Boomi has published some findings into research that looked at how companies across Europe are tackling ERP modernisation. The research highlights a shift away from IT spending on Keeping The Lights On (KTLO). It is moving to a mix of investment in new technology and innovation budget. Historically 70-80% of budget was spent on KTLO.
The survey findings demonstrated that KTLO spending has reduced to 35%. 33% is now allocated to modernisation and an impressive 32% to innovation. This survey was almost certainly taken before the COVID-19 crisis hit. Its is likely that results may have changed now as budgets are likely to be slashed across the board in the coming weeks and months.
Derek Thompson, VP of EMEA Boomi said: “IT leaders can be rightly proud of the clear actions they are taking to further innovation, while at the same time driving down spend on decades-old technologies, and it is encouraging to see the marked increase in investment towards application modernization and digitally driven business innovation.”
Boomi has published the findings in an eBook entitled “The ERP Innovator’s Dilemma”. It lays out the challenge facing business today. Either invest in new technology or face the prospect of falling behind less risk averse organisations. It is a concept borrowed from Clayton M Christensen in his book first published in 1997 by HBR entitled “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail.”
The research was conducted by Coleman Parkes. It was based on responses from 825 enterprise architects working in 13 countries across EMEA working in 12 industry sectors. What wasn’t published was the number of respondents either by country or industry. Sensibly the eBook does not attempt to draw many insights for any specific location on industry.
The eBook looks at what money is spent and investigates why money is being spent. It splits the findings between a business focus and a technology focus. 52% of respondents felt that the planned business outcome was to deliver amazing customer experiences, and 40% selected agility. There are still many struggling with resolving their hybrid IT landscape. 76% see one of the main challenges as the standardisation and consolidation of applications. 69% are still dealing with the consolidation of legacy infrastructure.
As companies look to invest in new ERP solutions they are also increasingly turning to large system integrators to both install and manage the solution in the future. Only 9% are looking to implement their own system in the future for example.
Why should companies move to the cloud? The reasons are varied. Cost, agility ,growth, uptime, customer and employee experience, and efficiency are all common reasons. In retail and public sector the major focus is on increasing efficiency. For public sector this is not surprising and for retail it perhaps misses the point. Retail is one of those industries that, with the advent of eCommerce, has seen massive disruption. A qualitative follow-up might have shed more light on that finding.
Cloud is coming
Most respondents (75%) are currently looking to migrate infrastructure to the cloud. There was one stand out finding. In only 12 months time 57% of companies believe their ERP solutions will be 100% cloud. All respondents thought that some component would be in the cloud. Bearing in mind that only 11% are fully in the cloud now and that 18% are fully on-premises this is a remarkable shift.
There are still barriers though. The report highlighted the following:
- Hybrid IT environments (42%)
- Legacy technology (39%)
- Point to point/bespoke integrations (35%)
- Data governance issues (35%)
The survey highlighted of two reasons for project failures which are familiar. A lack of understanding for the total cost of ownership and a lack of user buy-in. One key to success is, therefore, the kind of iPaaS solution that Boomi brings to the table. As a spokesperson at Eddie Stobart noted: ”Previous warehouse integrations could take up to 26 weeks to implement, whereas with Boomi, we’ve cut this time in half. This is helping us win more and more new customers.”
Integration is key, even in a cloud landscape as companies move away from a monolithic architecture and towards a hybrid one. The eBook has more findings around these topics and how iPaaS solutions are leveraged.
Enterprise Times: What does this mean.
This is an intriguing report that has some solid findings. That companies are now looking to transition to the cloud so completely is surprising. What isn’t clear is how large these “enterprise” companies are, especially those that are transitioning to a 100% cloud based architecture within 12 months.
What should be taken from this survey is that companies not planning a transition need to seriously look at the benefits of doing so or risk being left behind. It is possible that there was no dilemma when the survey took place. There is now, as company budgets are squeezed just trying to survive COVID-19. The bravest will transform, the rest are likely to be disrupted.
Where Boomi can assist in that transition is through the integration of on-premises and cloud solutions during the transition process itself. Most companies are still looking at a hybrid solution not just of cloud applications but of cloud and on-premisesI applications. This is where iPaaS solutions can fill the gap and ensure data and processes are integrated across the business. IPaaS is perhaps even now with companies needing to shift a a slower pace to cloud with smaller investments. They need to make sure that the legacy systems work seamlessly with the new ones.