It’s likely that if you’ve been reading up on enterprise resource planning or business management software, you’ve likely heard the term “postmodern ERP” start to pop up in conversation in the last few years. Discussed in analyst reports, tech blogs, and by vendors, this topic has become quite a hot one as competition has evolved.
But what is postmodern ERP? Is it jargon or is it something that can change your business? In the next couple weeks, we plan to explore this topic in greater detail, starting with todays blog which seeks to define what it is and how the software industry evolved to today’s landscape.
Postmodern ERP: The Basics
One such way that businesses can put themselves on a path to and through digital transformation is to embrace the latest technological advancements in business management software, balancing the flexibility and integration capabilities of the cloud with the power and control that comes from a fully-functional ERP.
Defining Postmodern ERP
This combination of flexibility and control is a large part of what Gartner defines as Postmodern ERP. According to Gartner,
“Postmodern ERP is a technology strategy that automates and links administrative and operational business capabilities (such as finance, HR, purchasing, manufacturing and distribution) with appropriate levels of integration that balance the benefits of vendor-delivered integration against business flexibility and agility. This definition highlights that there are two categories of ERP strategy: administrative and operational.”
Two Components of Postmodern ERP: Administrative and Operational
Referring to the core functionality of ERP, Administrative ERP focuses on financials, human capital management and indirect procurement—providing a customizable, service-focused solution for businesses who don’t need operational capabilities.
Alternatively, operational ERP is designed to deliver needed functionality for product-centric companies including retail, distribution, and manufacturing. Operational ERP strategies often include a wide range of necessary functions including order management, manufacturing and supply chain.
What it Means and How We Got Here
Part of the continued evolution of business management software since MRP I in the 1970s, MRP II in the 80s and 90s, and ERP through the 90s, Postmodern ERP came to be as a result of the cloud.
While we discussed the evolution of ERP in our guide to True Cloud ERP solutions, and the evolution of the cloud in our recent blog, the path to Postmodern ERP was built on the functional focus of this software.
Function-Oriented: The Initial Software Landscape
Initially limited by the technological shortcomings of the era, early MRP I and MRP II software was function-oriented, designed to complete a single task. In this era, businesses would implement a wide variety of solutions from various vendors, none of which would integrate. Data was siloed and the process of moving data from one solution to another was often laborious, consisting of downloading output files, translating or copying information to work with a different solution, and uploading or pasting data.
Data-Oriented: One Solution to Cover All Processes
This all changed with the initial rise of the suite, leading to a bigger is better mentality where everything could be tackled by one vendor. Considered a data-oriented era, solutions were large, highly integrated with other applications from the same vendor, and extremely standardized. However, the size and scope of these applications created its own set of challenges, as software was rigid, slow, and extremely expensive to customize.
Process-Oriented: The Best of Both Worlds
While both of the previous iterations did have shortcomings, this led to the process-oriented era of postmodern ERP. Offering the best of both worlds, modern integration capabilities meet broad functionality in today’s ERP. This allows businesses to build an individualized solution to meet their needs, adding functionality as needed, avoiding silos, and gaining flexibility.
Flexibility, Control, and Innovation: Learn More
It may feel like a relatively new term, but Postmodern ERP has been used to gauge and compare software for the last half-decade, used in many Gartner reports including their Magic Quadrants, Market Guides, and more. In fact, the analyst firm recently released a new research note: A Guide to AI in Postmodern ERP Strategies, exploring such topics as:
- The most common applications of AI technology in business.
- How conversational AI platforms can improve the effectiveness of your workforce.
- Where the Internet of Things (IoT) may fit into your ERP strategy.
- How AI enhances the HCM, finance, and procurement functions.
- Gartner’s four recommendations for supporting your digital transformation.
Download it here, and stay tuned as we explore the road to Postmodern ERP in upcoming blogs.