ERP in the digital era - challenges and new beginnings

ERP is one of the most widespread and important IT systems used by companies, representing the backbone of the business. The big trend of digital transformation certainly has an impact on these systems, from a technical, but also from a business point of view.

Both users and IT players are influenced by the changes and challenges brought by the digital era.

In a wider sense, digital transformation requires a far-reaching transformation of a company’s business strategy and operating model: IT calls for the rethinking of organizational structures, business processes across the value chain, and technology strategies. It also requires a dynamic business culture of innovation, participation, and collaboration.

The large installed base of ERPs dates back to times of much more structured interactions, and with lower volumes and typologies of data.

In this context, a conflict may occur between the business’ backbone system and the capability to satisfy the growing demands within its ecosystem.

The current perspective of IT systems - ERP - digital

The current perspective of IT systems

PAC has recently published a new InSight Analysis within its SITSI® BAS Cluster:

This report aims to identify the impact of digital transformation on both existing ERP systems and those to be implemented.

PAC analyzes the challenges and trends that largely depend on the digitalization stage of the individual companies.

The impact of digital transformation is analyzed from both software vendor and system integrator perspectives, as well as from the IT user point of view. The analysis covers the challenges and changes in approach and methodology that all these parties need to consider.

A number of questions are answered in the current report, such as the following:

Why do we need ERP in the digital era?

ERP remains the main system of record, the true backbone of the business, ensuring financial management, governance, and the integration of the material and financial flow. The digital era brings new challenges and requirements, but the ERP’s role remains. In fact, ERP has been transformed into an enterprise management system.

What are the requirements on ERP in the digital era?

ERP has to adapt to the requirements and pressures coming from the digital transformation of businesses, both in terms of system features and implementation methodologies. It also has to be integrated into the digital enterprises that are taking shape and maintaining the relationships between internal and external stakeholders (ecosystem).

What is the impact on users/clients?

The impact is undisputed, although its degree depends on the user’s strategy and stage in their digital journey. Users will be faced with decisions such as whether to migrate, update, or integrate their ERP systems. The approach may differ depending on the degree of customization of their existing systems.

What is the impact on ERP providers – software vendors and service providers?

Software vendors have renewed their offerings with products that offer more standard features. They have embedded extensive best practices and developed their own implementation methodologies to accelerate and increase value for customers.

Digital transformation represents more than a set of new software tools, it represents a profound transformation of internal processes. System integrators play a major role in their clients’ digital journeys. They are facing a changing paradigm regarding their go-to-market, necessary competencies, and resources.