Why Customers Should Care Who Runs Their ERP In The Era Of SaaS Applications

Claus Jepsen is chief product and technology officer at Unit4, overseeing the development of intelligent software for service organizations.

In the rush to debate whether customers should move their ERP to the cloud or not, the industry has perhaps overlooked a significant consequence of this transition: the cloud means that ERP functionality will become pervasive, and because vendors are encouraging users to adopt standardized workflows, there is a danger that ERP systems could become increasingly commoditized. Even with the growing hype around artificial intelligence (AI), this automation may only further standardize processes so that the difference between ERP systems is even more negligible.

Looking at it from the customer’s perspective and allowing the technology evolution to follow its natural course, there is a danger that customers could treat ERP systems as off-the-shelf functionality. If it is standardized, if it can operate invisibly in the background and if interoperability means customers can port their data easily from one vendor to another, why should they care who runs their ERP?

Why Vendor Support Still Matters

There are very real reasons why customers care about who supports their ERP systems. Aside from running crucial back-office processes that cannot afford to fail, CIOs and IT teams have staked their reputations on running highly cost-efficient and scalable ERP environments that help their organizations be more productive. Therefore, they need to know they have a vendor that will partner with them to ensure the system does what it should.

However, for the vendor, there is a very real question around differentiation in the age of pervasive ERP. The obvious answer is the user experience, but even with AI adding more sophistication to the customer interface and helping to personalize it even more, vendors must ensure it helps them stand out. Particularly with generative AI applications, the core large language models (LLMs) are being built by a small group of large vendors. If everyone relies on the same dataset, won’t everyone produce the same results?

Data could be a decisive factor in determining who the winners are in the ERP market in the future. At a time when organizations should be able to integrate all the sources of information within their infrastructure to create a holistic view of their business performance, how they use that data (and how quickly they can use it) to form insights and make predictions could be critical to their success in highly volatile market conditions.

Therefore, a key deciding factor when choosing an ERP vendor should be the vendor’s relationship with the customer’s data. How much control does a vendor exert over a customer’s data? More importantly, does the vendor have the expertise and understanding of the customer’s business and industry sector to enable the customer to gain insights or spot trends with the data that their competitors cannot? Can one vendor help the customer to identify the problem they want to solve better than another?

All these questions lead to one key evaluation criterion—does the vendor have a considered approach to data strategies? The vendor must be able to demonstrate that they understand not all data is good data. As we move down the path to AI everywhere, having the right data is essential if ERP applications are to make accurate, timely decisions using AI. Consequently, the vendor must show a track record of implementing data strategies for similar organizations, as this expertise is essential to qualify what is the right data and how to maintain data efficacy.

Four Key Factors For Partnership Evaluations

Aside from these criteria, there are several other factors to evaluate when customers are choosing the right vendor partner.

1. The Importance Of A Modern Architecture

Closely related to expertise in data strategies is the need to ensure the ERP platform is built on a modern microservices architecture. This enables interoperability between applications, which in turn is critical if organizations want a single view of all the data in their IT systems. It also gives the reassurance of greater flexibility so that customers can easily port data if they want to, giving them greater choice about which service providers they use.

2. Supporting The Cloud Transition

It may sound cliché, but moving to the cloud is a journey, not a destination. Therefore, it is also vital that your chosen vendor has programs to support the adoption of cloud-based ERP applications, not just during the initial implementation but throughout the lifetime of their use.

3. Investing In Long-Term Cloud Support

There is a vested interest in ensuring that customers embrace the cloud as it strengthens customer engagement (and hopefully loyalty), but this requires a sophisticated infrastructure and operational approach from the vendor. During the evaluation process, it should be very clear to the customer whether the vendor has invested properly in the right support for the entire cloud adoption lifecycle.

4. Balancing Innovation With Practicality

Finally, cloud adoption requires a level of pragmatism, particularly when it comes to innovation. There is always a temptation to invest in the next shiny thing, but that is not always the right approach for the customer. For example, customers should be wary of vendors over-emphasizing the mystical powers of AI agents to solve any number of business process and performance issues.

Final Thoughts

Like many vendors, we are working to integrate AI into our proposition, but we also understand it is not the right solution for every scenario. Automation can work just as easily. As such, interrogate any vendor’s pitch that suggests it is the key to innovation. Innovation should not be adopted for the sake of innovation but for a practical business need to solve a problem or open up a new opportunity.

The cloud is going to have a fundamental impact on the way vendors partner with customers. It will change how customers qualify the value that individual SaaS applications offer and the successful vendors will be the ones who adapt their approach to reflect the customers’ priorities. Ultimately, ERP applications will remain important long into the future, but technology will continue to evolve how its value is quantified.

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