Coupa Inspire in Paris – Magnus Bergfors on Post-Modern ERP

Much of last week’s Coupa Inspire event in Paris was focused on developments within the firm, and stories about their customer’s experience, from selecting a technology provider though to the benefits achieved once Coupa was up and running within the organisation. We will be back with more from those sessions shortly.

But the one totally external presentation came from Magnus Bergfors of Gartner. Now we at Spend Matters are in some sense competitors to Gartner, although procurement is only a tiny part of their sphere of interest and I’m sure their Board do not lie awake at night worrying about Spend Matters’ next strategic move. But we have to say, Bergfors gave a presentation that was much more interesting then we’d expected, given the subject matter sounded a little dry, shall we say.  He was a procurement practitioner for a few years before getting into consulting and analyst work, which probably helps, and his session on “post-modern ERP” was both fully comprehensible and stimulating, unlike certain other analysts we could mention.

He argued that ERP systems, initially designed for Finance, HR and production planning, grew into areas such as CRM and procurement, with user organisations considering integration to be more important than functionality. But “cloud” has enabled providers to compete in certain areas, with “ease of use now beating integration” in many cases.

This has led to what he calls "post-modern ERP” which he defines as “a technology strategy that links business capability with the appropriate level of integration”. So a key point there is that we’re talking about ERP being a strategy, not a system. The aim is to maximise business value for each domain (procurement being an example of a domain).

So, in his view, the “mega-suite” is dead, killed by cloud specialist providers, who win because no vendor can build and update a mega-suite fast enough to keep up with the more nimble, focused, cloud-based vendors. Loosely coupled ERP solutions are emerging, and although integration complexity is increasing, vendors can “hide this in the Cloud”. Traditional ERP will see a reduced footprint, perhaps retreating back to where it started, with cloud add-ons in areas such as HR and P2P.

He then talked about key trends, including those he had already touched on such as cloud, agility and more rapid access to innovation. Ease of use is the number one requirement now, with an expectancy of no user training for new systems.

The thirds trend however is where we see a bit of a paradox, although it is reconcilable. He spoke about “a single P2P platform taking over from individual sub-systems such as eProcurement, eInvoicing, and AP automation products”.

Yet if wider ERP is losing out to more specialist vendors, why are overall P2P systems not losing to even more niche tech providers? I guess the key point is to determine the optimum level of “capability aggregation” in the systems sense. So it may well make sense to have a single P2P system, maybe even a single source to pay platform – but going to a full ERP including all the other functions (finance, HR etc.) may be a bridge too far for the reasons above such as speed of innovation and flexibility.

Anyway, there was more in terms of future trends, but we won’t give away all of Bergfors’ material as I’m sure he will want to use it again! However, these are some of the key arguments that will determine the future shape of the procurement software world. Certainly, based on his views, you would not want to be a SAP or Oracle shareholder in particular.

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