Why do ERP Systems still dominate over Online Platforms in our Industry?
Smart and successful businesses today understand themselves as part of larger supply chains. Choosing adequate digital tools to manage a company's processes in this understanding becomes even more important to constantly evolve and stay ahead of the competition. The right solution should allow for optimal intra-functional process handling and cross-functional as well as inter-company collaboration at the same time.
ERP systems attempt to serve to the first two needs of a business organization: optimal intra- and cross-functional process handling. In fact, ERP software integrates all of a company's processes into one system including planning, purchasing, sales, marketing, finance and more. It serves as a central hub that all business functions feed into and exchange through for running the business together. Rather than each department working with different technology platforms, an ERP creates one main application that in principle allows all departments to “speak the same digital language“.
In reality, all users of ERP systems know that one of the major weak points of such systems are the interfaces between the different functions and department processes. From a software perspective, it does not matter if an interface is to be established within the same system or different systems. The main priority is that it has to work and allow for frictionless exchange. That’s all that counts. The endless maintenance and updating of ERP systems show that offering “all out of one hand“ is a proven, huge and very costly claim. Even if in the end all processes, intra- and cross-functional, allow for optimal efficiency, the worst for any company is achieved: total dependency on one system provided by one supplier.
Why go down this road when ERP systems can only solve two out of three problems anyway? ERP systems do not address inter-company collaboration. At this point, the modern alternative to ERP systems comes into play: online platforms that are built to address all three problems. These platforms produce optimal intra-functional, cross-functional and inter-company collaboration. As online systems they are easily and simply integrated into any business at a low indirect cost. Typically, they are user-friendly and deliver results from day one. Online platforms are constantly maintained using the feedback of multiple users and sources at no extra cost for the individual user. Additionally, there are practically no switching costs so users can “multi-home“ or switch from one solution to another at any given time. Users do not deliver their business into the hands of one software supplier. Also data exchange between online platforms with ERP systems via pre-configured APIs is a standard. And, the best and biggest advantage of online platforms is that they raise the treasures of inter-company collaboration: all members of a supply chain work on the same system within the same streams of workflows.
So why is our industry still mainly relying on proprietary software solutions and hasn’t switched to the use of online platforms?