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Founder of We Wire People, Martijn has 15 years experience in the field of Integration, as an Architect working in and for Enterprises. He mainly advises in case of mergers, application rationalization and Cloud / Social Media back-office integration Martijn blogs at martijnlinssen.com

7 responses to “Will SaaS kill ERP? No, but it should”

  1. Matthias

    Hi Martin,

    nice post, I agree with most points, with 2 remarks:

    First “So how come ERP is where it’s at? Well, only because it’s customised to death.”

    But it is quite often not ERP vendors fault, but customers who want to have “THEIR UNIQUE” processes built into the solution and don’t think around the corner to have a standardized solution with the same outcome (i rather guess a lot of those companies are afraid of change management internally..)

    Second regarding the point “The IT exception and rules”:

    In my opinion there is a bias in analysts and blogosphere opinion. Yes there is the other
    “very end, humans, the opposite takes place: we encounter complex, dynamic stuff that changes all the time,”

    But this is most in Service Industry (or broader named “knowledge based industries” and service departments of companies), where we as IT and consulting people come from. There are still so many manufacturing companies out there, where the other “very end” consists of work processes with “simple, static stuff that doesn’t change”
    Hardcore example: Look at Foxconn building Iphones, you see dynamic workers & knowledge flows? But I am still sure, if you speak to a Foxconn manager he would not like to have a standard IT-supported process, as in their opinion Foxconn is “special”.

    So it is a transition. There are a lot of companies where a proper “classic” ERP systems as “foundation” helps to manage the business and make the right decision (Still there are even in the US and other “saturated” markets a lot of companies who don’t even have ERP). As their business models evolve, those companies have to think about where to adapt the front-end, and there are the SaaS offerings quite a (more or less) perfect fit to be more agile.
    Integration of those solutions is another topic..

    1. Martijn Linssen

      Excellent points Matthias!

      It’s the customer request on the one hand, and SI and vendor supply on the other that cause this situation to perpetuate. Yet, any package out there is so flat that it at least needs some customisation – but one can always overdue it, or “get overdone” if you catch my drift

      Your point wrt humans is very valid as well. I use the same distinction in my socbiz book where I use an MQ on product and humans, driven and facing. Foxconn would be indeed most boring, and unfit for social, as it is product-driven as well as product-facing: rules rule!

      And yes, ask a CEO what makes his business so special and he’ll answer “we distinguish ourselves from the competition by…” – meaning “we’re in the same biz and support the same boring stuff, but we just support a few exceptions that they don’t”

  2. Pieter Eerlings

    Hi Martijn, great post, thanks for that!

    Most of our customers come back from an ERP since

    1/ their ERP contains too much functionality, much more then they need, and complicates their processes.
    2/ their ERP contains not enough functionality in very specific aspects (those are the aspects that are specific to their situation/business/size/…). Logic, since ERP is targetting every business (and hence, no business at all).
    3/ they want to differentiate from competition by doing things differently (deviate from the standard), and standard ERP supports commodities. Differentiation can only via custom software.

    - They realize that custom software, only solving what they really need, no more no less, is a better investment at the end of the day.
    - Moreover, this custom soft can follow their needs as their business evolves over time. A standard ERP package is never as flexible as custom software.
    - And last, we see a trend that writing custom software is becoming less and less expensive, given the great development tools, tons of open source projects, and new methodologies that the ICT industry has adopted over the past years.

    1. Martijn Linssen

      Thanks for sharing that info Pieter, are those your own / company’s experiences?

      ad 1) yes you pay for other people’s functionality, and vice versa: you overpay for packages to begin with
      ad 2) yes no matter how much is customised, a large part of your functionality will never be in it
      aqd 3) that’s what I mean by “We distinguish ourselves from our competitiors by…”

      Look at clothing, cars, housing: they all serve us off-the-shelf, and that really is off-the-shelf. Talking in terms of Buy before Make, only people with an awful lot of money can afford to Buy and then Make that into what they want. Very expensive, time-consuming, and does it ROI? You tell me

      The closer you become to core business, customers and key users, the more customisation you will need, because that’s where your added value is. But below the water surface, the iceberg is huge and can be just the same as any other iceberg around

  3. Opinionguru

    Great post, the ERP is not dying as many are predicting, but evolving and migrating to the cloud.Tapping into the cloud to roll out ERP/CRM and other solutions is an approach that is bound to be successful. ERP solutions on the cloud will increase scalability and efficiency, clouds are also ubiquitous thus enabling global accessibility.The future of ERP is most certainly bright and on the cloud.Just read an informative whitepaper, Choosing the right ERP solution for your organization @ http://bit.ly/zSEOXf

  4. Jos Bosmans

    I always find it funny to see that people think ERP, in SaaS-mode, will be the one size fits all, magic, solution and they will live on happily ever after.
    It’s not. The first SaaS ERP solution that will cover every major process in a company still needs to be developed. For the record, even though I know SAP invested a lot in Business By Design, it’s not a proper solution. While for CRM there are already succesful vendors, Salesforce, Microsoft, where the solution can be customized in an easy way, to the needs of the customer. An ERP is much more complex, it’s not a simple customer database, as to what I compare CRM to. For the OnPremise world, SAP has a very solid and proper solution, it’s called Best Practices. Unfortunately, even this software is not a complete answer, as the processes covered, still need to be adjusted or even replaced, to fulfill the needs of the customer. Besides this matter, there is also the point of ROI.
    OK, you could have 50€ or 100€/user/month agreement for the SaaS model. However the SaaS environment still would need to be customized/configured to the needs of the customers. This part is also very expensive. On shortterm you only save the price of the hardware and cooling, if you don’t have the infrastructure. On longterm, you will lose money, because once you configured your ERP environment, you will not just change over to another one, because you would need to go through all the hassle (Configuring, Uploads, Training…) again. ERP Saas would be the solution for a startup company, with 1 to 25 users, with very simple processes and as such no history.

  5. Martijn Linssen

    Hi Jos,

    thanks for that.
    We all share a common basis, hence my suggestion for tertiary and secondary processes: those should be pretty default for most.
    With regards to ERP, at least 50% is default for all, and the exceptions are closest to the customer. Who knows, maybe a few basic sets of exceptions (that does sound awkward, doesn’t it?) will get offered via SaaS, while half of your ERP stays on-premise as it is.

    The challenge there for SAP: to stay sexy. I can’t imagine SAP not offering hybrid and -in a later stage- full SaaS for some of their now existing functionality. It will cannibalise them partly, but maybe it will do them good in the long run