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Convergence of CRM+ERP: Myth or Reality?

Introduction

Over the last year, I have noticed that increasingly we are being asked to review whole system CRM and ERP requirements. I find that clients are now looking for a totally integrated and streamlined system or future system.

So why is this?

Reflecting on changes over the last few years, I think there have been three key drivers at work here:-

  1. Emergence of Cloud into mainstream
  2. Platform approach
  3. Vendor ecosystem growth

Let’s examine each of these key drivers?

1/ Emergence of Cloud into mainstream

It is now rare indeed where we came across a mid-sized organisation looking to stay on their legacy on-premise system, be this CRM or ERP. Most IT departments I talk to are now pushing for cloud based solutions and without going into the well-trodden path of comparing cloud versus on-premise benefits, the main factors driving this in my view are:-

  • Cloud is now mainstream. The last five years have seen a dramatic change in attitude, 10 years ago, we had the innovators, now every-one wants to be cloud focused. A Bitglass 2018 analysis of more than 135,000 organizations showed cloud adoption has topped 81 percent – a 37% increase since 2016 and a 238% increase since 2014
  • Office 365 has been a key business driver here for many organisations in moving to the cloud, so Microsoft have done an excellent job. Some figures suggest over half of organisations have now deployed Office 365. After all, once your email is cloud hosted, seen as your Users most sensitive app in daily use, where next?
  • Cloud access and security concerns allayed. Vendors have spent large amounts of funds in ensuring security with specific Trust websites, for example Salesforce and Microsoft on this topic
  • Uptime Availability. With 99+% service levels available, this again supports this cloud transition and increases business confidence. What internal IT department would be able to afford to offer 99+% availability, let alone guarantee this all year round!
  • Subscription or pay as you go model is widely accepted. For many, this is now their preferred pricing model. Clients like to budget and with cloud offerings, the iceberg analogy applies but in reverse, where most of the costs are all highly visible, there are no ‘hidden costs’ such as unexpected server replacement, maintenance and services upgrades.
  • Always up-to-date. With regular upgrades built-in the subscription. For instance, cloud enables Microsoft to have 2 upgrades per a year and Salesforce 3 per year, SAP Hana has a major update per year and this is replicated across the cloud, removing or reducing another IT headache.
  • Inter-connectivity. The linking between these cloud apps is one of the secrets to the success for the rapid rise in cloud deployment. All of a sudden, the big expensive integration problem can become a lot smaller and more manageable with cloud apps.

2/ Platform approach

The CRM and ERP vendors have spent many millions of dollars in moving their offering to the cloud, so that today, all major mid-market vendors have a platform offering, be this Oracle, SAGE, SAP and Microsoft whilst Salesforce has always been cloud based since 1999. In fact, I would argue you would be hard pushed nowadays to find any major on-premise new application launches in the last 5 years in the Western World where you have an advanced IT infrastructure and ever-improving broadband speeds.

There has been this massive investment by the likes of Salesforce and by Microsoft since 2015 on creating platform suites. This is replicated across the Software world with Oracle and SAP. But, first what do we mean by a Platform. Well for me, the Technopedia.com explanation sums this up very easily as “a platform is a group of technologies that are used as a base upon which other applications, processes or technologies are developed”

Taking two examples I know well, Salesforce have their Lightning platform, upon which vertical industry solutions have been built, including for example, Veeva, a primarily life sciences application, whist Microsoft’s Azure and Dynamics 365 platform using the common data model is becoming widely used as a foundation platform and across industries, here for instance Peppermint, a legal solution, built on Dynamics 365 and SharePoint has been successful in its vertical market.

This platform approach has been widely adopted by other leading software brands such as Oracle Cloud platform and SAP with its SAP HANA platform.

A key business driver is the need for a single shared view of the customer, currently not as easy as it sounds with older legacy systems. Indeed, a recent survey from Salesforce in their State of IT survey from 2017 highlighted this as key objective. This problem for many CIO’s is still being hindered by having multiple legacy applications that are hard to integrate. By adopting a Platform approach this can be a major factor in starting to resolve and reduce this issue over the long term.

Now as clients are embracing buy into the platform approach, it is this platform upon which applications are developed by both the vendors themselves and their ever expanding eco-system of third party partners.

3/ Eco-system growth

The third key driver in recent years in my view has been the tremendous growth of integrated vendor supported and promoted eco-systems. All the major players have been actively encouraging and supporting third party companies to produce add-on's or build vertical solutions on their own market place to augment their core offering and fulfill functional niches. Taking just four examples, Salesforce AppExchange, launched its own marketplace for third party applications way back in 2006 and now has over 3500 apps available that interconnect and which are all downloadable from their marketplace for any client.

Similarly, Microsoft has its own marketplace for third party apps, called AppSource, whilst Oracle has Oracle Cloud Markeplace and SAP its own SAP App centre. Indeed, such is the importance of this new market for apps, Forrester, the industry analysts, are now measuring these marketplaces in a new Forrester Wave annual review.

The strength of these online marketplaces for the vendor’s platform is in being able to offer their clients tried and test tactical solutions to missing functional or process needs and supporting their core product offering. Of course, added to this, the major add-on niche application players such as email marketing, e-documentation and marketing automation strive to have their own inter-connectivity app on these marketplaces to the key CRM/ERP vendors to support their own offering.

Conclusion

Today, the major providers are able to offer the complete CRM-ERP solution with their platform integrated with a marketplace eco-system of third party apps. And to take just one example from Microsoft as an illustration, their Dynamics 365 for mid-sized organisations has over last few years expanded to now offer a complete Lead-to-Cash suite of core applications, so for example this could include:-

  • Dynamics 365 Marketing: capturing visitors to your website converting them into Leads
  • Dynamics 365 Sales: Supporting engagement in the Lead to Opportunity process and creating Quotations and activities
  • Dynamics 365 Business Central: Financial transactions, shipping through the core ERP system ( better known as well-respected Navision ERP product)

Any niche functional gaps such as e-documentation for example can be fulfilled with a choice of approved apps from their online marketplace app ecosystem, Appsoruce

The key point is in this example is there is: One Vendor, One Platform, One Eco-system is now able to support this whole end to end Lead-to-Cash process in the cloud at an affordable price and without the endless integration issues of previous on-premise software.

As I stated at the start of this post, suffice to say, more and more clients are taking less of a tactical approach and are now considering first their overall CRM and ERP requirements and are recognising the remarkable transition of the last few years in being able to move to a single Platform. Clients are now looking at their plans much more holistically in a way that was probably not feasible or possible even just 5 or 6 years ago.

The myth of a single platform approach even just 5 years ago is now rapidly turning into a reality across the whole IT sector. You can argue if this is 100% complete for all the brands mentioned, but the direction of travel is clear and certainly in the next 5 years, they will be no more myth just the reality of an ever converged CRM–ERP solution being an achievable goal.

In my follow up article to this post, I intend to give some pointers on the next steps if you are just embarking on this transition to the cloud.

28th February 2019