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Managing hybrid ERP: new challenges for CIO

, August 26, 2014

Chief information officers (CIO) have been called to create a strategy to effectively plan for and manage a complex hybrid Enterprise Resource Planning (ERP) environment, as it back on the agenda with a different emphasis in today’s increasingly on-demand world, said a recent report.

ERP is morphing from a monolithic suite to a modular, multi-sourced and user-driven set of applications at the architecture epicentre of the networked enterprise, said the Accenture report.

Often referred to as the IT backbone of large organizations, ERP applications have been game-changing technologies since the 1990s.

As the ‘system of record’ for the enterprise, these packaged applications automate and support a range of administrative and operational business processes in finance (record to report), order management (order to cash), distribution and supply chain (purchase to pay) and human resource (hire to retire).

Why the renewed focus on ERP?

Companies, especially global enterprises, require a robust backbone of business functionality that only an ERP system can provide, said the report.

A reason for this ongoing centrality of ERP is that ‘big is the next big thing,’ according to Accenture notes in its 2014 Technology Vision.

That is, after a decade of headlines dominated by digital startups, the coming years are expected ‘to see the emergence of the traditional companies as digital giants,’ it said.

“Backed by their deep resources, enormous scale, and process discipline, these new digerati are about to rewrite much of the digital playbook,” it said.

Another factor is globalisation and the need for a common operating model across units and geographies, or after a merger/acquisition, while allowing for sufficient localisation, which can support and drive growth faster and more predictably by creating consistency in business processes as well as data management.

A distinctive feature of today’s ERP is that it is built inherently on a hybrid architecture, referred to as a ‘Two-Tier Model,’ that is, the combination of core ERP capabilities with cloud/software-as-a-service (SaaS)-based capabilities on the edge in areas such as sales, CRM and collaboration, all integrated with the ERP system.

In reality, however, the architectural environment is more complex than just two tiers, said the report. CIOs need to manage the legacy environment, ERP systems (sourced either through a public or private cloud), SaaS technologies, as well as various platform as a service, business process as a service or SaaS offerings from vendors and integrators.

Meanwhile, companies also need to consider the proper way to incorporate leading technologies including in-memory computing, analytics, mobile and social.

The move to a hybrid ERP architecture and the increasing presence of digital technologies has evolved the role of IT from a technology provider and caretaker to that of strategic business service orchestrator.

CIOs in the future will be service brokers focused on securing, managing and governing hybrid cloud computing services, as well as the existing on-premises IT footprint.

The winners of this new, more complex ERP environment will focus on a core set of activities, according to Accenture.

It will include shoring up their ERP system in terms of stability and open architectures, looking to low-cost solutions, such as public clouds, to meet non-critical needs, leveraging platform-as-a-service development in the cloud to meet customisation needs, implementing SaaS where it makes business sense, creating a long-term integration road map and building the architecture as projects they are approved and exploring in-memory computing as an important, viable solution in the near term. - TradeArabia News Service




Tags: CIO | ERP | hybrid | Accenture | managing |

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