ERP Flexibility Trumps Loyalty In The Cloud
August 22, 2022 Alex Woodie
How much loyalty exists in the ERP business? More than you might think, according to a new survey by ERP software provider Epicor. However, that loyalty only lasts so long in the fast-changing world of cloud ERP, SaaS solutions, and digital transformation, it found.
Epicor’s Industry Insights Report 2022 sheds some light on the state of the ERP industry, in particular the manufacturing segment where the Austin, Texas-based software company is most prominent.
One of the more interesting findings in the report, which was released earlier this year, concerned the level of loyalty that ERP customers feel toward their ERP provider.
Surprisingly, 90 percent of the 1,350 technology decision makers that it queried for the report stated that they either “strongly agree” or “somewhat agree” that they feel loyalty to their ERP provider. By comparison, only 9 percent said they “somewhat disagree” with that statement, and only 1 percent strongly disagreed.
Firms in the United States and the United Kingdom led the way in this technological solidarity, with 44 percent of companies in these markets strongly agreeing to the statement that they are loyal to their ERP provider. Australian and New Zealand companies – the other main segment of the user based surveyed – showed a bit less loyalty, with only 28 percent agreeing.
Despite that relatively high level of stated loyalty, a majority of ERP customers are constantly looking for better alternatives, according to the study.
Nearly one-third (31 percent) of all survey-takers say they look for a new ERP solution every year, while another 45 percent say they look every one to three years. That means more than three-quarters of companies (76 percent) are actively looking to replace their ERP solution every three years or less.
Those are remarkable figures, especially considering the large amount of time and resources typically required to implement an ERP system. However, the frequency of the ERP changes (if they are actually changing out ERPs and not just “looking”) may be explained by other findings from the Epicor study.
For starters, only about two in ten technologists surveyed say they are running ERP primarily on-prem, while only 5 percent say they are entirely on-prem. By comparison, 12 percent say they are entirely SaaS or cloud-based, and 35 percent say they are primarily SaaS or cloud-based.
About 80 percent of the customers have a hybrid setup, where they run some ERP components on-prem and other components on cloud/SaaS. The cloud/SaaS crowd holds the advantage; these figures were not changed much from 2021 to 2022, according to Epicor.
Getting better functionality was the number one reason to change ERP vendors, cited by 30 percent of the Epicor survey takers, followed by integration challenges (29 percent), better pricing (28 percent), better security (27 percent), and better support (26 percent).
One of the advantages of cloud/SaaS solutions that they’re usually easier to implement than traditional on-prem roll-outs. Since the software runs in the cloud, there is no software to install. There are configuration selections to make, but actual code modifications and customizations tend to be frowned upon.
If the cloud/SaaS implementation process goes poorly, it’s easier for the customer to try something else. This appears to be helping to accelerate the ERP lifecycle, which traditionally ran its course in the five-to-10 year range and is now appears to be done after three years for a majority of companies, according to Epicor’s data.
ERP migrations aren’t entirely painless, however, Epicor found that 86 percent of survey-takers strongly or somewhat agreed that there’s “a great deal of business disruption when migrating.” The time required to implement and migrate was the top concern, followed by training, integration, security, and the pace of the transfer.
In terms of the journey to full cloud ERP, Epicor’s research found that the pre-purchase stage was a positive experience for most businesses. “But more crucially, customers said they’re looking for more support and better partnership with providers, especially during the latter stages of the journey,” Epicor President Lisa Pope in her introductory letter to the study.
In addition to a dedicated team to support them throughout the process, businesses also want a partner with deep industrial expertise, particularly with important processes like interoperability, integration, and data migration, she wrote.
Epicor supports IBM i with Epicor CMS, which is an integrated ERP solution designed for mid-to-large sized automotive companies and discrete manufacturers. The package, which previously was sold by a company called CMS Systems, is an integrated suite that includes human resources, point of sale, and supply chain management for complex, multi-site operations. The offering available via one of the IBM i Solution Edition packages from IBM.
But Epicor is re-imagining its solutions in the cloud. In June 2021, the company rolled out a new cloud/SaaS offering called Kinetic that it billed “a total refresh of its manufacturing ERP platform.” The offering reportedly runs on Microsoft Azure.
The advantages of cloud-based ERP have proven themselves in the field over the past couple of years, according to Pope.
“The last two years saw unprecedented challenges for hard-working businesses,” Pope wrote in her introductory letter to the study. “From disrupted supply chains, to remote working and the need for greater flexibility, agility, and security. It was a period of huge upheaval. By some estimates, a decade’s worth of change happened in just a couple of years. With the vastly transformed business landscape now fully in focus, it’s clear that switching to cloud-based ERP helped thousands of businesses face challenges and come out stronger.”