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ERP technology trends point to a 'bright' future, Forrester says

New technologies are making ERP and other enterprise applications more efficient and manageable, according to a new Forrester report outlining how to make the most of the changes.

Seven different technologies will push enterprise computing in new and challenging ways in the next five years, according to a new report on ERP technology trends by Forrester Research Inc.

In the report, titled Innovative Technologies Will Drive Enterprise Applications and ERP to a Bright New Future, Forrester contends that technologies including mobile, Software as a Service (SaaS),  business process management (BPM), usability, Platform as a Service (PaaS), social networks and elastic computing will dramatically change assumptions when it comes to ownership and support costs, process flexibility, insight and speed of delivery.

It all comes down to putting more control over enterprise computing in the hands of users.

“Application ownership and configuration is shifting to business,” said Paul Hamerman, an analyst with the Cambridge, Mass.-based research firm and the report’s lead author.

“Applications were traditionally built to require very skilled technical people to manage the applications,” Hamerman said. “That’s less and less true. So much of this can be managed by the end user and a lot of the technical management of the application will be essentially outsourced through the cloud. ”

The ERP value equation

New ERP software and enterprise applications for manufacturers will improve in a number of ways, including adding model-based configuration and BPM tools that let business process professionals modify ERP systems to fit their needs while avoiding costly and headache-inducing customized workflows and business rules, according to the report. At the same time, SaaS computing means that the cost of ownership will become more transparent and flexible, according to Forrester.

Mobile technology and new ways to collaborate will help to speed up process execution. “Mobile devices and social collaboration will enable processes to be executed in real time with higher levels of participation and insight,” the report states. Enterprise applications will also become easier to use. Packaged application user interfaces are increasingly reflecting what’s available on the consumer market and could one day even include things like three-dimensional technology and the ability to control screens by gestures through game technology like Microsoft X-box Kinect, which allows people to play games without using hand-held controllers. At its Convergence conference in April, Microsoft demonstrated how Kinect can be used to control its Dynamic AX ERP software.

“Imagine: Applications might actually become fun to use,” Hamerman said.

Reducing ERP costs vs. driving value

Developments in PaaS and SaaS are important because they can deliver incremental cost savings, according to SAP customers like Mike O’Dell, chief information officer for Pacific Coast Cos. Inc., a building materials manufacturer in Rancho Cordova, Calif.

And while they aren’t necessarily ways to drive more value out of the ERP, they free up resources to look at ways of doing that, O’Dell said. “It lets you focus on something else,” he said.

Mobile technology and social collaboration, on the other hand, are two of the best ways companies can wring more value out of their ERP, according to O’Dell. The two together, and mobile technology by itself, make the business more productive by freeing employees from their desktops and reducing the amount of “work about work”  –  the inefficient inputting into ERP of data and figures for essential tasks like sales. 

Recommendations for effective use of enterprise applications

Forrester makes the following recommendations to business process professionals:

  • Evaluate software vendors on innovation vision and execution. Measure current and prospective vendors against the list of technologies included in the report. Expect vendors to deliver SaaS, mobile and usability innovation in the next 12 to 18 months. More time, in the range of two to three years, should be expected for “execution maturity” in developing more scalable “elastic application platforms,” process flexibility and social collaboration.
  • Define your process innovation and roadmaps. “Build an inventory of business processes, rate their innovation potential and match the appropriate technologies to the innovation opportunities,” the report recommends. Such an inventory should serve as a solid base for deciding what technologies can deliver value cost-effectively.
  • Expect frequent upgrades. The pace of innovation in areas like mobile technology and social collaboration will require updates every two to three years.
  • Process flexibility should be a top priority. Next-generation software technologies should help companies alter their business processes more easily. “Build for continuous change by exposing configuration content to business process pros and by loosely coupling application components,” Forrester states.
  • Develop and foster new approaches. Innovation can be stoked with trial processes that establish proof of concept within three months. Companies should recruit business process experts who gravitate toward process innovation and can take the customer’s perspective, connect back-office and front-office processes and work with vendors to refine products.

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