Rest In Peace Enterprise Resource Planning (R.I.P. E.R.P.)
R.I.P Enterprise Resource Planning. Digital Transformation will kill ERP. It is a strong statement but at this time nothing is more certain than change. When giant corporations are created from a basement in San Francisco or a student hall in Harvard, it is not hard to question the future of a software. If Digital Transformation can “disintegrate” enterprises why could not destroy a concept?
Industrial Age x Digital Age
In his excellent text “Old ERP is way past its “Best When Used By” date”,Brian Sommer provokes: “like Monty Python’s Norwegian Blue Parrot, no amount of talking or nailing the poor thing to its perch is going to make it come back to life. Call the funeral home and write the obituary.” In a second text he details his thoughts hitting the heart of ERP structure. Cost Accounting belongs, in his opinion, to the Industrial Era and it teaches people how to determine if any production, cost, scrap or other variances were incurred in the production of an item but this is not relevant if your product is data and “the digital age urgently needs a new cost accounting model.”
“It’s time to put the old ERP solutions out to pasture. It doesn’t many millions or billions your firm spent implementing its ERP system(s), they’re just not relevant anymore”
Corroborating with this requiem Gartner says that “the concept of a single ERP suite that meets all of an enterprise’s needs is dead, and has been replaced by a hybrid ERP approach that combines cloud point solutions with a smaller “core” of on-premises ERP function, such as financials and manufacturings. For them “as alternatives to monolithic, on-premises ERP and enterprise applications continue to mature, CIOs and application leaders must take action to address the fast-approaching reality of “legacy ERP”.
For years ERP helped companies to implement “best practices” in terms of processes. However this standardisation, affirms Steve Andriole “makes little or no sense in the era of digital transformation where disruptive business processes and business models are seen as the paths to competitiveness. Disruption and ERP are not birds of a feather”. Back toBrian Sommer, he questioned and answered:
If you were building an all-new ERP today, would it:
- Use sub-ledgers and all the redundant data these possess? (NO)
- Use a relational database for anything but a persistent data store? (UNLIKELY)
- Use Hadoop/Spark and/or in-memory database technology? (ABSOLUTELY)
- Ignore new data types like image files, blobs, blogs, social sentiment data, etc? (NO)
- Better utilize big data? (OF COURSE)
- Reimagine processes to also take advantage of a company’s dark data? (MOST ASSUREDLY)
- Design processes to take advantage of big data everywhere in the process? (YES)
ERP from 2000 and beyond incorporates new components: cloud, mobile and analytics — Sven Denecken, from SAP, would add the power of “network” here, not restricting to social media. These elements are the supporting pillars of Digital Transformation and should be considered for any kind of solution from this moment on.
“Every industry and every organisation will have to transform itself in the next few years. What is coming at us is bigger than the original internet and you need to understand it, get on board with it and figure out how to transform your business”
Tim O’Reilly, Founder and CEO, O’Reilly Media
In my journey to understand Digital Transformation and its impact in businesses, I feel comfortable — a discomfortable word to use. Not because I know where we are going — Google autonomous car seems to be the only one to know — but because I am sure that I embarked in the right ship. Confronting paradigmas I conclude: SAP vision fulfils the requirements of the Digital Economy Era.
Isaac Newton and Innovation
The Digital Era is transforming the world. Finally the Global Village (Marshall McLuhan) is taking shape. New companies and new products and services are created and reach the mass market in an unprecedented speed. How can large corporations — the focus of this analysis via Porter’s Five Forces — deal with this power? How can SAP offerings address the subject?
Traditional barriers for market protection became an inefficient reaction once disruptive products ignore these shields. Adapting Newton’s Third Law — for every action, there is an equal and opposite reaction — each threat should be fought with an opposite force generated by a permanent and constant state of innovation. It should not be only a reactive behaviour but dynamic and pro-active. In other words: innovation should be combated with innovation!
For every innovation threat, an equal opposite reaction should be created
SAP and Innovation
In terms of technology and business SAP and partners are in a position to help companies on the journey to digital transformation in two ways:
New Products: SAP and Partners can contribute to new products developments e.g. Nespresso from Nestle, or improvement of existent ones. In both cases insights can come from social media, for example, or from real-time analytics and Big Data.
New Processes: a disruptive idea might not be related to a product or service or even to a new company such as Uber or Airbnb. The innovation can be triggered by reviewing or creating new and more efficient processes; allowing, for instance, strategic and management teams access to information not available before.
Finally, a third component, beyond technology and business, should be presented: listening our clients. By doing so we have a long journey ahead. With our clients on board.
*this is part of a more detailed paper and above text is just a general introduction.
Thank you, Mr. Brunel — Design Thinking
Travelling to visit a client this morning I stopped five minutes to contemplate Paddington Station, one of many Brunel’s achievements. I had the same feeling described by Tim Brown in his book “Change by Design — How Design Thinking Transforms Organizations and Inspires Innovation”. He grew up and bicycled alongside the Great Western Railway. It is a “must read” for all of us and Tim considers Isambard Brunel as one of the earliestdesign thinker.
Although he was engineer’s engineer, Brunel was not solely interested in the technology behind his creations…He even imagined an integrated system that would allow the traveller to board a train at London’s Paddington Station and disembark from a steamship in New York. In every one of his project, Brunel displayed a remarkable talent for balancing technical, commercial and human considerations.
Thank you, Mr. Brunel! I will apply design thinking in my client when I get there. My stop is Bristol for while. But I will reach New York.
Is UX Human-Centered really? Or Process-Centered?
The provocative headline aims to bring attention to User Experience and its importance for the processes in a company. Yes, UX is human-centered but it is also process-centered from enterprise’s perspective.
Back to the period between the end of 19th century and beginning of 20th century, Scientific Management or Taylorism, was developed to improve economic efficiency mainly around “labour productivity”. Taylor’s method consisted in a systematic observation of workers — not surprisingly similar to UX professionals today. For example, by observing workers, he decided that labour should include rest breaks so that the worker has time to recover from fatigue, either physical (as in shovelling or lifting) or mental (as in the ball inspection case). Workers were allowed to take more rests during work, and productivity increased as a result. The study and theory concentrated in manufacturing as muscles operated the “system”. Against the post-modern human-centered concept, Taylor said: In the past the man has been first; in the future the system must be first. And the human process remained central until became unnecessary. It was replaced, in manufacturing processes, by automation and the system as we know (computer) took the central stage in the offices and bureaucracy by supporting daily activities run by a new specialised labour.
At this point, User Experience has arrived to improve operational activities and the system, again, can be shift to a peripheral position within the enterprise. Although the goal is to improve productivity and maximize profits — remember that Adam Smith beat Karl Marx — UX is the “rest breaks for the shovelling and lifting” of a work force stressed and pressed by the demands of a competitive world in the Information Age.
Beer Inspiring Big Data
Project Cybersyn and the origins of the Big Data nation: A Socialist Utopia in Latin America
It was spring in London when I had a great reencounter, after fourteen years, with Dr. Richard Barbrook, my master thesis advisor and one of the most controversial researchers in the field of politics and technology. Dr. Barbrook is acybercommunist (check The Cybercommunist Manifesto here)!
Explaining to him what I was doing as a SAP Innovation strategist for a company in London and how Big Data was related with my function, he suggested me, as always, more readings. I should study the history of technology to understand the future — Big Data for instance. Dr. Barbrook was right once more. He introduced me to Stafford Beer, a British theorist, consultant and professor, involved with a visionary project,Cybersyn, back in the 70’s in Chile. The goal was to apply his cybernetic theories in government. It is a fascinating story of an utopia in a country in South America.
I highly recommend the following sources to learn more about this adventure:
A great article by New Yorker
Decision and Control: Meaning of Operational Research and Management Cybernetics (Classic Beer Series)
Enjoy Big Data in a different perspective. Drink Dr. Richard Barbrook.
Million-dollar question: How to use design thinking in SAP projects?
SAP has been talking a lot about design thinking and Hasso Plattner, the genius, is one of the design thinking evangelists. He speaks about it with enthusiasm of a young entrepreneur. In this post I used the excellent paper “On the Perception, Adoption and Implementation of Design Thinking in the IT Industry” to help you in clarifying the question: how a “free” mind-set as design thinking can be used in projects such as SAP implementations?
“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.”
Software implementation is strongly associated with technical and business complexity. The human and its social aspects are not dealt. Within the IT world, this problem has been tackled so far in two different ways:
- New design disciplines such as interaction or user experience design came up taking on specifically the role of the “user’s advocate” within project/development teams;
- New software engineering approaches, in particular those summarised under the umbrella term “agile development”, put strong emphasis on an incremental and iterative development processes that is adaptive to user feedback throughout.
But in a practical way, daily routine of a project has been linear as SAP ASAP methodology preaches (Preparation, Blueprint, Realisation, Final Preparation and Go Live & Support) and it should remain so. However, using design thinking does not mean we have to give up traditional phases of a project. Instead, we should work in a constant iteration once design thinking has no linearity.
We will be always invited to revisit different stages even those in the past. So we can combine these two approaches, linear and human-centred. Be prepared because humans change mind, learn from experiences and, above all, are in constant evolution.
When ERP is gone and digital transformation has occurred, what will the SAP landscape look like? Our guide about the day after transformation trys to answer this. Take a look for more info on ERP.