Digital platforms that are fit for today’s specific business purpose are essentially far more agile, open and flexible versions of the old proprietary enterprise suites.
The Enterprise Resource Planning (ERP) suite juggernaut that arguably peaked at the end of the last century transformed many aspects of modern life. ERP evolution has been foundational to enabling global trade, offshoring of all types and swept away much of the previous workflow technologies used for business. It was an amazing time of business expansion, tying in with rapid advances in containerization, international sourcing, supply-chain and marketing to drive globalization.
A case could be could be made that the maturation of the European Union as a single trading block was enabled by SAP and Oracle’s rapid growth during this time.
ERP sophistication matured in the same timeframe internet use exploded, and these two superpowers swept away all that had gone before in a blaze of web 1.0 connectivity and created the foundations of subsequent IT/enterprise software.
What it replaced was a prior working and sales culture around mainframes and offline personal computers.
Personal Desktop computers had previously risen to dominance as an agile antidote to the rigidity of mainframes and paper-shuffling bureaucracy in business, with pre-internet office networked employees running programs on individual PCs to do their work. This C drive and floppy disk culture had evolved using hundreds of ‘mom and pop’ software company products, with end user companies of this era typically relying on a dog’s dinner of toolsets to get work done.
Virtually all those smaller software companies went away, replaced by complete ERP frameworks augmented by Microsoft Office documents. Y2K was the scare that was needed in the late 90’s for businesses to urgently modernize their IT infrastructure and start thinking about the internet in the context of their business goals and challenges.
‘The enterprise suite always wins’ was a common refrain during ERP’s glory years: the comfort zone was ‘why buy point solutions when there will soon be an add-on module/knockoff that does whatever it is you found attractive in that other company’s offering’… in other words, just wait for new modules to expand your suite…
Peak Information Technology
Cloud was initially perceived by IT planners as merely more storage space for these rapidly expanding data lakes, but today Amazon Web Services has quickly risen to become by far the dominant ‘as a service’ enterprise computing platform on multiple levels and dimensions. Amazon are also now one of the most innovative consumer products companies in the world – essentially the new Apple – and also own the customer, supplier and sales channels, all run in the cloud. While resource planning, financials and Human Capital/HR and the other enterprise technologies companies run on aren’t going away, they are increasingly mature, fully evolved commodity background processes compared to modern digital platforms.
The digital as-a-service platform is the modular approach companies strive to run on today: a complex fabric of data flow paths and connections both inside and through firewalls. Some firms run on these platforms today, others run partially in the old IT world and partially in the digital realm, some are aspiring to modernize…but the patterns of evolution are all headed in one direction, typically driven by business strategic needs and imperatives.
Where this puts the relevance of the IT services and integrator world that historically sprang up to enable the IT era is interesting, to say the least. Using a trades analogy, just because a company was good at plumbing doesn’t mean they can design a factory: many IT and business architects have little understanding of the rapidly evolving digital era.
Last century a visit from ERP sales was compelling and persuasive, with the promise of ideally cleaning up a mess of unconnected technologies running on employee hard drives – rolling everything up into a cohesive, connected system of record whole that spat out executive progress reports, streamlining and simplifying while enabling scaling and expansion. Services firms duly rolled out the infrastructure, tuning up and maintaining the machine for peak lean performance.
This decade the emphasis is increasingly about taking out cost from these now brittle, inflexible and overly complex systems in order to fund innovation and explore forward-looking digital business opportunities.
Relevance and perceptions
Retrofitting a legacy business for relevance in the digital era is a very different and more difficult challenge compared to starting a green field ‘born digital’ entity of the types so heavily funded, marketed and beloved by silicon valley.
The challenge is on for service providers to find the path to their continued market relevance for these difficult new challenges…in a worst case scenario plumbers seeking to be seen as digital architects.
As an example of business realities, during a bar discussion last month a senior IT executive from a major global box store raged about the licensing and maintenance costs just to run their archaic IT enterprise systems. A system incapable of helping the business evolve was costing north of 120 million USD per annum in maintenance and licensing fees, essentially just to turn the lights on every morning so people could work together.
The company is desperately seeking to revamp as a modern, customer centered and relevant digital entity, but the legacy technologies are an expensive boat anchor that is preventing evolution.
We are currently in a buyers market as businesses struggle to make sense of the new business environment and platforms, evaluating the many partner and supplier options onto them.
‘Relevance’ is a key word in the current era, whether around brand awareness and value to prospects or the utility of technology platforms. Today a business, regardless of the vertical it is operating in, typically strives to create a new type of interconnected platform ‘suite’ that joins all the data dots.
Once the new generation of digital suppliers build understandable credibility, digital services are sure to become a sellers market for those who have cracked the code and are providing a path to success. For others, the challenge will be staying relevant and being seen as a low-cost commodity IT plumbing execution option.