Enterprises are under pressure to tighten their enterprise resource planning (ERP), especially operations that are spread across a global landscape with a variety of different providers, suppliers and third-party vendors in the mix.
New innovations in cloud, automation analytics, artificial intelligence and mobile are all contributing to the adoption of an as-a-service business model.
To help hone the full benefits that can be derived from this business model, we have coined the term the “Power of AND” to describe how businesses can integrate software, infrastructure AND business processes on demand to develop services that are modular, scalable and can easily plug into a number of different IT architectures. Moving ERP and supply chain management into an as-a-service model adds intelligence and flexibility to operations that can foster innovative practices across the business.
An attractive feature of as-a-service for ERP is how it can easily integrate into disparate IT systems to deliver fast, immediate results. Companies are exposed to the knowledge and experience of multiple vendor-agnostic specialists in their field that they would normally not have in-house. They can assemble the right combination of solutions to get the business where it needs to be.
Cost reduction is another major consideration. Buyers gain access to continuously updated software platforms that can scale to current demand. They no longer need to invest in technology based on possible projections, or implement everything from scratch.
Despite the numerous benefits of as-a-service, recent findings indicate companies are slow to get on the bandwagon. It may take another five years for a majority of large enterprises’ to allow their core ERP operations to be delivered as as-a-service. Small-and medium-sized enterprises are moving more quickly in this area which could potentially leave these larger enterprise at a significant disadvantage.
One company that is on the cutting edge of as-a-service is Rio Tinto, a diversified global mining company that migrated their core enterprise information systems and technology to a cloud-based, as-a-service solution. They consolidated all their existing ERP and information management platforms into the cloud, and used pay-for-use pricing to ensure that their services equaled the business demand for them. It pays based on what it uses rather than committing to functionality and capabilities that may or may not be needed. Rio Tinto expects to see significant cost savings through increased business agility and cost flexibility and from continued lower infrastructure prices.
For any large enterprise looking to adopt as-a-service for ERP, they need to first learn how to buy services piece-by-piece. This means educating the entire organization on the strategy and winning support for it. To get started, we recommend starting with an ERP function that is less business critical, regrouping after the initial test run to review what worked and lessons learned, and then mapping out a larger as-a-service business model implementation, starting first by geographies or business sectors. Buy-in from leadership is necessary for this approach. From there you can migrate more functions to an as-a-service model and gradually add experts in analytics and automation to manage the entire operation.
Michael Corcoran is a senior managing director overseeing growth and strategy for Accenture Operations. He has 17 years’ experience consulting large, global clients on business process outsourcing, business transformation and market strategy.