Guruprasad GaonkarBlog

Inverting the ERP pyramid: New reality in the next normal

By Guruprasad Gaonkar, APAC SaaS Leader-Office of Finance (ERP) & Digital Supply Chain

We are witnessing a fast-forward button on history, which translates into experiencing “10 years of change in one week.” Businesses are tapping into their capital, computational power, and knowledge to change and adapt. 2020 exposed cracks across every aspect of traditional and current business models. In another heavy dose of reality, organizations discovered fatal flaws in their digital transformation. On the other hand, the crisis spurred a crucial boost to online customer interactions, overnight switch to work-from-home, ingrained rapid decision making in business and strategy, and introduced a “zero-touch” world.

Fast-forward to 2030, a job market where 85% of the jobs do not even exist yet, robots will promote intelligent operations 24/7, and 75% of the current S&P 500 companies will be replaced. This reality is nearer than we think, fast-tracked by 2025. The many changes we already see today are out of necessity, and the company’s short-term actions to do so were not easy but take note of the fastest lead time. These actions meant right-sizing operations, rethinking sales channels, adopting a new P&L, and associated costs to address shifting preferences and behaviors. The world is no longer linear, and changes are happening at a lightning speed. The Greatest Reset of Everything is taking place as we speak — a reset to restoring trust, to reset from rapid iteration, and a reset to Everything as a Service.

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Reset to restoring trust: Go Slow to Go Fast

Over the next few years, agility will take on a new meaning: the ability to explore multiple cash flows and supply chain domains at once and combine them into something valuable. CFOs (chief financial officers) will need to work with all stakeholders, to synthesize transformative ideas, supplementing them with data, and then working with the CEO to bring it all back to the board. In order to make a greater impact, businesses need to go slowly, as they need to prioritize building trust among their employees and other key stakeholders; collaborating across functions; and reaching out early and often to investors to reset performance expectations.

According to Aurobindo Pharma, one of India’s leading pharma company, digitalization is an evolving journey. One needs to start slow but have a bigger vision. Already matured processes will be easier to digitalize. However, above all, you need to have a plan on how you will manage the change and adoption of digital, in accordance with your organizational culture.[1]

Reset from rapid iteration: To Inverting the ERP Pyramid

Complexity is a “silent killer” of change as it creeps in unnoticed. Instead of keeping up with customers, complexity leads to management spends most of its time on processes. In a survey[2], 85% of CEOs have ceased to be value creators and they blame factors like complexity for their woes. The current situation is demanding a reset from iteration, to derive significant operating leverage without destroying value. Until now, we have had the luxury of working with technologies we understood well. Every generation of ERP packed on more and more functionality but worked exactly the same way as the last generation and added complexity over time. So, with high switching costs & associated risks, it is not surprising that rapid iteration emerged as a key strategy.

Westpac, one of Australia’s largest banks, will use Cloud ERP and EPM to reduce their cost & complexity while helping to meet regulations for the New Zealand business to operate independently from their parent company in Australia. As an established bank with a long history, Westpac turned to the cloud to simplify its IT infrastructure and create a consistent customer-centric experience across the multiple brands they operate in Australia and New Zealand. This gave Westpac the edge it needed to position itself better in an increasingly regulated and competitive industry.

Going forward, the challenge will be to work with technology that we do not understand well at all. Not every organization on its own will be able to understand these technologies and how they relate it to their businesses. By the time many of these technologies hit their stride, it may be too late to catch up. So, it is imperative to start exploring early.

Reset to Everything as a Service: To frictionless innovation

A tech-enabled transformation will increase shareholder return by 9% to 22% according to a report[3]. Consider this, CFO’s will have 92% of transactions automatically reconciled; global intercompany balances across hundreds of legal entities reconciled in 90 minutes; expense allocations reduced by 98%; accounting for open purchase order accruals globally is complete in just three hours; and, the company reducing its manual accounting by 35% with multi-ledger, multi-currency journals.

Technologies such as AI, ML, IoT, and blockchain are constantly evolving and hence their value to businesses is also growing. The implementation of these technologies is fast becoming synonymous with growth and profitability[4]. Blockchain-enabled ERP can help automotive companies to shift to renewable energy conforming to OECD supply chain guidelines with full traceability. With eCommerce driving demand-driven supply chain, shipping and logistics companies will transform how goods are moved across parties and companies with IoT embedded into ERP, as movements will be tracked and machines will be capable to reorder items and even request maintenance when needed without any human intervention.

Apollo Tyres, one of the largest tire manufacturers, has been working on upgrading software and taking advantage of cloud-based technology. Apollo has radically changed its supply chain with an integrated cloud application suite embedded with evolving technologies like AI, IoT, etc. Now, they are able to track their shipments everywhere via a weblink and hence have brought in transparency in the whole supply chain[5].

In other words, self-driving ERP as a service will be a platform leading to business outcomes driven by continuous frictionless innovation as a service, not just a point application aimed at production or operations. This evolution of ERP as a service into enterprise business capabilities is driven and controlled more by the business than by IT.

Reset will inspire leaders with bold goals, commit to continued simplification to building resilience in the next normal, and celebrate wins along the way.