The benefits of a multi-platform ERP strategy
Choosing the right ERP strategy for your organisation is a challenge that every CIO faces. But with a different way of thinking, you can make better choices.
Many business leaders or CIOs think that choosing an ERP is a final choice. "Choose one platform and learn to live with it." But this strategy often turns out to be detrimental. A single-platform strategy forces you into corners and quickly becomes expensive.
Disadvantages of a monolithic ERP strategy
I'll explain how to do it differently later, but the main disadvantages of a monolithic ERP platform are these:
- Vendor lock-in. Yes, you can work with different partners, but you're still stuck with one technology, one way of dealing with vendor contracts and one product roadmap.
- Access to data. You will not always be able to access and share data with other components, or you will have to invest too much money to make this possible.
- Overscaled. You will be forced to solve simple problems with complex components, because you will not have the freedom to choose a solution that fits the situation.
- Higher cost. When over-scaled, the pricing model of your platform is often a major contributor to the inflated operating costs of your ERP platform.
Do you recognise your situation? Read on!
So I'd like to make the case for a multi platform ERP strategy. And I'm not the only one...
ERP Body Mass Index. A term stated by Manish Gupta from Unilever during a CIONEXT session made this clear to me. Making sure that the apps on your ERP platforms all stay as lean as they can be. In order to manage costs during CAPEX, OPEX and exit phases. He believes in investing time in keeping your apps as fit as a high performing athlete and avoid from them becoming bloated.
This perfectly supports my plea for a multi-platform strategy. The only way to avoid bloated ERP situations is to have the freedom to choose how to handle different situations. The bigger your company, the more situations you will encounter where the lack of that freedom is very detrimental to your ability to be flexible, fast and agile.
This multiplatform ERP strategy can further be supported by some strong points
Simple solutions for simple problems
Using a small, versatile platform to solve simple problems is cost effective and safe, providing you're vetting the tools that you might consider. This also avoids shooting a mosquito with a bazooka. You wouldn't use Salesforce just to do some simple CRM tasks for a starting business unit. But you might need it later when it's full scaled and you'll need to face other challenges.
High capacity platforms for complex problems
Building on that, using multiple ERP platforms, offers you freedom. You can choose your platform according to the complexity of the issue at hand. If you're set on building an end-to-end complex ERP flow for your established brand of 40 years, you'll probably need a mature, feature-rich platform. But you might want to do some other tasks with a simpler solution.
Lower exit costs
When you need to replace or rebuild certain apps within your ERP platform, you'll face lower exit costs because of this. Because you have the luxury of replacing granular apps in certain technologies, you won't have to replace your full ERP. A multiplatform ERP strategy caters for this. Need to replace that small CRM application? No problem, just onboard it onto your other platforms, or choose a new, better suited platform to create your app.
Laying the foundation
Without going beyond the scope of this article, here's how to create a solid foundation to enable a multiplatform ERP strategy:
It's absolutely critical to require tools and implementations to have an open data way of working. Whether you're leveraging the multiplatform ERP strategy or not, you'll still use a combination of hosted and SaaS solutions, probably built in other technologies. Allowing them to freely interact and exchange data is a key feature to have for your ERP system to succeed in the long term. Vendors often don't like this and implementation partners will avoid the topic. But it's in your best interest to clearly require this in your tenders.
Define a general data -and implementation guideline
When using this strategy, it's mandatory to set up the boundaries and guidelines that your suppliers need to align to.
A data strategy defines for them how to handle data connection and storage. It's critical to demand an open data implementation from all your vendors. You'll also need to set up an implementation guideline that forces your suppliers to work in a way to allows for different technologies, but enforces the same implementation philosophy. Security is one thing that comes to mind, but documentation and platform architecture are often neglected.
Keep track of your platforms
Having the choice between platforms is a good thing, but you'll need to keep track of them. Centralising the information on the allowed, vetted platforms and sharing them with your business unit managers is how you can offer them choices, while still having the piece of mind that every micro app in your ERP ecosystem is supported by a platform that is in line with your own requirements and set of guidelines.