What Does The Future Look Like For ERP Systems In South Africa?
The future of ERP systems in South Africa is exciting. South Africans are known for their innovation, risk-taking, entrepreneurship and “Boer maak ‘n plan” (farmer makes a plan) positive attitudes. So as economic climates evolve and tighten, South Africans are open to systems that will gain them the edge over less flexible competitors. Enter ERP III… Wait… stop the bus (as we say here in South Africa) what happened to ERP II? Let’s take a step (or two) back…
The Origins of ERP
Material Requirements Planning (MPR) use on servers was the starting point of today’s ERP systems. They tracked stock needed during manufacture and provided basic information to managers as to when stock needed to be ordered so that there wouldn’t be a halt in production. MRP grew into MPR II which tracked purchasing, manufacturing and payroll which could tie into an organisation’s accounting system.
Additional modules kept on being added, as the advantages grew apparent, which lead to the birth of basic ERP as we know it – the proper management of organisational resources. These typically covered:
- Materials management (procurement, storage, scheduling)
- Production planning and control
- Accounting and finance
- Sales and marketing
- Document management
- Data management
The Birth of ERP II
Early ERP systems were (and some still are) limited to a single internal network within the organisation (and there may very well be good security reasons for keeping it that way). However, more modern ERP systems can now connect to the internet to gather and share information from other sources. The three main areas that ERP II unlocks are:
- Plan and analyse operations between different organizations.
- Exchange data with partners along the supply chain.
- Share inventory and shipping data from along the supply chain with clients.
ERP II systems can use a variety of applications, but they usually include supply chain management (SCM) software, customer relationship management (CRM) software and e-commerce software (often through the use of API functionality).
The Here and Now
The term cloud ERP is more commonly used rather than ERP II. Cloud-based ERP systems allow companies of any size to use ERP systems without the need to store the software on their own servers. For a monthly subscription, small businesses can use ERP to manage their information on servers hosted by the software company. Large companies with their own servers can use cloud-based ERP that coordinates with systems they already use, in a server-cloud hybrid situation.
The costs associated with having a hosted (cloud) solution are generally offset by those incurred when having to run and maintain the organisation’s own servers bearing in mind, that in South Africa, one always has to take the possibility of load-shedding into account and factor in the costs of running generators (or alternative energy sources) and UPSs (Uninterrupted Power Supplies) as well.
The advent of cloud ERP systems ushers in the next generation – ERP III
Into the Future
A third-generation ERP system can be defined as a flexible information system incorporating web-based technology which enables organisations to offer increasing degrees of connectivity, collaboration, and interaction through increased functional scope and scalability.
It embodies multi-organizational enterprise management concepts. This is where sections of companies work with sections of other different companies to deliver complex product-service systems using a multi-organizational enterprise (MOE).
A MOE will often result from a joint venture between companies as they focus on collaboratively delivering particular product-service systems (e.g. the construction of a building or bridge, the delivery of a complex integrated web-based shopping experience). Critical interdependent and dynamic strategic relationships will develop between these company sections based on their relative core competencies. MOEs may evolve and dissolve as required.
In other words, it takes the idea of extending back-office system capabilities to impact markets, customers, and build the “borderless enterprise”. The intricacies around the flow of information, the confidentiality, and security thereof would need to be given careful consideration.
Over and above integrating multi-organisationally, research from Harvard Business suggests that digitally engaged companies across virtually all industries are “26% more profitable than their average industry competitors” and “generate 9% more revenue with their existing physical capacity
Organisations need the ability to synthesize and integrate structured data (transactional and market data), unstructured data (social media, reviews, sentiment, forums, etc.), and third-party data sources into their analytics. Today’s major components of the digital economy, whether they are social, mobile, or the “Internet of Things” rely heavily on data analytics.
In today’s economy, the marriage of ERP and mobility, with social media and product or service usage information, are the keys to the future.
The future digital economy is still evolving. In the near future, it will consist of a few key components: your ERP system, data analytics, mobility, social, external data streams, and the Internet of Things (or, some form of product or service usage information).
While predicting the future of technology has proven to be difficult, the strategies for producing business results in the digital economy today, require a technology roadmap that prioritises data analytics, mobility, and marketplace product or service sentiments to integrate into your ERP application.
Omni Accounting ERP system is constantly evolving to offer functionality that will assist in helping organisations leverage today’s digital economy.