CIOs, Where Are You on Your ERP Journey?

The start of a new year is a common time for goal setting, but unfortunately, many goals end up falling to the wayside and the year carries on. What’s the reason behind that? Oftentimes, it can be attributed to not setting specific goals, not being all-in in pursuit of change, and not seeking support from peers to help ensure that change happens and keeps happening.

When it comes to major change initiatives, businesses also suffer from frustrating gaps between aspirations and reality. Enterprise resource planning (ERP) systems are a case in point. Today, the vast majority of business leaders know the cloud is the future. Inflexible, purpose-built legacy ERP systems cannot deliver the agility and transformation businesses now require to compete and succeed. No surprise, then, that moving to a cloud-based ERP is a top priority for 94% of organizations, according to IDC research. 

Yet just 10% of companies have a full ERP modernization strategy in place. Many leaders may resolve to modernize their ERP—and then watch as efforts to transform what’s often considered the spine of any organization flounder on the shoals of complexity, status quo bias, and inertia. 

The crucial first step in any change journey is to understand the starting point. The ERP Modernization Maturity Assessment, developed by IDC in partnership with Workday, is a new tool designed for that express purpose. It allows businesses to compare their current ERP system to industry peers, avoid common modernization mistakes, and receive custom guidance based on where they are on their cloud ERP journey. 

Agility Above All

While each ERP modernization effort is unique, businesses are clearly pursuing common strategic goals. First and foremost, according to IDC research, is maximizing agility to support business changes. But organizations can enable agility in two different realms via ERP modernization, the market research firm notes—one short term and one strategic. 

The former involves the ability to create short time-to-value IT solutions to meet new business requirements. This capability could stem from best-of-breed cloud solutions added on top of an existing ERP platform, for example, but it’s not a viable solution for the long term. Strategic agility—the ability to adapt to large market disruptions and continuous business environment change—can be achieved by utilizing a more modern, flexible, and cloud-based ERP platform, according to IDC research.

For this reason, CIOs should look carefully at the benefits of a cloud-native architecture that—along with delivering short-term and strategic agility—can provide other significant advantages including scalability, having all users on a single version, and up-to-date security. A common data core can help drive continuous planning, execution, and analysis.

The 4 Stages of ERP Maturity

While 75% of organizations have an ERP modernization strategy in place, the scope of that strategy and its implementation status vary widely, an IDC survey found. An even higher percentage of organizations—85%—say their main corporate ERP system will need significant investments to meet changing business needs over the next two years.

Across the business landscape, there are two broad approaches to ERP modernization, according to IDC. One is ERP preservation, which can involve incremental changes and ad hoc automation, or innovating around the core existing system via outside platforms and apps. The other is ERP evolution, which involves migrating to an entirely new and next-gen cloud-based ERP system while in essence reimagining what an ERP can be and do. IDC found “innovating around the core” to be the most prevalent modernization approach, regardless of an organization’s maturity level.

The new maturity assessment is based on the current ERP environment, strategic initiatives, and business needs and objectives. Depending on results, it places a business within one of four stages of ERP maturity: minimalistic, opportunistic, managed, and reimagined.

IDC found that within the four stages, highly mature organizations are twice as likely to achieve an array of strategic benefits including improved agility and improved profitability through better planning and forecasting. Importantly, business outcome priorities relative to ERP investment decisions vary by maturity stage: While less-mature organizations focus on cutting costs, highly mature organizations focus on growth.

The maturity assessment provides organizations insight into their current strategy and a comparison to their peers, as well as a detailed report featuring essential guidance on potential gaps in technology, clear next steps, and how to avoid critical mistakes. 

Don’t go it alone—leverage the assessment findings and lean on your network of support to make change stick. Start the process by assessing your organization’s ERP maturity today.