Postmodern ERP is a relatively new phrase in the IT lexicon. The term was created by Gartner to describe industry-wide changes in how companies implement and use ERP software. There is a difference between traditional and postmodern ERP models. In this article, we will explore what exactly post-modern ERP is, what some of the benefits of it are and what types of companies might especially thrive by using this software strategy.
What Is Postmodern ERP?
While there are many definitions of postmodern ERP floating around the web, it’s generally defined as a situation where companies abandon the traditional practice of using single, monolithic ERP platforms for several unique tasks and instead adopt a collection of individual standalone programs. Experts describe this as a “loosely coupled decentralization” of traditional ERP suite systems. In the past, ERP solutions were built comprehensively to offer business users a wide range of services under one collective umbrella.
Some point out the progression of the ERP suite from its early beginnings when it was oriented toward MRP, HR and core financials to becoming an expanding industry with added components such as marketing and data analysis.
People call the latest ERP model postmodern ERP because it deconstructs ERP software from one big central program into logical components. This new methodology breaks down the idea that you should have “one product to rule them all,” and that you should get all of your enterprise gear from the same vendor. Traditional ERP approaches seem easy and safe, but can sometimes end up holding companies back.
What Exactly Is the History of ERP?
The term enterprise resource planning was developed by Gartner in 1990. Initially, it was defined as integrated software tools that included processes such as financials, HR, CRM and manufacturing. These tools are still at the heart of what ERP does today.
The 1990s-2000s were primetime for ERP software — many companies started to implement ERP solutions into their core business features. However, at the end of this period, people began to view ERP negatively due to its high price, lack of flexibility and likelihood of failure (both completely and in terms of projected ROI).
Fortunately, ERP is not dead. Just as we have moved from old-school tools like AltaVista for search engine needs to the intuitive Google, ERP software has also taken a leap into the modern digital realm. Cloud-based software and integration opportunity have prompted this change from “all-in-one” legacy systems to picking and choosing solutions where your business only pays for and implements the tools it needs. Many legacy ERP companies have opted to keep up with this trend by improving their system’s ability to integrate with different solutions.
Postmodern ERP Strategy and Versatility
One of the main reasons why enterprise businesses gravitate toward a postmodern ERP approach is that it can be more flexible and easier to swap out or change components.
The cloud has made significant contributions to this new model. It’s much easier to choose and buy standalone applications with a cloud or hybrid cloud strategy. This benefit is compounded by the cloud’s availability of subscription pricing and on-demand benefits.
However, in some cases cost may also play a part. Companies may be able to get the functionality that they want at a lower price by cobbling together a set of standalone products rather than purchasing a “Cadillac” ERP system with all of the bells and whistles.
One common argument for postmodern ERP software is that companies get exactly what they need instead of paying and reserving space for unnecessary functions. This can ultimately reduce a company’s overhead. In the age of lean manufacturing (a slimmed-down business plan and automated processes), this is a big draw.
During procurement, buyers look closely at ROI to figure out ways to maximize advantage while minimizing cost. Therefore, a postmodern system available at a lower price than a traditional ERP solution is increasingly attractive to businesses, even considering that they have to forgo the ease of dealing with only one software vendor. Many companies find that the benefits of a postmodern ERP strategy outweigh the annoyance of dealing with multiple vendors.
Postmodern ERP and Best-of-Breed
Another reason why businesses pursue postmodern ERP is that companies can get best-of-breed solutions in place by integrating them with other components. Think of it like picking and choosing what you want to eat from a buffet rather than attending a wedding where there are only three main courses to choose from. With the buffet, you get to decide exactly what you want and combine elements to build your meal. With the wedding example, there are a few approved solutions available, but the features included (such as a Caesar salad and corn on the cob) are a standard set.
Some industry professionals point out that although postmodern ERP buyers can integrate individual best-of-breed applications, that doesn’t mean that there isn’t a centralized ERP platform available on the market that brings together all desired components. However, despite this potential availability, many companies prefer a postmodern solution because being able to choose from a menu of vendor options can be very freeing.
What Are the Pros and Cons of Postmodern ERP?
Postmodern ERP can be an effective solution depending on your company needs. Here are some of the pros and cons of going for a postmodern solution over a legacy system.
One of the core benefits of using a postmodern ERP strategy is the ability to pick and choose which tools you would like to integrate for your business. For example, if you don’t commonly deal with sales or employment contracts in your day-to-day business, you may not want to purchase a contract management tool. Because your solution would only include core components that you know you will use, you won’t waste money and storage space on features that would mostly lie dormant. Additionally, you can add and get rid of aspects as you see fit. If you decide to swap out your marketing team for a third-party agency, you could get rid of the associated tool fairly easily.
With postmodern strategy, you don’t just get to choose the features you want; you can also select vendors. Many legacy ERP software vendors acquire more niche software companies to integrate those specific solutions as modules in their program. However, with a postmodern solution, you don’t have to settle for what a legacy system thinks is a practical solution for your specific needs. You can choose from a wide range of software programs to find the method that works best for your specific business. Additionally, there are a lot of software programs that are specialized by industry, so you can look into those systems as well.
May Be Less Expensive Than a Legacy System
ERP software is notorious for being costly to obtain and to install. A postmodern solution is a good option because it can be less expensive as a base cost depending on the size of your business and the number of software programs that you’re implementing. Additionally, if you opt for cloud-based software, it’s less expensive to install than more traditional legacy systems. However, it should be noted that more and more legacy solutions are adding a cloud-based solution to their portfolio so that customers don’t have to make a software decision based on installation method alone.
More Complexity Between Systems
Because ERP modules and tools are built to work together, legacy systems can be a lot easier to configure than a postmodern solution composed entirely of best-of-breed solutions. Because postmodern ERP may involve different programs from different vendors, it may be a lot more challenging to integrate. For example, during the buying process, you would need to ask about compatibility with other systems to ensure that the solution that you have in mind would be sufficient.
More Difficult Upgrades
This con goes hand in hand with the increased complexity between systems. Because of this increased complexity and the fact that the solution isn’t an all-in-one program, making system upgrades can be difficult. When updates occur, your IT team will need to make sure that the relationship between the disparate systems isn’t negatively affected.
Lack of Access When Offline
When you implement a cloud-based software, you need to account for the fact that you won’t be able to access it when you are offline. Many legacy ERP systems offer on-premise solutions, albeit with a high installation cost. However, this software is available offline. For cloud ERP solutions, you are reliant on the internet to access all of your data. Depending on your specific business needs, this may be a dealbreaker.
Case Study: The Salesforce Boom
Salesforce takes a vital concept – CRM – and applies it to a platform approach that’s easy for companies to use. As a result, it’s taken off in the business world to an incredible extent, dominating the field even with other big vendors in play.
Over the past few years, tech journalists and others have weighed in about exactly how Salesforce became the dominant model for CRM. A 2013 Forbes article took a look at how Salesforce latched on to some of the big ideas of the new cloud era to propel its brand to new heights. Much more recently in 2018, Gartner selected Salesforce as a top CRM option for its “Voice of the Customer” via its innovative mobile application development.
This often happens with branches of technology — a favorite vendor uses industry trends to build its client base, eventually gaining market share and receiving more press. As this cycle continues, more and more people want the system and integration with it becomes a selling point for other tools.
This cycle is a big part of what postmodern ERP is about. With a postmodern ERP approach, it’s relatively simple to integrate Salesforce (or whatever the best new software is) with the tools that a company is already using. Many software vendors advertise Salesforce compatibility as a key benefit, which compels even more companies to integrate Salesforce. Additionally, you have the advantage of economies of scale and user familiarity. It’s all part of how a particular standalone tool rockets to the top of the pile, and how companies can stand ready to take advantage of that.
What Types of Businesses Should Take Advantage of Postmodern ERP?
In general, most companies in industries that benefit from traditional ERP software may also benefit from post-modern ERP. However, business size and specific needs are relevant when opting for a legacy solution or a new approach. For example, small companies wishing to obtain an ERP system may decide to go with a legacy tool because there is a lesser degree of necessary integration.
On the other hand, enterprise businesses with complex workflows may prefer to go with a postmodern strategy because of the variety of tools needed to conduct business. Enterprises usually have bigger IT teams that can help out with the sometimes complicated integrations associated with postmodern ERP.
Post-modern ERP offers businesses more of the new possibilities available in this vendor-diversified era. These benefits range from the ability to mix on-premise and cloud technologies to the ability to build agile IT architecture. The scalability and versatility of postmodern ERP is one of its main appeals — it doesn’t just put a particular “box solution” in place, which can lead to growing pains down the road.
Do you find postmodern ERP strategy interesting, or would you rather stick with standard ERP software? Let us know why in the comments below!