According to management consultancy firm McKinsey, the average business in EMEA accelerated its digitisation by a factor of some seven years over the course of 2020. We all know the extent to which global supply chains and entire national economies have been subject to upheaval and the need to drive reinvention over the last two years, but have we stopped to look at where digital change moves next?
If you don’t have time to read the full ‘technology tipping point’ McKinsey report, there’s a web meme joke of sorts that might just put the picture in your mind even more clearly than might be initially comfortable.
Q. Who led your business transformation this year?
Spoiler alert: sorry but there are no prizes for getting the correct answer here.
This slice of web-shared mirth was recently tabled by Steve Sichtman in his role as VP of multi-channel development at Jitterbit, a company known for its API integration platform that companies can use to rapidly connect on-premises and Software-as-a-Service (SaaS) cloud applications in order to infuse artificial intelligence (AI) into any business process.
The enforced period of national lockdowns, Zoom calls and spikes in demand for goods and services (in-store and online) led to disruptions, product shortages and many cases of personal frustration, upset and worry. It was almost like a starting pistol had gone off and we needed to change the way we did some things almost overnight; business transformation simply didn’t know what had hit it.
The 2020 starting pistol
If 2020 was a transformation starting pistol, then it was a race to innovate at unprecedented speed and scale to service the needs of customers and connect employees who couldn’t leave their homes. Companies that were slow off the blocks knew pretty soon that they might not make the finish line.
“Behind the scenes of the mad dash to keep the world turning, it was integration and ERP solutions that bore the strain of the accelerated transformation that was called for; these were (and still are) the connectors and management tools joining the dots between the hundreds, often thousands, of software solutions, platforms and technologies businesses deploy to deliver their products and services to customers. Those companies with automated solutions already in place had a head start in the transformation race,” said a now carefully reflective Sichtman.
As we approach two years since the start of the COVID-19 pandemic, a report from Jitterbit entitled ‘Integration and the Digital Road to Recovery’ hopes to lift the lid on how businesses retooled their companies at warp speed to meet the challenges of the pandemic, with opinions and commentary from companies including Wayfair, gohenry, Wave, LAUDA and FUNDA.
The report dives into the anonymised data of over 2,000 Jitterbit customers between 2020 and the first half of 2021. It found companies in EMEA increased their investment in e-commerce integration solutions by 99 percent over the course of 2020 to meet the spike in demand for online services. Added to this, with remote work mandated for many and a reliance on communication tools to keep businesses running, investment in integrations to support ‘employee experience’ rose by 72 percent in the same period.
But while e-commerce and employee experience investment spiked, investment in integrations around the total customer experience actually fell across EMEA by 15 percent during 2020, having previously been the number one investment for multiple years.
A strategic shift to operations
Jitterbit’s reading of this shift – from analysing the data and conversations with customers – is that as the magnitude of the pandemic became apparent, companies shifted a portion of their IT ‘management matrix’ investment away from strategic applications delivering speed and features (customer experience) to operational applications dedicated to improving business effectiveness (e-commerce and employee experience).
“Ultimately the narrative changed and the focus on operational efficiency was centralised” Steve Sichtman, Jitterbit
“So while the glossy customer-facing front-ends and successful customer outcomes of the pandemic’s transformation projects might grab the headlines, behind the scenes, the importance of integration solutions and ERP systems – the glue that held those transformations together – shouldn’t be overlooked. Indeed, looking at these trends in integration, it’s possible to make out the shape of wider macro events and forces impacting companies and organisations on a global scale,” said Sichtman.
It’s a point not missed in the report. Sichtman suggests the project came about because his company wanted to make sure lessons could be learned to make companies – and whole industries – more robust in the face of future technological and economic challenges, whatever they may be.
“In the haze and maelstrom of the early days of the pandemic, companies were answering numerous challenges at warp speed,” recalls Sichtman. “How do we cut and contain costs? How can we get the data needed to decision makers in real-time? How can we serve customers whose behaviour is changing all the time? How do we do all this with our workforce now remote? But ultimately the narrative changed and the focus on operational efficiency was centralised.”
Mapping ERP to wider forces
With this report, the intention was to see how businesses invested initially and then formulated their wider more holistic plans. The intention was to analyse just how far integration and ERP trends map to wider social and economic forces.
Jitterbit says it can pinpoint a double-digit increase in 2020 investment in integration for large ERP systems from the likes of SAP and Microsoft. This appears to demonstrate that companies were recognising the need to optimise and automate business processes during a time of intense change.
Interestingly, the data shows investment in what Sichtman and team have referred to as ‘mid-market’ ERP systems such as Infor, Epicor and Sage has more than tripled in 2020. This may be signalling Gartner’s predicted move to a ‘post-modern ERP era’ where monolith vendors are increasingly replaced by a patchwork of best-of-breed solutions.
“Developing a custom ERP system comprising of multiple vendors, can deliver greater flexibility and lower costs, but requires more complex integration solutions to hold it all together. Once again, integration is under the hood, quietly determining the success of each and every business transformation,” said Sichtman.
The data for the first half of 2021 already showed new trends in the choices companies are making – and all the signs point to businesses preparing for a new post-pandemic phase where speed and agility are key. From Sichtman’s perspective, the trends emerging now all point to a need to move quickly and provide the highest level of product, service and employee experience in order to compete and survive, with companies turning to no-code/ low-code and microservices in readiness for the next stage of hypergrowth.
Even if the worst of the pandemic is behind us, the data tabled in this study appears to show that the medium to longer term effects leave consumers more digital, workforces more distributed and businesses with new expectations in terms of how quickly they can transform.
The ERP hyper-automation-anchor
“Looking even further ahead, I predict ERP to outgrow its current position, where it’s nestled deep in organisations with decades of history of development. We’re looking at a rebrand; ERP will go from being seen as a ‘solution suite’, to a sort of hyper-automation-anchor driving business outcomes. We’ll also see more real world uses where AI, IoT and blockchain make the most of what ERP offers,” concluded Sichtman.
The Jitterbit team point to a future where the currently preferred hybrid on-premise cloud model of ERP deployment is wound down. Although they admit that it’s hard to predict exactly when this will happen, the weight of pressure here suggests that a wider move towards cloud is likely. This will herald the uptime of what they call ‘full SaaS’ i.e. cloud-based ERP run by a cloud services provider (CSP).
The SAP community, partner and specialist systems integrator and consulting services ecosphere reports many of the same thoughts and experiences that Jitterbit has tabled thus far. SAP-centric software-enabled services provider Lemongrass Consulting (like many in the enterprise ERP space) hasn’t necessarily ‘hurt’ throughout the pandemic and has seen its services called upon in full capacity across people, processes and technology.
Ben Lingwood, chief innovation officer at Lemongrass Consulting reminds us that for the majority of customer implementations, the SAP quotient is among the slowest moving systems in the total IT estate. But he says, the early stages of the pandemic forced that to change as remote working had to be enabled and the knock-on effect to system configuration and infrastructure demands rapidly re-adjusted.
Polarised response behaviour
“Our clients became aware that on-premise traditional operations represented an unacceptable risk with both technical supply chains and resource availability becoming disrupted. So, we saw a polarised response to SAP-centric transformation projects, either accelerated to leverage the lockdown window inside which business disruption in the form of business transformation could be accommodated, or conversely, being pulled back as funds and risk concerns heightened,” said Lingwood.
“Our clients became aware that on-premise traditional operations represented an unacceptable risk”, Ben Lingwood / Lemongrass Consulting
The lasting transformative impact Lemongrass has seen above all else is the demand for SAP on cloud, which the team say has been supercharged and now represents a defacto deployment model. At the same time, customers are said to be ‘aggressively adopting’ a DevOps approach to SAP workloads at rates of change unheard of only a few years ago. Future ways of working being brought rapidly to life from normally slow moving strategy roadmaps.
“This has created another behavioral side effect,” said Lingwood. “Organisations are now making early decisions on their journey to SAP S/4HANA either going ‘all in’ embarking on an SAP S/4HANA transformation, or deciding to continue performing technical upgrades on their current versions. For us, the positive side effect of COVID is our SAP on cloud ecosystem is now fitter (new agile processes), leaner (leveraging automation and DevOps) and quicker (digitisation of operate services) than ever before and a trend we fully expect to see grow and develop well beyond the COVID-era.”
Jitterbit’s and Lemongrass’ broader stance on this whole topic is widely resonated. Concurring with many of these technology propositions and commercial validations is Chris Williamson in his role as director for partner and alliances EMEA at Boomi. Known for its work in the integration Platform-as-a-Service (iPaaS), data intelligence, process automation and API management competency, Boomi has witnessed firsthand the rush to digitalisation, which has yielded many successes, but has clearly also taken a lot out of businesses.
Data disarray & disconnect
“It has obviously not been easy for all businesses to adapt so quickly while everyone has been working at home, or to hire new talent when the business is under a strain not seen in living memory. Some of our own findings at Boomi are that existing applications or data sources are often disconnected and are nearly always in a complex state of ‘old and new version’ disarray and disconnect,” explained Williamson.
The Boomi team say that the challenge is compounded by the fact that working systems are often subject to multiple entries of customer or individual data records in various formats. Across the enterprise IT spectrum, vendors appear to agree that any organisation’s journey to transformation needs a big push towards optimising ERP systems; Boomi insists that it has strong capabilities to help with this process using what it calls its branded ‘Integrated Experiences’ methodology and subsequently Boomi has increased its focus on ERP modernisation as a strategic priority and enjoys working with leading ERP vendors like IFS creating joint solutions to aid the transformation journey.
“Existing applications or data sources are often disconnected and are nearly always in a complex state of ‘old and new version’ disarray”, Chris Williamson / Boomi
Boomi supports enterprises when integrating core systems and data sources using its Atomsphere platform in both cloud and on-premise architectures, supporting full lifecycle API management.
“We also help automate manual processes and reduce the need for manual intervention with Boomi Flow. Lastly, to help manage data more effectively we would help them discover what data they have with Boomi Data Catalog and Preparation, where that data resides and then provide a data optimisation exercise using Master Data Hub to synchronise and enrich their data across their application landscape,” said Williamson.
The transformed future
For many of us that have heard the term digital transformation perhaps one too many times, the words themselves may be at risk of losing their lustre through hackneyed overuse and disrespect.
What we can say is that digital transformation has moved from being a medium to long-term aspirational objective to becoming a much more short-term operational imperative. If this reality serves as a wake-up call driving enterprises to retire legacy systems that have passed their best before dates, then all well and good. If it further encourages organisations to grasp the nettle and embrace new technologies – in securely sandboxed zones where prototypes are still subject to testing against real world data flows – then all the better.
Post-COVID digital transformation then? Yes okay, but please still wash your hands.