ERP - Endowment Of A ‘Permanent Employee‘

by Anshul Srivastav - VP-IT, Bharti AXA General Insurance Company Ltd

‘Change is the only constant’ - ERP defies this phrase. In the early 40s to 60s, there were major attempts to build calculating machines/devices. Since then, organizations started exploring systems to improve processes and thus a portion of ERP was brought in. Evolution started with automation of inventory management to material management in the early 80s and subsequently in 90s transforming to Enterprise Resource Planning (ERP). ERP implementations were tying all knots to get the internal processes automated and had seamless integration of all functions viz finance, HR, procurement, operations and automated all commercial functions. ERPs entered the organizations as rookies in 80s and transformed into “Permanent Employees” by mid-90s. Gradually, ERP systems became de facto for industry standards right from manufacturing to financial services.

With the business shifts and new business models evolving in late 90s and early 2000 more towards customer centricity, the organizations were forced to commit to service the customers and competitors were taking a competitive edge. Some of the ERP product providers were still enhancing their current functionalities and organizations were eager to go to the market and ERP service were doing little or nothing to help.

This is when ERP or so called legacy systems started taking a back seat and organizations started exploring new technologies that included Java, J2EE, .NET supported by websphere and weblogic as business logic layer and databases like Oracle, MS SQL, amongst others. The need of the hour for ERP product providers was to scale up and support their clients, their current business requirements or provide the methods to connect to the core/legacy applications. Mostly ERP product providers chose the latter option, some of them evolved but not to a great extent in terms of offering the current business value. CIOs were getting restless as there was huge business pressure and businesses were having pressure as competitors were using cutting edge technologies to cater to the needs of customers and partners, agility to roll out new technologies was missing or available with minimal usage.

Cost of scaling up the ERP system to cater to current new business requirement and ERPs were unable to manage the internal hunger of the organizations. Cost of customizations for new business models was high in terms of resources as well as skills.

ERPs did map it to the new age technologies by moving the ERP onto cloud and it was a wonderful move for organizations that didn’t have enough capex to manage ERP implementation infrastructure. It was targeted for SMEs market initially and later-on scaled up for large organizations. But that was just one side of the coin, when it was required to scale up to new age business models, it was not ready to offer the ever changing business models.

CIOs were in a catch 22 situation as they could not get away with legacy systems and had to adopt new technologies. This is where new age product vendors started building middleware to develop interfaces between legacy and new age applications. Innovation was the need of the hour for CIOs as they had to go with the pace of change but ERP implementations were restricting them as they had to align with internal processes to the customer/partner facing processes. CIOs started blueprinting and planning to transform for next three to five years. They started adopting new methodologies such as agile to deliver what was required by business. They started checking the feasible options to transform looking at the current state. Business teams required new IT models to align with business models which was changing very fast. And here innovation was the only way forward, so prioritization of identifying and creating disruption was the key.

ERP on the ground were helping old age systems to synchronize with new age systems, but still holding lot of legacy processes of finance, HR, procurement, to name a few. Transaction processing capabilities of ERP systems with huge data base were still holding the flag for ERP implementations. Plus, the quantum of data ERPs holding was not an easy let go for organizations. Even the new age organizations which are implementing ERPs are due for transaction processing.

By the end of decade of 2000, the organizations were having hooks to connect to ERPs. So every time there was a new requirement, ERP service providers were providing hooks to interface with new age technologies. With this kind of structure, overall landscape for both application and infrastructure is now very complex.

Now, the organizations are wrapping solutions around their legacy ERPs and they are just upgrading ERPs around. As when the decision makers are developing matrix on change, feasibility, success and innovation, they are unable to map the shift in business with the value these legacy systems will deliver; although they are the heart and soul of any organisation and not at all detachable as they are now graded as “Permanent Employee”.