Each company has unique IT and technology needs necessary to support cross-department functions. Berry Diepeveen, a partner with Bain’s Information Technology practice, explains the choices facing companies when upgrading ERP systems and how more nuanced approaches can help create a competitive advantage.
Read the Bain Brief: Rethinking Your ERP Strategy to Gain Digital Competitive Advantage
Read the transcript below.
BERRY DIEPEVEEN: Many organizations really struggle with driving sustained value from digital transformations. And often, it is quoted by our clients that their transactional environments, from an IT and technology perspective, are too rigid and too inflexible. And on top of that, you'll have the software vendors out there in the market starting to phase out the support and maintenance of current generation ERP products.
And that leads to a very interesting discussion around how do we modernize the technology architecture of an organization to drive a competitive advantage? We believe there are really four key questions to answer around how do you minimize the risks of technology transformations? The first one is really around do you build or buy the new technology platform? There's a lot of advantages in buying an off-the-shelf technology platform or ERP system into your environment, and that is you'll deploy best practices that are proven in the market into your organization. But if you really want to drive specific differences in the organization, then we do see clients also build their own platforms.
The second question is really around when do you upgrade, and when do you modernize? Are you the fast follower that wants to go into the market only after some of these platforms have been proven to work and been debugged by some of the other organizations out there, or do we want to be the early adopter that wants to be first to market and drive new functionalities and different customer experiences that no other can deliver into the market?
And a third, critical question is around how do I actually upgrade? Do I fundamentally rethink the business process and leverage what's out there in the technology such that I adapt my processes end to end, or do I upgrade the existing instances in my back office environment and allow for the support that is currently running in the organization to continue? And finally, an important question is around to what degree do I deploy cloud-based technologies?
Do I go into a cloud-based-first strategy, or do we allow a hybrid model where we deploy cloud-based technology where they really matter the most, but we'll also continue to leverage on-premise? In our experience, we've seen that overall, if we answer these questions holistically, we can drastically minimize the risks of large technology transformations and allow any organization to put technology at the heart of driving a competitive edge.
A core set of critical functionalities loosely coupled with best-of-breed third-party SaaS delivers better insights and performance.