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Part I: Avoid Looking for ERP Silver Bullets in the New Abnormal.
Welcome to the first of a three part series in conjunction with our forthcoming webinar.
Our goal is to help C-Suite leaders, decision makers and influencers understand the compelling business case behind a number of optimisations to your Oracle E-Business Suite Enterprise Resource Planning (ERP) investments that will give you an enterprise-grade ERP platform for the next decade.
- Part 2: Tactical Oracle E-Business Suite ERP optimisations to last a Decade.
- Part 3: A Smooth ERP Trajectory to SaaS.
Unless you have just dropped in from Mars, it's fair to assume we all know the COVID-19 back-story and the tragedies that exist around the globe. Social media suggests some are already a little desensitised to the current situation, having now read one-too-many posts with the 'same old' Coronavirus messaging. This isn't to trivialise the situation; how can you? When so many have been deeply affected losing both loved ones and their livelihoods as thousands of businesses have become paralysed in struggling to cope with the containment restrictions.
We now begin to dare-believe that Coronavirus has been contained as indicated by the increasing ease of lockdown measures across Europe. The virus of course has not just vanished but remains amongst us and continues to touch us individually, collectively, ecologically and economically.
So what is the immediate consequence for the enterprise? The expectations on IT leaders are even greater: CIOs must adjust and adapt at increased pace, do more with less in the face of increased scrutiny on every penny being spent as we head towards an inevitable economic recession.
Let's just pause for one moment. Is it accurate to say that CIOs are being asked to do 'more with less'? The inference being that IT budgets are expected to shrink. It is a given to say that budget holders are expected to optimise business value from their investments as a matter of principle and function. The answer is unsurprisingly, 'it depends'. It depends on what classification of enterprise spend you are talking about. In early April, Gartner forecast a bad-case economic impact of a GDP reduction of 20-30%, which in human terms could affect ~30% of us. In this scenario the projection was that IT spending would decline for the first time since the 2009 financial crash. According to Statista at the end of March, the midpoint average for the impact of COVID on global IT budget was -3.8%. Roll forward to mid-May and Gartner were projecting a -8% spend in global IT, equating to a reduction of $300 billion to $3.46 trillion. Of course there are also winners with increased spending across digital documentation, collaboration & productivity tools, evidenced by vendors such as Adobe, DocuSign, Coupa, Microsoft and Twilio, all of whom have reported as trading at a 3 year valuation high by RBC Capital Markets.
The general impact on back-office ERP enterprise software sales is forecast to be low, in line with purchases similarly considered to be non-discretionary. The short-term reaction to ERP transformation investments is entirely rational, with spend decisions typically being re-validated and triple-checked, resulting in large-scale transformations being typically delayed by 6 months or more.
So what does this mean for people like myself focused on helping organisations create effective ERP visions and roadmaps that are both cost-effective, low risk and executable in meaningful timescales? Are there short-term actions that you can execute in the face of a budget reduction that enable you to do "more with less" with your E-Business Suite investment? Can you implement short-term actions without compromising longer-term strategic visions? And most importantly, is there a clear business case to encourage you to move forwards through effective action? The answer to all of these questions is a resounding yes!
What is increasingly clear is that standing still and stalling on all digital transformation roadmaps is not an option; freezing in fear never worked for proverbial rabbits in the headlights and it is not an option for enterprises looking to stay ahead of competitors and take advantage of every available marginal gain. Enterprises should look to accelerate plans to operate leaner, more efficient platforms, decreasing time to market and staying relevant. You don't need me to sit here and cite Kodak or Blockbusters, Blackberry or Nokia, to understand what it means to stay relevant, which is even harder in the 'thousand year decade', such is the rate of technological advancement.
Sometimes going back to basics can bring clarity and identify ways forward perhaps not considered or forgotten. Let's do that now: back in December 2010, Gartner wrote a paper that coined the five 'R's to navigate through the "bewildering choices" faced when moving applications to the cloud, distilled into five alternatives: Re-Host (on IaaS), Re-Factor (PaaS), Revise (for IaaS or PaaS), Rebuild (on PaaS) or Replace (with SaaS). At a time when 'going to cloud' was considered optional, this helped create great clarity for CIOs and other decision makers. Today, cloud is no longer optional, but inevitable.
Unfortunately along the way, in all of the Klondike 'Cloud-Rush' prospecting, software-as-a-service (SaaS) seems for many to have become the ubiquitous interpretation of what 'going to cloud' means. We seem to have forgotten author Richard Watson's words "no [single] alternative offers a silver bullet". Make no mistake, this is highly pertinent today. Don't misunderstand me, as a veteran of 23 years in the industry who has been through the transformation hokey-cokey of centralisation, de-centralisation, and even Smart Client (ouch!), I'm a huge fan of SaaS solutions: I just like to see it used in its right place and not shoe-horned as a square peg into a round hole. Too often in my estimation, SaaS is wrongly positioned as the "silver-bullet" to an enterprise's problems, with an incomplete consideration of the business transformation requirements or target outcomes. It is no surprise then, when we read reports of SaaS projects over-runs or worse-still, ending in complete failures. I much prefer to help my CIOs get the Golden Fleece on their shoulders rather than egg on their face.
So let me wrap up this 1st instalment, by seeding a few thoughts and questions to help you determine whether retention or replacing is right for your ERP strategy.
- Are you willing to retain your existing ERP platform if you recognise you have a clear business case?
- Do you have an appetite for invoking short-term, high impact changes that offers you a strategic low risk trajectory to SaaS?
- Is there a need to isolate transformational change to technology and infrastructure and avoid disruptive and distracting business process reengineering?
- Would you like to considerably reduce your risk posture through significantly improved security and compliance in the short-term?
In the 2nd post in this series, I will discuss some of the fast, tangible actions you can take to achieving these outcomes in a COVID world and demonstrate that you really don't have to throw the baby out with the bathwater.
To get the most out of this timely topic and series, do register to join me, Hitachi Vantara and Oracle at our E-Business Suite optimisation webinar on the 1st July (10:30 (BST) / 11:30 CET). In this webinar we will go further and help you build a robust business case with the full assurance that your ERP platform will remain enterprise-grade and relevant for the next decade.
Hitachi have already helped our ERP customers achieve platform cost efficiencies of 30%, and improve operational productivity by 99%, as well as optimising performance and transactional throughput to reduce business-critical processing periods.
Hitachi Vantara have been the ideal partner for our transformation journey – they bring real world, pragmatic, experience of retail, Oracle solutions, custom development skills and a broad range of technologies. We are well positioned for long term global success.