Most organizations deploy ERP to manage their transactions, keep their records & data and to provide a platform for business intelligence tools for giving information to management/business teams. Yes, there are other applications of ERP also that are used in organizations but broadly, the above mentioned three uses are the most sought after objectives for ERP deployment. The latest thought process revolves about classifying your IT systems into three major kinds, which are:
- Transactional Systems - These are the systems that form the foundation for your enterprise and manage the information necessary to run your business. These are transaction oriented and are core to financial reporting and regulatory compliance. Their pace of change is slow, with their life span measured in decades. They're most likely delivered on premises traditionally but now these are being evaluated as SaaS or even further – using clouds computing
- Differentiation Systems - These are the systems that help drive differentiation for your organization. They connect to customers and trading partners, as well as help speed time to market and overall agility. They are more collaborative in nature, and while they leverage data from transactional systems, they capture and maintain additional information also. They are relatively stable and have a life span of anywhere from three to ten years. Many of these systems will be deployed on premises, but some may be delivered as a cloud application. These applications are also called as best of breed systems popularly that flank your core transactional system and provide not only the extra features that are required to project your differentiators in market but also help in making the processes further lean
- Transformational Systems - These systems create innovation for your organization. They are often developed out of ad hoc processes and tied to specific initiatives, so they can have very short life cycles. They are driven, developed and funded out of business budgets. The transformational systems are also highly collaborative and involve both structured and unstructured data. The dynamic nature of these applications is well suited for cloud-based deployments as these systems are not always huge and carry far less amount of data as compared to transactional systems or differentiation systems
It is not that role of all three systems can not be interchanged. They can be interchanged based on the objectives they are fulfilling but saying that our ERP itself is our transformational system, might not be a right statement. Let us take an example here: A automobile company hired a consulting company to identify a strategy to launch its new model in rural and far fetched areas where it has minimal presence till now and this launch has to be a big bang launch for all its markets in a country. The consulting company suggested a strategy that required a temporary system that is needed to record preliminary data, ongoing campaign data, collaboration between multiple teams, continuous monitoring of progress of campaign etc. and the client organization got this system developed for this launch campaign. Now this system, which is quite different from your transactional system (ERP), is your transformational system and it will have a short life period equal to the launch campaign period plus some post campaign analysis etc.
We need to not shy away from development of these niche systems and keep on pressing the fact that we already have one system (ERP) which should cater to all our needs. Differentiation is very important these days and automation in your processes, new campaigns etc. will ensure that you remain ahead of your competition always.