Businesses that already use both ERP and e-commerce technologies stand to benefit immensely by integrating them. Cost savings, advanced analytics, personalized customer journeys, omni-channel enablement, and easier development of new digital services are just some of the reasons to integrate. However, decision makers in some organizations might be wondering why their entire digital operations shouldn’t be managed using a single, all-encompassing platform. This would seem like an especially attractive option for companies that have yet to implement either type of digital solution. After all, wouldn’t one platform have a lower total cost of ownership than two? After a bit of digging, I came across a good reason to think twice about this kind of monolithic approach.
Recent articles by researchers from MIT Sloan recommend that businesses build their digital strategy around either customer engagement or digitized solutions (Ross, Sebastian, & Beath, 2017; Sebastian et al., 2017). While both outcomes converge (customer engagement drives the development of digitized solutions, while digitized solutions facilitate customer engagement), companies should pursue only one strategy, or they risk losing focus. In their study of “big old companies” (averaging approximately 80,000 employees and 100 years), the authors illustrate how the two main technological requirements for the successful implementation of both digital strategies are a strong and scalable operational backbone and an agile digital services platform.
For most organizations, the operational backbone corresponds to ERP and CRM platforms, while the digital services platform corresponds to e-business technologies (e-commerce, SCM, EDI, and so on). While the researchers agree that these two classes of enterprise technology need to be integrated, they also present compelling reasons to use two specialized technologies instead of a single, generic solution.
In a nutshell, both components satisfy different, complementary requirements of an organization’s digital strategy. In their words, the operational backbone enables operational excellence, while the digital services platform enables rapid innovation. Both platforms also employ contrasting development strategies, funding models, and primary goals, which makes them difficult to manage as a single system. While ERP platforms aim to standardize and improve visibility of internal business processes, web technologies are better suited to the construction of single-purpose modules that can be mixed, matched, and swapped in and out as needed. ERP systems favor large funding tranches and quarterly or annual updates, web platforms prefer more frequent funding in smaller parcels and continuous development methodologies.
Aside from picking one of the two digital strategies and implementing both of the major enabling technologies mentioned so far, the authors emphasize the importance of being service-oriented. The digital services platform should be designed to allow customers, suppliers, and other partners to collaborate in the development of services and apps, and corporate structure should also become highly service-oriented. The ITIL framework is recommended for ensuring that IT services and business objectives are correctly aligned. Organizations that have already arranged their teams around offered services before embarking on their journey of digital transformation will be at an advantage.
Visionet Systems possesses decades of experience in digital design, technology-driven enterprise consulting, and platform integration. For more information on how to develop a winning digital strategy, integrate e-commerce and ERP platforms, and implement ITIL principles, please contact Visionet Systems for a complimentary consultation on digital transformation.
Ross, J. W., Beath, C. M., & Sebastian, I. M. (2017). How to Develop a Great Digital Strategy. MIT Sloan Management Review, 58(2), 7.
Sebastian, I. M., Ross, J. W., Beath, C., Mocker, M., Moloney, K. G., & Fonstad, N. O. (2017). How Big Old Companies Navigate Digital Transformation. MIS Quarterly Executive.