Will SaaS Kill ERP?

Larger used to be better.

Back in the 1990s, when the term “enterprise resource planning” moved into the IT mainstream, enterprises needed a comprehensive software solution for integrating internal and external information. ERP served as the bridge between isolated business silos – retail, manufacturing, supply chain and beyond. Those bridges, though, became large and complex. Today, the very nature of ERP is struggling with what a modern enterprise needs to do to survive.

Video: The Death Of ERP? 

The current economic climate rewards agility. The nimble software-as-a-service (SaaS) business doesn’t depend on traditional procurement, and application programming interfaces (APIs) facilitate instant interconnectivity between relevant applications.

All of this spells trouble for ERP. As early as 2007, market watchers were sounding a warning about the eroding relevancy of legacy systems like ERP. In the fall of that year, Cynthia Rettig wrote in the MIT Sloan Management Review, “These systems…promised to eliminate the complexity of multiple operating systems…But these massive programs, with millions of lines of code, thousands of installation options and countless interrelated pieces introduced new levels of complexity, often without eliminating the older systems they were designed to replace.”

That perception has become pervasive. Now, the connotation of ERP among most companies, especially SaaS-based ones, is hulking, monolithic, outmoded software apps. It is time to relook at this once-ubiquitous technology.