Building the Postmodern ERP

2020-08-20

Jarmo Suoranta
CEO

ERP systems have been the heart of companies since the rise of the digital era. Like the human heart, the ERP should be active at all times, pushing freshly oxidised blood throughout the body and keeping the machine running smoothly.

Unfortunately, just like the human heart gets artery disease, so can ERPs run into many problems. If our cardiovascular system doesn’t allow us to perform optimally, it goes without saying that we can’t even dream of becoming top athletes.

Let’s skip the human body analogy and just dig into ERP systems and the problems in this space. The mission of the ERP system is to integrate all the main business processes inside and keep those processes running. The ERP may cover a wide range of different functions, such as production and material management, HR, accounting, BI, CRM etc. The idea is having all of this inside one out-of-the-box solution.

Sounds tempting, but how many successful ERP systems are there actually covering all main business functions and processes, working smoothly without any manual steps? Systems without any roundabout solutions that users founded because they’re flustered with the stiffness of the system?

Why traditional ERP systems fail us

In my view, the main reason why traditional ERP systems fail business needs can be found on Wikipedia: “ERP systems are theoretically based on industry best practices, and their makers intend that organisations deploy them ‘as is’.”

This means you either have to follow the processes you get out-of-the-box, or you have to tailor your system. When you customise, it’s no longer out-of-the-box. Implementation starts to become heavy, and nevertheless, the system is limiting your business. In the best case, there’s just a need for some manual steps within a workflow. A user might seemingly operate inside one system, but really, there’s no integration between the different functions. Wouldn’t you love to add manual data from one window to another?

In the worst-case, however, the system is limiting your capabilities to innovate new offerings, services and products. If we think about one definition of strategy – to do things either more efficiently or differently than your competitions – then how you can do business if you use a system “based on industry best practices”? You can only run your business precisely like everyone else who has fallen to the illusion of The One ERP to rule all of our processes.

“If we think about one definition of strategy – to do things either more efficiently or differently than your competitions – then how you can do business if you use a system ‘based on industry best practices’?”

The Postmodern ERP

The field of traditional ERP problems isn’t new. In 2014, Gartner founded the term Postmodern ERP. The definition of Postmodern ERP can be found here.

The main take is this: “appropriate levels of integration that balance the benefits of vendor-delivered integration against business flexibility and agility.” The idea is no longer trying to put everything inside one system. It’s rather following best-of-the-breed architecture. For production management, you can use the system best suited for your business. For FICO and HR, you can pick state-of-the-art solutions from the market.

Then, the question becomes how to manage all these integrations and make a fully automated machine? It’s all about your business processes, and how the IT-systems can fulfil the processes. Development of any kind of system begins by modelling your business processes using some type of flowchart diagram. When you choose an out-of-the-box ERP, you demand in the RFP that the system should fit your processes. If you build based on the best-of-the-breed strategy, you’ll use the business process models to define data flows between systems. Then, process definitions are forgotten, and documentations become deprecated. 

The process-driven approach

I strongly recommend leveraging a Process Automation Server when building a Postmodern ERP system. The whole solution is a combination of tailor-made user interfaces, best-of-the-breed products and microservices, where the Process Automation Server is the backbone and clue. The idea is to truly run the same business processes as modelled in the Process Automation Server. 

Why? Because:

·   Orchestrating business processes through a BPM workflow automation platform guarantees your business process definitions are always up-to-date. Process models are self-sustainable, and there’s no need for separate documentation explaining how the system works. But it comes down to one benefit: The solution doesn’t limit processes or service innovations.

·   Products and components can be selected with the best-of-the-breed approach.

·   There’s no dependency on any single product or component – any part can be easily changed.

·   Process models are a communication interface easily understandable between business and developers.

·   Historical and real-time views of the process states enable the continuous development of the business.

Thanks for reading. I hope you got some ideas about how to develop your cardiovascular system to meet the demands of winners. I’m always happy to help and spar.

If you’d like to have a chat about how to take your ERP system to the next level, please book an appointment in my calendar through this link:

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Jarmo Suoranta

CEO

+358 400 958 991
jarmo@tx.company

Antti Osara

Business Developer

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