Managing Source to Pay in the “Postmodern” ERP Era
As enterprise technology has evolved with the notion of ERP, so has the need for organizations to understand how to adopt it in a modern context. Source to pay is no exception.
In the early eighties, many looked to enterprise resource planning, or ERP systems, as the panacea to all the woes of working with MRP systems. ERP was going to solve the problem for organizations looking to manage all distinct software solutions under one umbrella, and make it easier to see how all these functions work together.
As an ERP consultant looking back in the early 90s, I witnessed the euphoria around managing multiple functionalities — such as HR, Supply Chain and Finance — that captivated many organizations. I recall having a conversation about this with Dave Duffield, co-founder and former chairman of PeopleSoft and, more recently, co-founder Workday, in Pleasanton, CA.
At the time it was commonplace to hear him and other pundits talk about how ERP will revolutionize the IT industry. The market was rife with the notion of the value proposition that businesses could link and run all their processes on one platform.
However, this promise was not always realized, given limited flexibility in integration, poor user interface and often the high cost of on-premise deployment that could last years. (in particular, SAP war stories abound…).
Today, in what many, including Gartner, refer to the “postmodern” ERP era, we know that the world of enterprise technology for source to pay requires a new way of thinking about how one should approach technology in the context of the cloud.
Just one look at the latest headlines tells us the importance of how cloud is impacting traditional ERP players—with Oracle’s latest acquisition of Netsuite, which is seen as a critical aspect to their strategy. Capturing everything under one umbrella has not changed.
But organizations today increasingly recognize that “best of breed” requirements often challenge the argument for using an ERP to manage all processes under one platform. To bring this point home, based on a recent article in CIO Review, “In the postmodern ERP world, the legacy ERP suite is deconstructed into a more [loose] set of integrated business functions. The pieces make up the whole, rather than the whole (or suite) comprising the pieces.”
For those in procurement, this can not be underemphasized given what’s changed since the early days of ERP, including:
- Development of Open API in the Cloud for enterprise integration
- Evolution of the “Internet of Things” with mobility and business apps
- Millennialization of technology and focus on hyper-ease of use, and
- The Rise of Procurement / Supplier Management as an operational imperative
In this context, a top priority for procurement departments today is knowing that the promise of ERP may now be more adequately addressed with specialized source-to-pay suites that are decoupled from an ERP-only mindset. At the same time they can easily integrate to ERP and provide best-in-breed capabilities in order to address the wider need to generate savings, manage risk and improve compliance – supply chain compliance and internal user compliance for the entire enterprise.
The need to manage complex procurement work streams with visibility across the entire source-to-pay cycle has created a demand for the suites—mini ERPs, if you will.
Most organizations aspire to use these technologies across source to pay. In fact, the entire market has responded through consolidation and rapid development, including Determine (consider recent history with the merger of Iasta, Selectica and b-pack).
Yet even in the new world of the suite cloud approach, many struggle to drive user adoption and compliance. They find it difficult to ensure that solutions are in line with user expectations. Failure to meet user expectations, drive adoption and ensure compliance kills many suite implementations.
* Based on the new challenges that we see in the “postmodern” ERP era, we share our thoughts in our latest online microsite, “Source-to-Pay Advanced by A Business-Centric Cloud Platform”. In this online newsletter we provide insight and background, as we present related Gartner research that addresses how to navigate the brave new world, and how the Determine Cloud Platform overcomes the challenges associated with large-scale source-to-pay suites.