It’s easy to dismiss the “some assembly required” disclaimer when buying a piece of furniture, exercise equipment or a kid’s three-wheeler in a box. No biggie, right – how hard can it be?
Hours later, you’re looking with frustration at parts scattered on your floor. The instructions are confusing, you need parts, tools are missing and trial and error hasn’t solved the puzzle. What you thought would be a simple job has turned into an ordeal.
Similar risks await organizations that launch a composable ERP strategy without fully sizing up how it aligns with business goals and what’s needed to make it, well, composable.
The “what” and “why” of composable ERP
Composable ERP has emerged as a way to modernize legacy ERP environments to be more flexible and interoperable. The composable model is replacing the monolithic ERPs of yesteryear, so that you can assemble digital business capabilities as you wish – though often using cloud-based services.
The vision is compelling, but outcomes depend on ensuring your shift doesn’t take a wrong turn.
Core ERP capabilities like inventory and financial management might be delivered by the central platform, while best-of-breed applications handle satellite functions. Done right, composable ERP equips your business to be nimbler, make informed decisions and create or adapt business models on the fly.
The vision is compelling. All of a sudden, you’ve got that agility your C-suite has been talking about. You’re faster than competitors because you can roll out digital capabilities in bite-sized pieces that are easier to deploy and use. You’re smarter too, because you’ve got data at your fingertips to make informed decisions.
Plus, you’ve achieved AI readiness because your composable ERP environment lets you test and deploy AI with relative ease. Now, as everyone from CIOs to teenage TikTok-ers knows, AI is a very, very big thing, so this is a benefit that really can’t be overlooked.
Almost as a bonus, composable ERP eliminates the risk of a Big Bang ERP lift-and-shift to the latest version going horribly wrong. Of course, all these outcomes depend on ensuring that your shift doesn’t itself take a wrong turn.
The global shift to composable ERP
As organizations face end-of-life deadlines for outdated ERP systems and brainstorm over digital transformation, composable ERP sits at the leading edge of IT modernization. Its value is widely recognized, to say the least.
Some 94 percent of organizations worldwide are embracing a composable ERP strategy, according to a survey of 1,675 CTOs and enterprise architects conducted by Boomi. Of them, 76 percent are standardizing and consolidating applications, and 71 percent are moving to the cloud.
As composable ERP takes shape, we’re seeing several points of differentiation on what works and what doesn’t.
What works and what doesn’t
Composable ERP can’t be strictly an IT concern. Sure, it benefits IT with a lower total cost of ownership, reduced technical debt, faster development and deployment and reduced risk. Architecting composable ERP, however, shouldn’t be pinned to those IT goals.
Instead, design your composable ERP strategy around specific business objectives. What matters most to the organization whether increased customer loyalty, better sales rep efficiency, improved decision making? Whatever the goal, composable ERP lets you attack business priorities with speed and precision not possible with a rigid monolith.
Ongoing business and IT collaboration is required. You want to avoid anti-pattern scenarios in which composable ERP starts off with a lot of enthusiasm and executive backing, only to have momentum dwindle into half-baked shelfware.
At some organizations, recomposing business structures may be in order as well. A rigid and compartmentalized chain of command is contrary to the principles of composable ERP. It pays to bear in mind Conway’s Law, which holds that any system designed (such as composable ERP) will mirror an organization’s communication structure. It works best when the business itself is flexible and composable.
Composability requires connectability
Composable ERP that spans the core ERP and diverse cloud systems in a hybrid IT environment doesn’t just work out of the box. It’s a “some assembly required” proposition and its success depends in part on how that assembly is accomplished.
Integration technology to connect systems, standardize and share data and automate processes should be first on the technology shopping list.
But those outdated tactics don’t cut it in our ever-accelerating digital age. It’s not quick; development can drag on for months. It’s not easy and integrations are often brittle and can break with the slightest change. Nor is it sustainable, as developers skilled in legacy tools are harder than ever to find.
If cloud-first composable ERP is on your roadmap, equipping with the latest generation of cloud-based integration technology that can connect systems, standardize and share data and automate processes should be the first items on the technology shopping list. You want to be able to quickly and easily recompose your ERP environment, leveraging any API or building your own, as applications and objectives evolve.
Composability and AI-readiness
The advent of generative AI alone is arguably a reason to shift to composable ERP. The ability to test, deploy and iterate large language models swiftly has profound implications for business transformation that we will see unfold in the months and years to come. In essence, composability makes it possible to embed AI within core ERP capabilities, handing you what we can call “AI-readiness”.
We are already seeing AI introduce “systems of intelligence” that sit between the traditional systems of record and systems of engagement (those used by employees, customers and partners). As with a conventional application, AI is best anchored to business objectives and a sound foundation that can connect composable systems and share data.
When a new generative AI tool emerges, your composable ERP environment is tailor-made to test, tweak and move the shiny new AI tech into production.
So, the takeaway here: composable ERP gives you readiness for anything – be it a merger and acquisition activity, a new line of business or even a global expansion. The project is yours to pick, just be sure you have the right strategies lined up so that you can actually hop on that new exercise machine instead of looking with frustration at parts scattered on your floor.