For a long time, many people have been predicting the demise of ERP, and while I share those sentiments, a demise can take many forms. The one we all understand well is the crash-and-burn variety, but that’s not the only and perhaps not even the predominant approach.
The crash is at best the final step. Humpty Dumpty must have teetered and lost his balance, but all that got recorded was the fall and crash. The truth might be more interesting. For instance, rather than disappearing all at once, I’ve been writing about ERP’s decline as a movement, one application at a time, from the back office to the front and from the data center to the cloud.
Beginning in 2008 when Zuora was founded, billing and payments began moving from the back office — but not simply because it was cheaper to do it in the front office. The billing business process began changing all the way back in 2000 when the first SaaS companies went live. As you know, billing for SaaS services is a much different activity than billing for sprockets and widgets.
SaaS-based billing and payments became a front-office application because billing went from a one-time thing to a constant need, driven through customer service and online sales, and ERP-centric billing couldn’t keep up.
We’re seeing the same thing happening in another part of ERP, this time in human resources or human capital management. When HR consisted largely of managing payroll and tracking employee education, it made sense to keep HR close to the money in the ERP system. Today, however, HR is rapidly becoming a front-office function where managers and their direct reports leverage social tools and expect to be able to capture and check on important job-related information in the moment.
Also, regular people have come to increasingly rely on their smart devices for many of their computing needs due to their increased mobility. Companies want to bring their businesses into the presence of their customers, and getting closer to them means relying on mobile devices. So, HR isn’t just coming to the front office, it’s coming in all right, but it’s also going right out the front door.
Wait, There’s More
We’re not done yet, either. Sales and marketing are getting a major facelift as social media reshapes those business processes. Salesforce has (with a few others) been a major driver in that reshaping, too. It has aggressively applied new thinking to old processes by adding social technologies and approaches, which has led to more collaborative business practices. More people now know what’s going on in their businesses than ever before because of social approaches, and that’s a good thing.
What happens, though, if you’re a small company and the challenge isn’t internal lines of communication, but how to approach the very large marketplace? Arguably, your business process challenges are different. Sales might be more focused on online processes and e-commerce and marketing will be socialized which brings me to the topic of Infusionsoft, a company with an integrated sales, marketing and e-commerce solution for small business. It’s an idea with some legs as the company’s 12,000 customers would attest.
Earlier this week, Infusionsoft made an eye-popping announcement. None other than Goldman Sachs led a US$54 million dollar investment round for the company. Not only is the raw number interesting, but so is the leader of the syndicate — Goldman, of Wall Street fame and all that goes with it. Of course, the press release calls it “growth capital financing,” and when I hear that, I think it isn’t the same thing as venture capital, but I am seeking confirmation.
Financing has the aura of a loan rather than an investment. Be that as it may, 54 is still a lot of millions and to invest it in a company that addresses the SMB market is a head-turner.
Now, sales and marketing are decidedly front-office functions, but e-commerce offers a nice intersection point between front and back. Companies like NetSuite offer a nice e-commerce package that runs off their back-end ERP — so does Oracle, just to pick a couple. That looks old-school, but NetSuite is also a SaaS company in the CRM and ERP markets, and it’s doing what it can to disrupt ERP in its own way, too.
State of Change
So, I think we’re in a transition state in which experimentation is the rule of the day and where certain functions live and how they work is all up for grabs. Social makes the front office even more distinct from the back office, taking the company to the customer while traditional ERP functions continue transitioning to places that are also closer to customers.
So, while my attention has been on ERP as the candidate that will meet some kind of end, it looks like CRM, with its renewed focus on customers, is changing just as much. Where CRM appears to be changing itself, however, ERP looks like it’s being dragged into the new century.