In an article that my colleague Rudy Lukez wrote in June, he was spot-on when he noted that one of the biggest reasons companies hesitate to upgrade on-premises ERP systems is because previous projects have sometimes been long on effort and short on return.
But increasingly, we’re noticing that companies are holding off on ERP upgrades because they’re concerned that their current vendor—or those they’re considering—may not be able to provide the functionality they’ll need in the future.
For companies ready to move on from ERP technology based on ’90s-era requirements, understanding the path that vendors plan to follow is an important first step. In most cases, companies are looking for ERP vendors that are offering open-platform solutions that can easily integrate with a variety of hardware and software products.
Because open platforms don’t lock-in companies to a single provider, businesses can more readily take advantage of best-of-breed products developed by other vendors. And because open platforms are built on standard code, there is usually a ready supply of IT professionals who know how to work in it.
But there is also a camp of ERP providers tying solutions to proprietary platforms. For example, SAP is creating substantial market buzz with its S/4HANA in-memory product, citing its computing speed as the primary value proposition.
Decision-makers at many SAP shops aren’t making any commitments, though. According to Rimini Street, which provides third-party support for Oracle and SAP customers, one-third of the SAP customers it surveyed last year were not planning to migrate to S/4HANA, and more than half said “maybe.”
Chief among their concerns is the return on investment and the fact that S/4HANA is an early-stage product. But companies may also be concerned about the challenges of working within a proprietary environment.
For example, while proprietary systems can generally accommodate third-party solutions, their integration can be more difficult and costly. And if adjustments are made to the proprietary platform’s ERP solutions, links to third-party solutions may be compromised.
Integration with new applications, especially Internet of Things (IoT) technology, may be more challenging with proprietary systems. Cisco forecasts that 500 billion devices and objects will be connected to the Internet by 2030.
The vast majority of these device sensors run on Java, an Oracle technology. How easily a company’s systems can connect to these devices will be become increasingly important to decision-makers.
For companies eager to transition their ERP solutions to the cloud, proprietary systems may constrain the scope available to them and offer reduced functionality.
Other concerns about propriety systems worry decision-makers—especially concerns related to migrating existing data. For example, the workload required to migrate data to the S/4HANA platform from legacy systems is unclear. And because the S/4HANA database is relatively new, its reliability has not been proven.
A large number of current SAP customers rely on rigorously tested and proven Oracle Database products to store their information. For companies that have come to rely on both SAP and Oracle technology to streamline their mission-critical processes, walking away from a proven database component may not make sense, especially if the ROI is unclear.
Moreover, companies are likely to demand that the core of their ERP technology be sufficiently flexible to support real innovation. As rock-solid as on-premises solutions can be, the speed at which companies can innovate in the cloud is much faster.
For businesses to lead their markets today, they need a digital foundation that enables them to outpace the speed of innovation in their markets. Businesses are increasingly realizing that this level of flexibility can be found only in the cloud.
What so many business leaders really demand is proven ERP technology that gives them the flexibility to address market opportunities swiftly. Increasingly, they want to transition away from on-premises systems to dramatically reduce their costs, and free IT professionals to focus their attention on more digital value-generating activities rather than upgrades.
As IDC noted, businesses need an agile platform to quickly build, test and scale new applications services to react to digital disruption. Without that capability, companies risk their market share and growth opportunities.
Oracle ERP Cloud is helping companies transition away from legacy on-premises software, with everything from financials and procurement to supply chain, manufacturing and project management solutions.
With our Platform-as-a-Service offering, we provide a foundation and components that have wide awareness and acceptance among enterprises. This open platform for mobile, on-premises and cloud applications makes it easier to build and maintain business solutions using a comprehensive and unified set of integrated components.
As a result, organizations can optimize application development to address needs across IT and individual lines of business.
I strongly believe that technology leaders need to partner with open platform solution providers with a clear and long-term roadmap that will help them reach their destination.
If you’re concerned that a proprietary solution isn’t going to get your company where you want to it be, I encourage you to learn more about Oracle ERP Cloud, or download the eBook, Your Complete Guide to Modern ERP.