Post-modern ERP – How the Digital Era is Disrupting OnPremise ERP. Clifford Martin

Executive Partner

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Headline News – Post-modern ERP • The Mega-ERP suite is dead, killed by the Nexus of Forces. • By 2016 heavily customised ERP systems will be referred to as Legacy ERP! • “Born in the Cloud” ERP Vendors are stealing market share from the Mega-Vendors As a result ERP is moving from On-Premise “Systems of Record” to hybrid “Systems of Engagement” © 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

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Key Issues 1. What is Post-modern ERP and why will it disrupt your IT Organisation? 2. How are the Mega-vendors reacting to the concept of Post-modern ERP?

3. How do you create an ERP strategy that embraces and optimises Post-modern ERP?

© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

Why ERP Systems of Record must not be Disrupted?

Over 90%

Over 60%

Over 70%

Over 80%

of oil & gas production is managed by ERP systems

of world GDP touches an ERP system at least once

of chocolate production is managed by ERP systems

of beer production is managed by ERP systems

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© 2012 SAP AG. All rights reserved.

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We are Entering a Third Era of Enterprise IT IT Craftsmanship

Focus

IT Industrialisation

Digitalisation

Technology

Processes

Business Models

Capabilities

Programming, system management

Service management

Digital leadership

Engagement

Isolated, disengaged

Recognise internal customers,

Engage external customers

Sporadic automation, frequent issues

Services & solutions, efficiency & effectiveness

Digital business innovation, new types of value

Outputs & outcomes

© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

What your Customers are Demanding in this Digital Era?

Instant access everywhere

Instant value

Business consumers Business consumers expect out-of-the-box expect instant access business value without to business information, need for significant wherever they need it customization

Beautiful product experience Business consumers expect the same usability with enterprise systems that they get from consumer apps

Lower total IT cost and sustainable growth CIOs expect the cost of IT to shrink, even while capabilities expand rapidly (but complexity must not)

© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

© 2012 SAP AG. All rights reserved.

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How is On-Premise ERP Shaping Up in this Digital Era? • ERP didn’t deliver all its promises (value?)

Go Live Party!

Can We Get Functional Changes? Wait for the Next Upgrade.

• Very few organisations have happy ERP users • Most CFOs complain about the costs of maintaining their ERP’s • The Nexus of Forces, and Cloud in particular, has disrupted the traditional view of ERP

Can I connect via my mobile device? We Need You to Support a New Business Initiative — FAST!

You Do Realize This Is Complex?

Our ERP is falling into dis-use, I Am Buying SaaS!

I Want an App Store App! Why is our ERP system so expensive to run,?

We Need Budget for an Upgrade.

© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

That's Going to Be Difficult.

The Nexus Disrupts - From “Systems of Record” to “Systems of Engagement” Information

Big Data Embedded analytics In-Memory Computing

Mobile

24/7 Personalised BYOD Consumer-grade UI App stores

ERP

Social

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It’s new! It’s cool! Cloud It’s cheaper! It’ll solve all our IT problems! Users in charge

Collaborative business processes Multi-enterprise commerce Social Integration

So where will the battle for Business Value be fought in the Digital Era? Characteristic

Record

Differentiation/ Innovation

Strategic Focus

Operational Excellence

New Ideas/Disruptive

Life Span

10 – 20 years

1 – 4 years

Data Integrity

High

Limited

Pace of Change Infrequent, Incremental

Frequent, Throw Away

BP’s

Common, Understood

Ambiguous, Dynamic

Support Requirement

75% Technical, 25% Business

25% Technical, 75% Business

Sourcing

ERP, Integrated Suites

BoB, Custom Built

Governance

Control

Co-ordination

Budget

IT (Capital)

Business (Expense)

Skills

Technical, Business

Business, Behavioural

© 2014 Gartner, Inc. and/or its affiliates. Source: Gartner July 2014All rights reserved.

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If you Don’t Fill the Digital Void Someone Else Will

© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

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Key Issues 1. What is Post-modern ERP and why will it disrupt your IT Organisation? 2. How are the Mega-vendors reacting to the concept of Post-modern ERP?

3. How do you create an ERP strategy that embraces and optimises Post-modern ERP?

© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

The Future is Increasingly Cloudy Main reason

Payback

Other

25 %

Have made significant cloud investments

12% Quality 10% Innovation 13% Cost 14%

SaaS

Agility

72% IaaS

47%

50%

PaaS 43%

BPaaS 17%

© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

22 MONTHS

The Market is Being Disrupted and the Mega Vendors are Playing Catch Up

© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

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Why the “Born in the Cloud” ERP Vendors are Winning Market Share

© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

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The Sum of the Whole is Greater than the Parts Requiring Multiple Partnerships and Products Mobile

Acquisitions Strategic Partnerships Analytics

Core ERP

Cloud

New Product Investments

Joint Ventures Big Data

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SAP in the Cloud – No longer a Single Product Suite

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Oracle in the Cloud: No Longer a Single Product Suite

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An emerging (Postmodern) Hybrid Integration Scenario salesforce.com

SuccessFactors

Other Cloud Services

Mobile Platform

Considerations

• Licensing Models • Integration Strategies • BP Continuity • Master Data Management

iPaaS

• Data Privacy/Security Security/Encryption On-premises Integration Platform

• Vendor Management • Shadow IT • Data Analytics • Data Storage & Retrieval • Bi –Modal IT

Other Applications

SAP ERP

Siebel CRM © 2014 2014 Gartner, Gartner, Inc. Inc. and/or and/or its its affiliates. affiliates.All All rights rights reserved. reserved. ©

• Application Support

Key Issues 1. What is Post-modern ERP and why will it disrupt your IT Organisation? 2. How are the Mega-vendors reacting to the concept of Post-modern ERP?

3. How do you create an ERP strategy that embraces and optimises Post-modern ERP?

© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

Post-modern ERP Market Scenarios: The Gartner “HOOF” Model Outsourced Everything

Maverick

(5 to 10 years)

( 5 to 15 years)

Tactical

Strategic

Hybrid Reality

On-Premises Monolith (dominant state today) © 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

Flip Model

(now, next 5 years big shift)

Conventional

Key Post-modern Strategy Drivers •

Identify HOOF scenario

•

Extend Mobility

•

Understand Vendor Cloud Strategy

•

Improve user experience

•

Adopt Pace layered approach

•

Provide embedded analytics

•

Define Integration Approach

•

Reduce reliance on single suite

2014

2015

Drivers •

Complexity of ERP and Upgrades

•

Shadow IT Purchasing

•

Lack of Agility

•

Growing customer centricity

© 2014 Gartner, Inc. and/or its affiliates. All rights reserved.

•

Adopt in memory computing

•

Re –imagine BP’s

•

Use PaaS for external integration

•

New IT Governance models

2017

2016

Drivers

Drivers

•

Innovation

•

Social Integration

•

Pace of Business Change

•

Rapid Cloud Adoption

•

•

New ways of working

On demand, on device

•

•

Real time operations and analytics

Market Disruption

•

Rise of CSB’s

Recommended Gartner Research  Develop a Strategic Road Map for Postmodern ERP in 2013 and Beyond A Drobik, N Rayner (G00252735)  Predicts 2014: The Rise of the Postmodern ERP and Enterprise Applications World D Ganly et al (G00259076)

 How to Develop an ERP Strategy D Ganly, N Rayner, C Hardcastle (G00259897)  Best Practices for Managing Integration in a Hybrid Cloud and On-Premises ERP World N Rayner(G00251013)  Survey Analysis: Adoption of Cloud ERP, 2013 Through 2023 N Rayner (G00261104)

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