Top Trends in ERP 2010 – Part III

Continuation from Top Trends in ERP for 2010 Part II

Top Trends in ERP 2010

Part III

8.) Expanding ERP

The traditional ERP concept that we are familiar with was first introduced in 1992. Going forward traditional ERP systems will transform into what is being called EERM (External Enterprise Resource Management) which incorporates knowledge management information into your business process. I totally agree with this prediction.

The transition from ERP to EERM follows this general Timeline.

TimeLine[1]

<- 1980 ——————- 1990 ————————-2000—————————-2010—>

Business driver

Get supply chain under control

Establish single view of the customer

Optimize allocation of knowledge assets

Challenge

Unconnected internal processes

Customer data integration

Strategy-to-execution realization

Scope

Back office

Front office

“whole” office

Tech catalyst

OLTP | RDBMS

Internet

Collaboration

Interaction model

Transactional

Transactional

“Decisional”

In the 1990’s – era, enterprise applications addressed the operations level of the organization. Enterprise applications functioned at the Operations level incorporating all of your traditional business functions: IT, HR, Accounting, SCM, Production, Sales, and Service. Your direct Line Management has access to these applications and can control the operational output/function of each. Executive and senior management, however, still needs to depend on spreadsheets and historical analysis to make decisions on current and future performance under this model of ERP.

As we enter into the new century and beyond the knowledge economy has shifted the move-the-dial resources from physical to people. As we move the focus of the enterprise from “Physical Assets” to “People Assets” the classification of our business processes has become less modular and more categorical. ERP or “Physical Assets” are now grouped around concepts instead of discrete functions. For example, we now classify business functions in the following manner: Capital, Materials, Inventory, Fixed Assets, etc.

Moreover, over time –“People Assets”– have blended the distinction between Line Management, Senior Management, and Executive Management into more collaborative concepts such as Relationships, Knowledge workers, Work, and Information[2]. This has led to customers investing for ERP integration value through even further changes to the people component of their enterprise. This investment has further changed management from a hierarchical structure with an emphasis on historical analysis and spreadsheets to a flatter management style focused on instant analysis, widespread collaboration, and real-time analytics. As a result, traditional hierarchical work structures like Executive Management, Line Management, and Middle Management have been replaced by modern business functions such as: Social Networks, Collaboration, PPM, and BI Content Management.

These modern functions have replaced the top-down authoritarian mandates of the previous century with a more fluid collaborative decision making process that depends on technology to provide real-time decision making capability and group consensus. As the continued integration of social media (wiki, blogs, tweeter, face book, IM, etc.) into the workplace continues to expand, I believe that this emphasis on “People Assets” will continue to grow and increase adoption of EERM in the enterprise.

End Part III

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[1]Entire contents Forrester Research, Inc.

[2]Entire contents Forrester Research, Inc.