I am excited to be preparing to launch my annual 2014 ERP survey. This will be my 8th and I’ve learned a lot through the years about how to ask the questions and how to best analyze the results. Since founding Mint Jutras in 2011 I have gradually shifted the timing of the survey, so that now (and in the future) it will be launched early in January, and I will use and reference the data throughout the year. As most of you know, I collect a massive amount of data. I try to be consistent with many of the questions from one survey to the next in order to make legitimate year over year comparisons, watching prior trends and spotting new ones. But each year I remove some questions that didn’t produce much insight (that’s how I learn) or that really don’t change much in one year. I do that to make room for something new.
It will be interesting to continue to watch trends, particularly around:
- Buying cycles: Last year the percentage planning to purchase a new ERP within the next three years more than doubled from 24% to 47%, with another 15% undecided.
- Deployment preferences: In the 18 months between the 2011 and 2013 surveys, the percentage of companies that would consider a traditional on-premise deployment dropped from 56% to 27%. Preference for both SaaS and hosted models increased.
- ERP is reaching more users: On average 50% of employees actually use ERP today, including more executives. All executives have access to and regularly use ERP in 47% of companies, a far cry from just a few short years ago. We suspect the growing use of mobile devices has been and will continue to be a game-changer here.
- Results measured since deploying ERP rose considerably with improvement percentages rising from the 5-7% range to double digits. These are improvements like cost reductions and improvements in on-time delivery, customer retention and inventory accuracy. “World Class” ERP implementations produced results in the 20-24% range. Was this an aberration last year or is new technology fostering better results?
What’s New This Year?
But what I am even more excited about is our new approach to capturing information about how the full spectrum of business applications, with ERP at the core, are implemented. Back when I started benchmarking ERP in 2006, I set out to quantify its usage. My first five annual surveys were done while I was at the Aberdeen Group where I came up with a formula for determining the percentage of ERP that was actually used. When I founded Mint Jutras I used what I had learned in those five years and modified that formula in order to get what I felt was a much more accurate result. But after eight years of this type of measurement, not only has this become old news, it is also harder to get an accurate read.
As I have been saying for several years now, the footprint of ERP has grown to the extent that it is becoming more and more difficult to determine where ERP ends and other applications begin. That is not only the case when covering, writing and talking about ERP, particularly as integration capabilities have improved, but for users as well. In prior blog posts this year I have discussed the relative advantages and disadvantages of “tightly integrated” versus “loosely coupled” applications. But this distinction is not intuitively obvious to the typical ERP user that takes our survey, particularly since typically less than 40% of respondents are in IT. Most are business users and may not have intimate knowledge of the purchase or the architecture of the product itself. They simply use ERP to run their businesses. And of course, that is primarily what we benchmark.
Modules versus Extensions: No longer the right question
In prior surveys I distinguished between ERP “modules” and “extensions” to ERP – those separate applications that might surround and complement it. I asked which modules were implemented (fully or partially) and then asked (separately) which additional applications were implemented. But as the footprint of ERP has grown, the overlap between these two lists also grew. While having both for any particular function might happen occasionally (e.g. a manufacturer might use supply chain planning functions of their ERP and also complement that with a separate “best of breed” solution), it would be the exception and not the norm. And yet, the number of instances where survey responses indicated they had both a module and an extension for the same function began to grow, casting a shadow of doubt on the validity of the responses. That told me it was getting too hard for the survey participants to answer the questions.
So this year I am changing it up with a different purpose in mind. This year, we will
- Determine current state of implementations with a single list of functions, including traditional core functions of ERP (e.g. general ledger, accounts payable, accounts receivable, inventory control, order management, purchasing, etc.) and more advanced or “edge” functions (e.g. warehouse management, cash flow planning, BI and analytics, employee expense reporting, supplier collaboration, etc.) that might be a module or a separate application. The survey respondent will indicate whether it is (perceived as) part of ERP or not and, if separate, the level of integration.
- Ask “what if?” Maybe this current state came about because of limited functionality and technology at the time of purchase. If the respondent were making the same decisions today, how would they go about it?
- Ask “What next?” Given the state of their current implementation, what are most likely next steps? Add new components? Trade it all in for newer technology? Replace certain embedded functions? Eliminate separate applications now that ERP does more?
- Have them choose up to five areas they are most likely to invest in next.
While this will tell us a lot, we’ll also drill a little deeper into plans for two areas, which happen to be among the hottest categories on the market today:
- Human Capital Management (is it a fluke the big ERP vendors are buying these applications?)
- Business Intelligence and Analytics (Is it time to take these tools out of the hands of IT and put them in the hands of the business user?)
We have also added a couple “Mobility” questions, along with one that will determine just how “usable” ERP data is.
If you are an ERP user, look for a link to the survey in the beginning of the year. We welcome your response.
If you are an ERP solution provider and think
- The data we collect will be useful to you in making product roadmap or go-to-market decisions
- Mint Jutras might be able to develop some good educational content for you with our distinctive “call to action”
- You might like to benchmark your customers against our World Class
Please shoot me a message or contact Lisa Lincoln (firstname.lastname@example.org)
Lisa and I both wish everyone health and prosperity in the coming year!