I wonder: what advantage would a customer have for deciding to use an ERP package provided as a service, instead of as an inhouse installation?  We’ve seen the growth of Salesforce.com in CRM.  Microsoft has very recently responded by providing CRM as a service. 

But would there be an advantage to providing the rest of ERP capability as a service?  SAP has dabbled in this space.  From what I understand, their success hasn’t been revolutionary.  Perhaps there is an advantage that is being missed.

One big advantage to sharing a platform: social computing.  Many of the processes that are run inside ERP packages reflect the industry and special needs of an organization, but most, let’s face it, are pretty straight forward.  If I could see which processes have the best adoption ratio or the greatest customer satisfaction, or if I could see what other processes are available to me because other companies have developed them, then I could benefit from social computing on a common ERP platform, with minimal cost.

That would take the whole “industry” of process improvement in a new direction, as they develop intellectual property that can be sold, not just leveraged.  All of a sudden, process improvement folks would be looking at “buy vs. build” decisions just like software people already do.  It could leverage up the ability to make processes more sophisticated by skipping entire evolutionary steps in a company’s growth, allowing them to move more easily from a 30 person company to a 3000 person company by adopting practices of others in their industry or by their size. 

In addition, we wouldn’t be reliant on ERP software development companies (SAP, Oracle, Baan, Microsoft) to create out of the box solutions for a hundred different industries.  They are not good at it.  Let the industries themselves do it on a common platform and sell it to each other and the rest of the world.

Add to that, Software as a Service, when applied to ERP, would provide a way for very small firms, say 25 employees, to benefit from some of the abilities of a full-fledged ERP system without the cost and computing committment that is normally required.  For these companies, out of the box installation is a must, so being able to select proven processes, and have those processes gradually improve themselves, through a “social computing” environment, would provide substantial benefits.

I firmly believe that we have, as an industry, missed on the benefits of social computing when it comes to process improvement and process refinement.  What is required is a common platform and some companies willing to improve common processes for all to use.  I say it is time to make this happen.

By Nick Malik

Former CIO and present Strategic Architect, Nick Malik is a Seattle based business and technology advisor with over 30 years of professional experience in management, systems, and technology. He is the co-author of the influential paper "Perspectives on Enterprise Architecture" with Dr. Brian Cameron that effectively defined modern Enterprise Architecture practices, and he is frequent speaker at public gatherings on Enterprise Architecture and related topics. He coauthored a book on Visual Storytelling with Martin Sykes and Mark West titled "Stories That Move Mountains".

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