Postmodern ERP or Modern ERP? How to Choose the Best Fit for Your Business
By Ashley Ellington
If you’re shopping around for an enterprise resource planning (ERP) solution, you’ve probably come across a new buzzword: “postmodern ERP.”
Coined by Gartner, postmodern ERP is a new approach to the one-stop-shop, behemoth ERPs that big enterprises typically use. Instead of seeking every business solution from one application, it harnesses the full benefits of an ERP solution while adopting a more multi-system integration approach that results in a unique, nothing-like-what-your-competitors-are-using, unified business software system.
Understanding what elements of postmodern ERP to implement in your ERP strategy will ensure you get the maximum benefits of a more efficient, tailored solution that is a perfect fit for your unique needs.
During the 1990s and 2000s, ERP software became IT infrastructure must-haves. However, by the mid-2000s, after masses of implementation failures, ERP systems started getting some negative attention. That, combined with their heavy price tag and traditional inflexibility, made many believe that the days of ERP systems were numbered. Furthermore, these intrinsic shortcomings lead to more and more organisations implementing alternatives to the traditional all-in-one ERP solution.
Enter the “postmodern” ERP system, defined by Gartner as:
A technology strategy that automates and links administrative and operational business capabilities (such as finance, HR, purchasing, manufacturing and distribution) with appropriate levels of integration that balance the benefits of vendor-delivered integration against business flexibility and agility.
A timeline of ERP
The ultimate goal of a postmodern ERP strategy is to identify the best applications available in each particular business function, and then ensure they can integrate well with one another where needed. These systems may be hosted either on-premise or in the cloud, depending on what is required. Postmodern ERP strategies can include:
- Integrating best-of-breed alternatives to replace certain modules within larger ERP suites. This strategy makes use of a modern ERP solution, with additional integrations from other applications. For example, you may prefer to integrate a more powerful, built-for-purpose HR and Payroll system, such as Sage 300 People, with your ERP solution, or Elite for Point of Sale which can integrate with ease, to name a few.
- Designing a new ERP suite altogether. This strategy uses only best-of-breed applications to design a custom, conglomerate solution. For example, you may choose Sage Intacct – with its strong financials, projects and contracts capabilities – and then integrate it with an almost limitless number of best-of-breed solutions for your CRM, document management, warehousing, HR and Payroll, business intelligence, and BEE needs.
Design Different Strategies for Different Applications
A key aspect of a postmodern ERP strategy is that it is not an off-the-shelf solution. Because of this, it can be difficult to strategise without possessing in-depth knowledge of the organisation, its systems, its needs, and its goals. As a result, two organisations can have ‘postmodern ERPs’ but one’s solution will look nothing like the other.
Typically, there are two or more strategies for postmodern ERP. According to Gartner, most ERP applications can be grouped into an “administrative” or an “operational” category:
|Administrative ERP Applications||Operational ERP Applications|
• Human resources
• Indirect procurement
• Supply chain management
• Order management
As a result, it is typical to have several deployment strategies, based on the number of software vendors and applications that need integration. For example, a midsize manufacturer might have a postmodern ERP strategy that looks like this:
- Your core business operations, manufacturing, and production are housed in one integrated suite, hosted on-premise or privately hosted in the cloud.
- Your sales and CRM, HR and Payroll, and core financials systems are cloud-based, and are integrated into your ERP solution as they better meet the unique requirements of your business.
Postmodern ERP strategies are contingent on the integration capabilities of the applications. Without communication between your applications, it is like reverting to the bad old days of spreadsheets and paperwork.
Modern ERP or Postmodern ERP?
The benefits of modern ERP are still highly meritorious, and if your organisation has no business solution, or uses an outdated or homegrown ERP that limits growth and speed, then a SAAS business application is a good fit for your business. Modern ERP solutions are highly customisable and configurable and work well for organisations whose business needs are met by their in-built functionality.
Additionally, we’ve developed an Integration Layer for Sage X3 ERP, so that best-of-breed applications are able to integrate seamlessly with core ERP functionality. This gives you the stability and functionality of modern ERP, with the benefits of a postmodern ERP integration strategy.
A good way to determine if postmodern ERP is right for your business is to consider size and operational needs.
On-premise or privately hosted in the cloud
|SAAS / Modern ERP|
|These include growing midsize to large businesses typically with multiple locations or subsidiaries.||Companies with limited operational applications and fewer logistical needs.|
|Well-suited for a postmodern ERP approach due to complex operational requirements, broad geographical reach and a need for greater business agility in a highly competitive environment.||
Better suited for modern, all-in-one SAAS ERP solutions.
The Way Forward
Ultimately it is up to the business owners to decide on the best ERP strategy and deployment model for the business. We understand that organisations’ needs change, and that business solutions need to facilitate quick decisions and support rapid business shifts.
If you’re not sure, or would like someone to advise you on what strategy would work best for you, chat with us.
We are experts in traditional ERP as well as postmodern ERP strategies, integrations, and deployment, and can help you choose the best solution that will best meet your current and future business needs.