Why composable ERP strategies change everything
In case you missed it, industry commentators and analysts are very keen on the idea of composable ERP or modular ERP. According to a Gartner report “By 2023, organizations that have adopted an intelligent composable approach will outpace competition by 80%in the speed of new feature implementation.”
It is placing ever greater pressure on CIOs to oversee and enable these composable environments where users can rapidly deploy applications thanks to software-as-a-service (SaaS) and the cloud, writes Emmanuelle Hose, group vice president and general manager EMEA, Rimini Street. CIOs are expected to support these applications and ensure they integrate with existing enterprise systems without creating further layers of complexity.
Interestingly, if you are responsible for delivering innovations in your business to support the growth of your organisation, flexibility becomes more relevant. Indeed, I would argue it is “table stakes” if an organisation wants to create more dynamic, composable application environments.
If this makes me something of a fan of enterprise resource planning (ERP) applications, I am unapologetic. I believe composable ERP signals an exciting new era for enterprise applications. By 2024, Gartner says at least 50% of existing ERP megavendor clients will evaluate multiple vendors rather than automatically adopting the latest versions of incumbent ERP suites.
This heralds a significant departure from the dominance of the single suite ERP vendors such as Oracle and SAP. The attraction of composable is understandable. With the prospect of a recession looming, having a lean, efficient ERP system & support team underpinning your enterprise application environment will be critical. Traditionally this has taken the lion’s share of the IT budget, so the more your ERP system can enable you to streamline processes, integrate data across the whole organisation, automate tasks to enable your workforce to be more productive, and rely on efficient and cost-effective support teams to run the ERP, the more value it will deliver for the business.
What’s the problem?
As with every vision for the future, achieving the goal of a composable ERP system is not straight forward.
Firstly, we should probably explain what composable ERP is; according to Gartner “Composable ERP is an adaptive technology strategy that enables foundational, administrative and operational digital capabilities through which an enterprise can keep pace with fast business change.”
This requires a very different mindset when it comes to planning, implementing, running and maintaining an ERP system. For example, where the traditional planning process would have been about designing an ERP system to last, under composable principles you are designing systems built for change. Similarly, in the past companies would have been reluctant to make changes to their ERP system as they were worried about unknown risks, now composable ERP means IT teams should embrace risk as a known tool to minimize disruption when unplanned change happens.
You will also be interacting with more vendors in this model, as you will be adopting best-of-breed applications or developing new functionalities leveraging low/no code technologies alongside your core ERP system. More vendors equates to more effort and risk for your organisation thanks to increased complexity and the potential for more sources of security vulnerabilities. Integration and interoperability are key priorities as you must ensure compatibility between the different applications. This can be challenging if the applications are coded differently, making data governance crucial as it will help with process integrity and synchronising operations schedules as information passes between applications. Of course, data security is of paramount importance right across the “supply chain” for your enterprise application environment and must be a key consideration.
There are not just technical challenges, there are also people considerations. Do you have the right skills in your organisation to implement and maintain a composable ERP system? For example, if you are using tools to enable interoperability between applications, they must be programmed by experts who are knowledgeable about your organisation’s platform and data. They must also have the business and IT skills to analyse how the data is used in order to develop the rules that ensure data passes properly between the different components in the environments.
Support also requires a very different approach. Traditionally, software support models were based on the concept of a single, very large enterprise application suite that was tightly integrated. This meant change had to be laboriously and rigorously vetted to reduce the risk of breaking the total solution. If you are buying into a composable ERP model that enables greater agility, your support strategy must be responsive and scalable enough to respond to such a dynamic environment.
How does support have to evolve?
Composable ERP has the potential to create a new and positive role for IT support within the enterprise application environment. Given there are so many moving parts, any of the problems outlined above could be encountered, creating unexpected downstream solution management and support issues. Therefore, support must take on a more pro-active, engaged role with the business to ensure composable strategies are planned, implemented and managed in a more effective way.
This means that how support is delivered is going to evolve. Rather supporting an individual ERP application or suite from one vendor support may need to evolve to focus on business capabilities that stretch across the composable ERP environment. This does require different skills and a broader set of IT knowledge as mentioned earlier, but it also gets support more involved in thinking about the impact of change on the business.
Vendor Service Level Agreements (SLAs) will need to adapt to reflect performance criteria for services that impact related ERP components. This comes back the idea of support being focused on business capabilities as there are a number of components affecting software environments, whether it is operating systems, middleware layers or edge applications extracting data from the core system.
The ability to scale is also a key tenet of composable to meet changing demands, so your support requirements should be able to increase and decrease depending on requirements. With today’s economic uncertainty, predicting when you will need to scale creates resourcing challenges. Can you afford to staff for future demand in-house if that resource is not required?
The final consideration for the support function is that it is no longer just about keeping the lights on. In an age of much more dynamic market conditions, support must contribute to decision making about technology investments. It needs to speak up about the operational, application management, and support risks of implementing a new technology, as every new component could affect the core ERP environment. Support needs to have an intimate understanding of how the components work together and what changes will mean for overall performance.
Composable ERP needs a different support mindset
The reality is that ERP remains a booming industry, projected to be a $93.34 billion market by 2028, according to Fortune Business Insights. That said, it is changing, and everyone involved with ERP systems needs to understand it requires a different mindset.
It is why you have seen Rimini Street continue to evolve what we do. Yes, our core business is third party support, but as composable ERP becomes more mainstream we also believe that unified support services are going to be critical. With all the component parts of a composable architecture, having a single oversight mechanism will ensure customers have a single experience offering simplicity rather than having to deal with multiple providers.
What’s most exciting is the potential for support to play a more strategic role in the business. Given its understanding of the ERP system and surrounding components, support will be better placed to help the business make the right IT choices for innovative technologies and how they interoperate with the core system. So, while we would say you need to be prepared to reengineer, reframe, and rethink your traditional ERP systems, we believe you should be thinking about how you re-engineer support. Ultimately, modern IT support must be integrated, intelligent, collaborative, and personalised. It also relies on a global pool of experienced talent to help resolve issues. The organisations that are ready to evolve to this way of thinking and approach to ERP will be better placed to respond to what is going to be very fluid market conditions in the coming year.