ERP III and the Digital Economy – Building the Borderless Enterprise

Author

Bill Wood

April 13, 2015

 The Impact of the Digital Economy on Your Industry was an overview of the Digital affects on markets.  The research from Harvard Business suggests that Digitally engaged companies across virtually all industries are “26% more profitable than their average industry competitors” and “generate 9% more revenue with their existing physical capacity” [FN1, pg. 4].

Using technology to generate those types of results creates a compelling business case.  Part of that business case, for gaining opportunities from the Digital Economy, surrounds the concept of ERP III–,  the idea of extending your back office system capabilities to impact markets, customers, and  build the “borderless enterprise”.

The Future Digital Economy is ERP III

First, ERP III is not necessarily a new ERP system, instead, ERP III is a new way to leverage the investment in your SAP or ERP application.  Academic literature defines ERP III from a technical perspective as:

[A] flexible information system incorporating web-based technology which enables enterprises to offer increasing degrees of connectivity, collaboration and dynamism through increased functional scope and scalability. [FN2]

From a practitioner’s perspective, the academic literature referencing my own research, defines ERP III as extending the ERP II view from back office transactions and supply chains, directly into the customer-driven marketplace:[T]hrough collaboration, direct contact, social media, and various data streams, within and outside of the enterprise, ERPIII integrates marketplace fans and critics into the existing ERP and ERPII organizations. From the integration of customers and vendors beyond the enterprise

[T]hrough collaboration, direct contact, social media, and various data streams, within and outside of the enterprise, ERPIII integrates marketplace fans and critics into the existing ERP and ERPII organizations. From the integration of customers and vendors beyond the enterprise boundaries a constructive dialog or information exchange is created to innovate, produce, and then sell (or distribute) better products or services.[FN2] 

The ERP III bridge between an ERP system like SAP, and the Digitial Economy of the future, relies on Big Data.  You need that ability to synthesize and integrate structured data (transactional and market data), unstructured data (social media, reviews, sentiment, forums, etc.), and third party data sources into your analytics.  Today’s major components of the Digital Economy, whether they are social, mobile, or the “Internet of Things” rely heavily on data analytics.

ERP III [is] “the collaboration of internal and external data streams allowing the integration of fans and critics to become part of the extended ERP and ERP II of an organization”. [This is the same] basis for the creation of the “borderless enterprise” through “the combination of a host of technical collaborative tools such as social media internet technology and SOA and analytical search engines”.[FN3]  

What Do You Need to Consider About Data Analytics? 

Capgemini recently surveyed about “1,000 C-level executives and senior decision makers in nine regions and nine industries to help… assess where the [big data] market is heading.”

Big data has brought the market to an inflection point, causing massive disruption:

  • 64% of companies believe that big data is changing traditional business boundaries 
  • 53% expect to face increased competition from start-ups enabled by data
  • 27% of companies report disruption from new competitors moving into their industry [FN4]

A holistic enterprise strategy is needed for the Digital Economy.  The ERP III bridge to connect your SAP system to the Digital Economy is through data analytics. In today’s economy, the marriage of ERP and mobility, with social media and product or service usage information, are the keys to the future.

Building a Strategy for the Digital Economy

The future Digital Economy is still evolving.  Right now it consists of a few key components:  your ERP system, data analytics, mobility, social, external data streams, and the Internet of Things (or, some form of product or service usage information).

While predicting the future of technology has proven to be difficult, the strategies for producing business results in the Digital Economy today, require a technology roadmap prioritizing data analytics, mobility, and marketplace product or service sentiments integrated into your ERP application. 

Where are you in that journey?

Contact Capgemini to see how can we help you today!

Note: This is the personal view of the author and does not reflect the views of Capgemini or its affiliates. Check out the full article here.

[FN1] Westerman, G., Bonnet, D., McAfee, A. (2014) Leading Digital.  Turning Technology Into Business Transformation. Harvard Business Review Press, ISBN 978-1-62527-247-8.
[FN2]  Clegg, B., & Wan, Y. (2013). Managing enterprises and ERP systems: a contingency model for the enterprization of operations. International Journal of Operations & Production Management, 33(11/12), 1458-1489 referencing Wood, B. (2010), ERP vs. ERPII vs. ERPIII future enterprise applications. http://www.r3now.com/erp-vs-erp-ii-vs-erp-iii-future-enterprise-applications (retrieved March 17, 2015).
[FN3] ERP III The Promise Of A New Generation (September 2014 Conference Paper) DOI: 10.13140/2.1.3906.1765.  Proceeding of the 13th International Conference on Informatics in Economy (ISSN: 2247 – 1480), Education, Research & Business Technologies (Bucharest, Romania). http://www.researchgate.net/publication/265735922_ERP_III_THE_PROMISE_OF_A_NEW_GENERATION (retrieved March 17, 2015), referencing Wood, B. (2010), ERP vs. ERPII vs. ERPIII future enterprise applications. http://www.r3now.com/erp-vs-erp-ii-vs-erp-iii-future-enterprise-applications (retrieved March 17, 2015). [FN4] Capgemini, Big & Fast Data: The Rise of Insight-Driven Business. https://www.capgemini.com/resources/big-fast-data-the-rise-of-insight-driven-business (retrieved March 22, 2015).

 


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