The shift in thinking to ‘ERP plus’

And enterprise leaders will have to embrace a new mindset when it comes to ERP and the potential of cloud, and use cloud more strategically—as an enabler of business integration, innovation, and analytic insights. Three Deloitte cloud transformation specialists and industry leaders share their insights on what the enterprise cloud landscape will look like in the years ahead.

Building at the edges

With the post-pandemic new normal, companies faced with delivering desired business outcomes with quick win solutions have good news: Industry cloud. “You do not need huge infrastructure,” says Smitha Chowdavarapu, senior manager, Deloitte Consulting LLP. Industry cloud, allows companies to “build out solutions almost on the edge within weeks.” What’s more is they are co-innovating, leveraging existing nimble solutions and to meet their needs in a scalable way.

This approach is placing the monolithic large systems further in the rear-view mirror, says Chip Kleinheksel, principal and Global SAP CTO, Deloitte Consulting LLP. “Companies are embracing quick-build apps, innovative apps through cloud technologies, which allows them to adapt to disruption quickly–the kind we saw almost overnight in 2020.”

A clean core and innovation

The topic of a clean core continues to be at the forefront of IT strategy, and Kleinheksel is emphatic that preserving a clean core doesn’t mean it can’t be used as a development platform. It means having a strategy and the appropriate governance and discipline to know where to begin coding–something, in his view, that rests with the Chief Information Officer who can empower the business through innovation in the right places.

Hernan Krymkiewiez, managing director, Deloitte Consulting LLP, agrees and offers that industry cloud technology enable companies to innovate on what he calls ‘the innovation layer’ providing a much-coveted business edge: Speed. “You have to have a clean core to adapt to the new releases and the new versions as fast as possible. Putting the changes on the innovation platform ensures companies can keep progressing while still innovating, and without conflicting messaging between both layers.”

Leveraging the ecosystem

Whereas the core was once the epicenter of innovation, not only are there industry cloud applications, but there is a full ecosystem to leverage with specialized tools–like AI and machine learning–to build in the agility companies need. Says Chowdavarapu, “Robotics, RPA, machine learning, artificial intelligence, OCR technologies, all this to actually build solutions that build efficiency into processes, and resiliency overall.”

For Kleinheksel, it comes back to the pillar of inclusivity in Deloitte’s model of the Kinetic Enterprise. “It’s embracing the ecosystem of technologies out there, and thinking about it in layers. You’ve got your ERP layer and then you have a cloud integration and app layer; it's not separate, discrete systems.”

ERP plus

The universally-adopted strategy of the sharing economy has changed the purchasing habits of companies and IT leaders’ views of ownership. The quandary for transforming enterprises is similar to the rent-or-own consumer dilemma. In Chowdavarapu’s experience, customers are asking whether they want to own a piece of software that is not nimble or agile, or, amidst the companies growing needs and disruption in the market, if cloud would be more beneficial.

Newcomers in the new digital economy, says Krymkiewiez, have particularly embraced the ‘rent’ model, owing to an almost built-in agility that comes with being a new company. Being free of legacy systems means the luxury of trying solutions without major investment. “They don’t have to own it if they don’t like it.”

What then, for companies that do have legacy systems? “We have to shift our thinking to ‘ERP plus’,” says Kleinheksel. That means looking at that legacy ERP plus a new ERP that creates a platform that integrates and connects to an ecosystem. “You can leverage a subscription model or something to use only for a period of time. It allows people to try it out and not be heavily invested.”

Want more transformation insights from enterprise leaders? Visit deloitte.com/SAP to download future podcast episodes or listen to previous ones.