today primarily connecting in to the ERP or the ERP connecting out to RPA but over time again, we'll see it more embedded within the user experience of ERP as it gets more and more connected.
So, just to conclude that one topic, I'm just curious, so are you seeing that, RPA technology will become part of an ERP will be an, an embedded, component of ERP environments, or are you seeing more that there is effort being made to support the interoperability between external RPA systems and ERP user interfaces. You know, I would say it's more about the interoperability. And, and it fits right on with the trajectory of ERP and how we see it, you know, modernizing. Legacy ERP through to today has always been about making people's lives easier, you know, and robots when, when brought onto the shop floor, the warehouse, and used to, you know, take over some of those repetitive high-volume tasks, potentially those that are, you know, even dangerous to humans. That is supporting the people that, that we work with every day.
And you know, the reason why ERP has always been so helpful for organizations helping people do their business better, instead of focusing on those administrative tasks, you know, leveraging technology, leveraging automation to be more strategic in your day to day. To make better decisions, and to be more productive and more efficient overall. So, I think it fits perfectly again, in that trajectory of ERP as we see RPA technologies becoming more and more common and embedded. Cool. So last question. If we look ahead now, five years from now, do you have a sense of being able to predict what ERPs will be like how more digitally enabled or how more intelligent they will be. Is there the potential for an ERP in 2027 to out of the box support a multitude of inherent data science processing functions, internally focused, externally focused, perhaps even have built in features that allow ERP administrator to choose whether some decisions will be autonomously by a built-in AI system and just, you know, define that logic, whether there will be sort of a migration component to the ERPs whereby you can just sort of determine, well, these things, these, these user interfaces that have been used by So, human workers traditionally, we're now going to just drag and drop this RPA bot there to take over that. And perhaps a native blockchain repository to allow, critical business data or sensitive business data to be stored with immutable storage technology and cryptography and so on. I'm not asking if all those things are possible, but as you see it evolving cause you're on the inside with these types of products, technology, development, life cycles, you've probably seen some blueprints for future releases. The direction you see it going five years from now, do you see
it significantly different than it is today in relation to those types of digital capabilities? Gosh, it's hard to imagine. You said 2027. That's so crazy that that's five years from now. Yes. Yes. And products what an exciting picture that you just painted. I really think that it's going to be all about the data, and we already see elements of that, right? When a company. You know, there's a ransomware attack or any kind of cyber security issue. It's all about the data. Get the data back. Where is my data? You know, and, and I think as we continue to see ERPs
evolve, certainly they strengthen the protection of data. But then they also bring it to life in, in new and different ways that I think you've, you've painted out there very nicely in, in the vision. But ways in which to monetize data in new and different ways, to capture more customers, to create more delightful experiences for them, and to create really powerful competitive advantages.
I think again, it's gonna be all about the data ways in which we can make predictions based on data that we can help people make decisions. Certainly, it's going to require all, you know, kinds of new skill sets and, innovative thinking, but certainly, we'll see data become just more and more important as ERP evolves. I hope it does, because right now in these types of projects, which are often massive, highly complex require large investments and are therefore, often classified as being moderately high in terms of risk. One of the reasons there's
a higher risk to these types of projects is because they often require that organizations pull together disparate technology sets and are required to then successfully integrate them and make them work in harmony together. If ERPs could stay on top of that in terms of their evolutionary cycle to provide more and more consolidation of those technologies and capabilities, more and more abstraction of the complexities that lie within all of the integration. Like basically do all of the hard wiring and interoperability and interconnections for the organization and provide simplified abstraction, whether it's definition of business processes, whether it's data processing, whether it's activity monitoring and simplified so on, I mean, the more, the more important and relevant and attractive they will remain because organizations three, five years from now looking at digital transformation projects and saying, Well, if we go our own way and assemble everything together it'll be this much, and the risk will be this high, and it'll take this long and it'll be this complex. Option B is to bring in an ERP system that does 80% of this for us already, and it would reduce our timeline, our complexity. We might have to build a lot of stuff around it still, but if a big portion of it can already be taken care of for us by the platform, then that becomes an attractive option. That becomes an attractive investment. Whether it's the right investment for a given organization that only they can decide that. But I think that's a
path that the ERP industry needs to follow in order to continue to provide that option and provide that value. So that's sort of my perspective of it. I'll let you just conclude Kerrie with any final thoughts you may have? Yeah, well, I really think that you're right and it's being pushed. ERP is being pushed, just like we said, it's been modernized because of companies needs and, you know, ERP providers are being pushed to create more and more service-based solutions really focused in on helping companies achieve their desired business outcomes. And, you know, transparency is really, really critical, you know, to this process. So yeah, overall, I mean, it's exciting that the trajectory that ERP is on and all of those things that you said, I mean, challenge accepted, you know, five years from now is, is actually not that long time away. Super. Well, thank you so much, Kerrie. Before we conclude,
please tell us a bit more about your role at Epicor and what Epicor is doing in this space. Sure. Thank you. Yes. So, my role at Epicor is, helping to design the ERP solutions, the, productivity modules, e-commerce, business intelligence, configure, price, quote, all of those tools that not only, you know, house the, the ERP information, but then brings to life that data, you know, and really creating a platform a modern platform to help companies run their business and, you know, help to solve their most pressing problems. Epicor is a really exciting place to work. You know, we serve the essential businesses in manufacturing, distribution, automotive, building supply, retail and we also have a portfolio of solutions that we, provide to the aged care industry in Australia, New Zealand. So, we also serve the essential
healthcare providers. So, you know, we we're very focused, and, and humbled by our customers and the things that they do to keep the world turning. So, we're really dedicated to helping them do that. So, Epicor has been in business for over 50 years. It’s a billion-dollar software company, and continuing to grow and to serve these really important businesses around the world. Super, very impressive. Kerrie, thank you so much for your time today. I hope we can
do this again sometime soon. Thank you so much. Same here. Thank you for listening. Follow Thomas on LinkedIn.
2022-10-25 03:46
