ERP software today transcends a business organisation’s boundaries with digital innovations like Cloud computing assisting in data management.
By Mitalee Kurdekar
On an organised scale, Enterprise
Resource Planning (ERP) systems were first introduced to businesses with core modules in manufacturing and supply chain, later extending to sales, marketing, human resources and general accounting functions. Over the past two decades of ERP evolution, organisations have gathered a host of data points that, if analysed and utilised in a meaningful manner, have the potential of being turned from a data mine into a wealth of information and intelligence.
Explaining this scenario in the context of modern business enterprises, Neeraj Athalye, VP, innovation & digital strategy group, SAP Indian Subcontinent, says, “Today, every CEO wants to leverage Data & AI (Artificial Intelligence), ML (Machine Learning) and IoT (Internet of Things) to enable an intelligent enterprise, which can drive business outcomes such as total customer experience, step change in productivity and transform the way the workforce is engaged.”
The opportunities are immense. IoT would enable the capture and analysis of data in a real-time. On the other hand, Data Analytics and solutions arising therefrom would help enterprises manage both structured as well as unstructured data. In addition, AI applications would support capturing, reading and predicting based on past data, responding and executing transactions in a seamless manner.
Appreciating this positive change, Pradeep Aggarwal, senior director, Cloud, Oracle India, suggests, “Manufacturers must view themselves not just as product companies, but also as service companies. This combination will enable businesses to offer more compelling value propositions to their customers and open up new revenue streams. This approach can be powered by new technology, such as IoT.”
Speaking about Industry 4.0 implementation, Aggarwal adds, “Growth in an Industry 4.0 environment will be closely linked to the ERP system. If businesses intend to leverage the growth opportunities being presented in the age of intelligent manufacturing, the production and management functions will have to work in a collaborative environment as an integrated unit.”
Talking about the modern digital era, new technologies that are now emerging will have a much more profound impact on the ways in which organisations will work in the coming years. The CXOs helming these companies will have to re-invent themselves and change the organisational structure to adapt to this digital transformation. If they don’t, they are most likely to get left behind as others will move ahead of them in the ensuing race. While the pieces of software and hardware are easier to adopt, the most difficult part would indeed be to alter the organisational structure and culture.
Cloud computing is one such component of the new digital landscape. Its impact on ERP is significant, wherein the computing platform is available to users as a common processing platform. Thiru Vengadam, regional VP, Epicor Software in India, explains, “Worldwide, more Epicor customers are choosing to deploy ERP in the Cloud to benefit from the compelling economics of Cloud, while enabling a growth strategy fit for future growth. The Epicor ERP solution, unlike competing products, comes with a single line of code that is the same in the Cloud as it is on-premises. This means customers do not have to go through a cumbersome time-consuming migration process if they decide to move from on-premises to the Cloud, or vice versa.”
“With cloud computing, implementation has become much faster and the time to benefit can be in a matter of weeks, as against the average time of six to nine months that it takes to get an on-premise system implemented,” confesses Vengadam.
Athalye of SAP elaborates, “Demand collaboration with suppliers, inventory collaboration, subcontracted capacity and many such scenarios have been there for a long time and supported by SAP. However, in the digital world, business models are completely transforming business processes, where we see examples of products as service, additive manufacturing, and asset as a service, which require a completely different level of collaboration and business network solutions.”
Farrokh Cooper, chairman & MD, Cooper Corporation, recounts his experience, indicating that customers are seeing value in this. He states, “We are in the process of interfacing our set-up with those of our customers and suppliers to improve seamless flow of information and continuously changing requirements. We have achieved significant benefits in managing supplier orders and accounts payables.”
Cloud computing has had a significant impact on ERP.
Data turning into information and thereafter paving the way for drawing intelligence by itself means that the whole process will result in value creation, provided it is handled effectively. The tools provided by the latest digital technologies essentially make that happen. Tools like ML and robotic process automation help gather data as the processes operate and integrate with each other. Often, with platforms like the Cloud and mobile computing, this integration and interaction happens in real-time. In essence, the entire exercise of gathering data mines results in processing information with data analytics software support. The information so created is then turned into intelligence to draw inferences and support for future decision-making processes.
Moreover, the ERP system implemented by an organisation can go beyond its premises and result in value enhancement. As Oracle’s Aggarwal points out, “Today, when we look at the full spectrum of ERP, we see organisations extending the core ERP to adopt cloud-based applications to add value to distinctive business processes such as production monitoring, vehicle scheduling, maintenance management, and above all, valuable real-time insight into business that can be used for decision support.”
In this context, Athalye proudly elaborates on the SAP ERP software’s added capabilities. “Some of the scenarios where SAP solutions are extending the ERP beyond the enterprise are SAP Connected Products, SAP Asset Intelligence Network, SAP Ariba Business Network for Procurement and Sourcing Collaboration, SAP Fieldglass for Contingent Workforce Collaboration and SAP Logistics Business Network,” he says.
By using ERP solutions, Cooper has achieved significant benefits in managing supplier orders and accounts payables.
He further adds on the Connected Products front, “We see examples in auto OEM companies where they want to provide specialised services collecting telematics data and using the same to collaborate with fleet owners to keep commercial vehicles in high utilisation, best efficiency and low breakdown.”
Similarly, in heavy industries, there is significant opportunity to reduce the cost of running these heavy assets (power plants, refineries, cement plants, etc.) when the OEM of the equipment and the operator of the equipment come on a common network to share information on operating the asset for the best performance through the Asset Intelligence Network, he says.
On the other hand, the Ariba commerce network provides a seamless collaboration between suppliers and buyers. Collaboration between shippers, carriers, logistics service providers, ocean liners and many more stakeholders in the logistics space is enabled via the logistics business network.
Going Beyond boundaries
The tools provided by the latest digital technologies generate information, which can be converted to business intelligence.
Today, with Cloud and mobile computing, ERP and its applications are overcoming boundaries and going that much farther. The size or the location of the user entity does not matter at all when one looks for Cloud computing platform and software solutions. A move to the Cloud is inevitable, and no business enterprise can avoid it, knowing the value and convenience of such applications.
Given this, the next question is regarding data security. This is an important consideration for all the stakeholders to address. Traditionally, ERP software was confined to and within the control of individual businesses, hence, there were no concerns on data security and integrity. For the sake of business data sensitivity and its importance for business continuity, these ERP systems were far more secure. Things are rapidly changing.
ERP systems using IaaS (Infrastructure as a Service) offered by private service providers can be used by small and medium enterprises who seek privacy and data security, but which do not offer a lot of analytical capability. However, ERP offered on the Cloud with SaaS (Software as a Service) is more cost-effective, but comes with low security on data.
Aggarwal states, “Modern-day ERP has comprehensively supported the disparate needs of small, medium and large enterprises in the Cloud with scalability, flexibility and agility in the face of constant economic, political and regulatory uncertainty.”
Yet, he agrees that, “Organisations struggle with the trade-off between perceptions of data security and adoption of modern technology that is mostly available in the Cloud deployment model. Very few organisations understand that professional levels of security provided by Cloud service providers, along with rapid advancement in business IT capabilities, can enable more data security, with greater business benefits than they could implement otherwise. The most significant challenge of all, however, is managing change and disruption.”
ERP as a colossal software running inside any business organisation in its traditional form has gradually given way to an intelligent form of ERP, which we can call i-ERP. From the days of recording and accounting; and managing and integrating organisational resources in a closed environment; we have now moved to a new architecture where intelligence and responsible actions are more important. That architecture of i-ERP is now feasible with a judicious mix of ML, Cloud and mobile computing, Data Analytics, AI, robotics and IoT.
Migration to Industry 4.0 and increasing dependency on the Industrial Internet of Things (IIoT) supporting superior Data Analytics will help integration on both the vertical and the horizontal scale of industrial operations. This will truly and significantly impact the manufacturing environment today and in the future.