As major software producers are phasing out support for popular enterprise resource planning systems, executives have an opportunity to rethink their entire IT architectures. Florian Braun, a partner with Bain’s Information Technology practice, discusses how companies can gain a competitive advantage by combining a small ERP core with best-of-breed, industry-specific applications.
Read the Bain Brief: Rethinking Your ERP Strategy to Gain Digital Competitive Advantage
Read the transcript below:
FLORIAN BRAUN: Over time, companies have grown complex ERP landscapes. Through M&A activities and customization, they have created these ERP legacy landscapes, which are now inflexible and monolithic. These ERP landscapes do not lead to executive expectations. And in particular, they are hindering their progress toward digitalization. They do not allow for the speed of change which is required nowadays. And they do not integrate easily with new technologies.
In addition, SAP and Oracle have recently announced the end of the standard support for their most popular ERP software, which means that we are in a unique time for the executive to rethink their overall IT architecture and think about their ERP landscape. In order to achieve this flexibility and the speed of change required by customer expectations, companies should focus on having a small ERP core -- leveraging "plain vanilla" as much as possible in order to benefit from best practices -- coupled with some best-of-breed industry-specific or functional-specific applications where there are differentiating processes.
By maintaining the subtle art of best-of-breed application between a small ERP core and some leading software-as-a-service applications, companies can leverage their IT system in order to maintain their competitive advantage.
A core set of critical functionalities loosely coupled with best-of-breed third-party SaaS delivers better insights and performance.