The architecture of future-proof ERP

Every ERP vendor will tell you their software is 'future-proof'. But what characteristics really make enterprise software a smart investment in an unpredictable future? I believe there are four main qualities CIOs should look for.

1. A microservices architecture

A lot of enterprise software is migrating to cloud, and software-as-a-service (SaaS) is getting more popular because these platforms promise greater accessibility, scalability, and cost-efficiency. But to actually deliver these benefits, the software itself needs to have a microservices architecture.

Microservices are small, self-contained bits of business functionality common in cloud-native and serverless applications. They are messaging-enabled, context-bounded and independently deployable. They can also be scaled independently, making scaling less resource-intensive since it’s unnecessary to scale the whole application.

These features make a microservices architecture ideal for continuous software development and deployment, which is a key part of most enterprise application strategies.

2. Ease of integration and extension

Organizations often need to connect their ERP to other systems, like HR or finance, or sector-specific software such as professional services automation. These systems may be on-premise, hard-coded monoliths or flexible, cloud-native applications, but between them they employ a wide variety of programming languages and communication protocols.

Open application programming interfaces (APIs) play a crucial role in facilitating integration and extension between all these systems. APIs are common in enterprise applications because they make it easy to get one application talking to another. They allow developers access to the application so they can integrate other software with it or build value-add extensions onto the platform.

Software development kits (SDKs) are also very common. These are a collection of software development tools in a single installable package. They give developers a helping hand in the creation of applications by including a compiler, debugger and perhaps a software framework with libraries that ease access to APIs. Each SDK is normally specific to a particular combination of hardware platform and operating system, and some may include low-code capabilities to speed up the development process and allow business users to participate.

Together, APIs and SDKs are the building blocks for creating an open platform where systems communicate, transact and negotiate with each other. They’re the means by which an organization actually transforms siloed systems into an integrated ecosystem that can improve efficiency, reduce operational costs, and foster innovation.

3. Machine learning to maximize automation

Organizations want to maximize the use of automation. Today, less than 20% of business processes are automated in enterprise software. In as little as two to three years we could see up to 80% of routine business processes automated, and this will be achieved through machine learning (ML).

Examples of ML-driven automation common in ERP today are timesheet completion, receipt reconciliation, and smart invoicing. The more advanced types of ERP include task-based apps, which are simple, stripped down user interfaces dedicated to the execution of specific business tasks, such as capturing missing information on a form.

Forward-thinking ERP vendors use ML to continuously search for further opportunities to add automation. They have smart automation services that can solve problems by using ML to combine historical analysis of previous cases with new data coming from internal and external sources.

For example, a smart invoice processing service could be built that would evaluate invoice amounts and the supplier's history of invoicing before automatically electing to send a particular invoice to a manager for approval, while it might decide to pass other invoices straight through without approval.

4. Ease of developing bespoke apps on top of the platform

Good enterprise software comes with ready-made industry best-practice modules that organizations can use straight out of the box. But some organizations still need to develop custom apps on top of the vendor’s platform, either to accommodate special business processes or to differentiate themselves in the market.

A SaaS ERP built on a public cloud, with a microservices architecture, open APIs and SDKs will make it easy for organizations to develop value-add apps on top of the vendor’s platform.

For example, one of our partners, Embridge Consulting, developed a Goods Received Note app on top of our ERP platform. It uses the camera in a phone or tablet to scan a QR code and enter goods received data straight into the ERP, saving time and improving accuracy for their customer.

Another way vendors can help developers create innovative apps on top of their platform is by offering good partner training and support programs. These help implementation partners to solve clients’ specific business problems and also create additional revenue opportunities for the partner.

A good scheme will offer access to development environments, extension kit training, and support to develop applications and have them certified. Some ERP vendors are also launching app marketplaces which act as a central hub from which organizations and their IT partners can find and deploy functionality.

Future-proof ERP

If your ERP platform has these four key ingredients – a microservices architecture, easy extensibility, ML-powered automation, and the ability to develop on top of it – then your organization should be able to respond easily to whatever the future may bring.

Read IDC’s InfoBrief on Evaluating ERP Solutions: Advice and Checklists for Service Organizations