Making predictions on technology is always deemed to have risks, but it is extremely interesting to put forward certain inferences pertaining to the trends that would be culminating in the ERP ecosystem by the end of 2020.
ERP has traversed a long way since its inception undergoing continuous evolution in the last 3 decades right from being a mainframe to a single PC solution before again getting networked and ubiquitous with Windows based client server in office environment and eventually to be heavily networked and mobile through cloud. However, what has been the most constant has been the ERP ecosystem with its consultants, vendors, customers and ISV relationship.
I would throw light on some prominent changes that would redefine the future of ERP and ERP Ecosystem. I won’t be stressing on extensively on how “Cloud ERP will dominate”, “Mobility in ERP will be all around us” or “Data Analytics hullaballoo” that would define which ERP is good.
Customer Workflow will soon become centric to entire ERP universe in the SMB space rather than today’s ERP Module Based Universe.
The long due of importance to be given to customer facing the ERP solutions is imminent. Almost all successful organizations in the past have always put in “Customer First” as their motto, but it has not trickled down as expected in the ERP systems with its emphasis on Chart of Accounts, Audits, Process Flows and Supply Chain and Vendor Management.
However, the next 5 years will see Customer being the focal point of ERP systems. The revolution is being led by industry leaders like Microsoft and Salesforce, which are set to become the top players in providing path breaking and agile enterprise software systems that give “Real Time” accounting solutions as projected by Stephen Kelly of Sage through Sage Live. This evidences that customer is becoming the core of ERP ecosystem worldwide.
At this stage, it certainly is not a good notion to simply integrate CRM and ERP and be happy that we have made the customer centric workflow. This is because SMBs are constantly hotfooting and competing with the bigger players and their biggest strength always has been personal relationship with their customers and that is what would play a pivotal role in redefining the ERP space by 2020. A successful enterprise solution for SMB will be the one that puts all the customer information on table in real time.
The seamless integration and flow between e-Commerce, Website, Social Media, Customer Service and Partner Portals, Finance, Manufacturing and even Analytics driven by Customers’ Real time choices and company strategies when changed in an instant manner will be the key to this change in attitude for SMBs.
The role of a typical commission based Software reseller will reach its highpoint and will move towards direct sales by vendors and consulting revenues by Software “resellers”.
A typical software reseller enjoys the margins and commissions for selling Software solutions. Nevertheless, with the advent of cloud and direct sales mechanism being pushed by the social media revolution, this aspect of revenue earning for software reseller will be constantly be under pressure until it is eliminated. The most successful vendors in this age are the ones that are providing platforms and charging customers on subscription based pricing models where they are giving out less commission on the table for Software reseller. By 2020, all software resellers will evolve into consultants rather than salespersons and would be able to sell their expertise or offering their maintenance/configuration services to customers of vendors. This does not mean that professional services or configuration/implementation services will also eventually move to vendors like Sage, Microsoft or SAP, but vendors will encourage their customers to find their own preferred consultant or partner for support and industry expertise. The biggest catch for this has been with Cloud providers wherein you do not care whom you are interacting with as a customer as long as you are paying the subscription fees. Yet, a small percentage goes towards the reseller as commission, which would be eventually dragged down to the level of hardware margins by 2020.
The ERP App store for ISV’s will be an integral and differentiating factor
The learnings from B2C world of Mobile OS has been perceived up by different thought leaders as indicators pointing towards a better UI, first mover advantage, Customer Experience and Google power, but in my opinion the biggest difference has been the App Store and locking the customers in with easy upgrades of not only OS, but Apps as well. No software publisher in the ERP world will be able to cover the entire system and will instead rely on their ISVs to provide the advantage for the system through their offerings. Software vendors will earn margins on each sale of the ISV products on their AppExchange and they will strive to make it more customer driven by providing ratings, feedbacks and pushbacks to ISV with better technology to ease integration and upgrade the ISV systems.
Interestingly, ERP vendors will lay more focus on building their core applications leaving thousands of applications, verticals and horizontals to the ISV ecosystem. Vendors will treat these as revenue generating mechanism by taking higher commissions from the ISV vendors for providing the platform for them to use. They would turn agnostic to vendors and let customers decide through marketplace mechanism for both pricing and quality of vendors.
A very successful example I would like to present here is that of Apple and Android with their App store mechanism in B2C space and we have seen the doom of closed ecosystems like Windows and Blackberry. This is being replicated in a lot of successful new age ERP and CRM providers like Salesforce or Sage Live where the primary focus is shifting to proving ISV with the best of services and tools.
New Era of technology would drive the ERP segment: SMAC would be commoditized and RiOT/AI would be the game changer for innovative ERP organizations
SMAC (Social, Mobility, Analytics and Cloud) which has been driving the ERP revolution in recent times would become a passé by 2020, as every ERP or CRM vendor will have everything in its armour for its customers. So, how would ERP and CRM providers differentiate themselves? The buzzword would be centred on technology like RiOT and AI (Real-time Internet of Things and Artificial Intelligence). The Internet of Things will dominate the way ERP and CRM providers will deliver customer centric services to its customer on real time basis. Batch as a system will be a passé and people will push for instantaneous updates and Major changes in SCM because of the iOT in terms of deliveries or Real time IOT in Retail for customers with ease of purchasing through customer information and movements within stores or surfing on web or interacting with customer support. The predictive analysis based on RiOT will give business strategists the tools to make correct and immediate decisions. Systems like Sage Live that delivers Real time information, would become a common hub and will be utilized more by the iOT and AI companies to help make informed and sound decisions to business owners and help them give their customers the best of everything. The ecosystem will need to change accordingly with ISVs and consultants need to be more innovative and technology driven than being number crunchers. The golden era of technology in our staid world of Financial Accounting, Social CRM, SCM and Customers Services is here finally.
Kumar Siddhartha is the Managing Director of Sage Software Solutions Pvt Ltd (a Distributor of Sage, plc in India, the leading business solution provider for SMB worldwide). An alumni from prestigious IIT-BHU, Varanasi, he carries over 18+ years’ entrepreneur experience as Management and owner in IT Software Services, Consulting and Product organizations with special focus on corporate strategy and entrepreneurship helping SMEs worldwide to succeed in their businesses using world-class processes and smart technology. He has been one of the instrumental figures in building Sage brand as a leading provider of ERP, CRM and HCM in India.
About Sage Software Solutions Pvt Ltd:
Sage Software Solutions Pvt Ltd is a leading ERP, CRM and HCM provider in India. Sage Software Solutions is a distributor of Sage Asia Pte Ltd in India for its ERP and CRM business solutions Sage 300, Sage CRM and Sage X3 through partners and offices across India. For HCM and Payroll, it is an exclusive distributor of Pocket HCM in India.