If ERP is an Elephant, Blockchain is…
Enterprise resource planning (ERP) software is omnipresent in every business, but it has limited potential for breakthrough innovation. Blockchain is setting a whole new paradigm of thinking about how to implement modern reliable IT technology into existing business processes. OriginTrail blockchain-powered platform enables businesses to safely share data in modern supply chains.
Being in ERP business for seven years has led me to feel pessimistic about innovations in that area. There are numerous reasons why the ERP industry is behaving like an elephant in a glass store — if it goes in any direction, mayhem will happen anyway, so it is best not to move at all. Here are some facts:
- Business processes are essentially the same for decades. The sales process is basically the same in every company — for example, you have goods in stock, you sell them one way or another, you post inventory part first, then finance part later and that is it. Of course, there are some differences, but the core process is the same. The only thing that is changing is the design of the interface to enter data, and the technology we use to store the documents.
- ERP vendors are afraid of big steps. ERP systems are fundamentally generic software that is made to suite a lot of types of business industries. One step forward in some direction probably means two steps backwards for other types of end users. That is the main reason why innovations are implemented towards interface upgrades, performance enhancement, and integration readiness.
- Why would anybody change something that works and sells well? The market is accustomed to the concept that ERP software is expensive generic software. There is no doubt that there are billions involved in this industry. There are some third-party partners who live from customizing that software to business requirements and they charge it even more. The market is also used to fact that customizations demand not only money but also time and patience. After all that invested effort, things will maybe work as they are supposed to. Maybe not.
There are quite a lot of examples of technology innovations failed to get into the world of business IT systems, or to change it significantly. What if I told you that the great majority of ERP implementations don’t even need an internet connection to function properly? In my experience, it is around 80% of them. Hence my overall doubt about further mid-term development within the ERP industry. We need innovation on another level. But, let’s evaluate something obvious.
For example, ERPs on cloud servers are good thing forwards without any doubt. But cloud computing hype has been around for almost 10 years and less than 30% of ERP systems use that technology. Still, most of the users state that “there is a great potential”. So why don’t they use it?
Whenever I was in the role as a solutions architect on some ERP presentation and we presented the option for the cloud-based solution to a potential client, they basically all said: “Yeah, that is great. But we already invested in servers, and we like to know where our data is, even though it is big dark locked room in our mouldy cellar.” Cloud computing is a big step forward, but it only considers infrastructure. It doesn’t really give any actual obvious benefit to the end user. It all looks the same, there are no major utility issues resolved. Improved reliability is not something substantial for business users, they consider it as something that is normal and non-negotiable. Maybe cloud servers did not present big enough advantage for an average client. Business stakeholders always needed a platform that will easily make things happen — that is easy to implement and has a significant improvement for the whole business process. Investment in cloud technology is like insurance for the future if things go wrong. Who likes to pay for insurance? We all like to invest resources into things that bring us obvious benefit immediately.
There’s a New Kid on the Block
If ERP industry is an elephant, then I would call Blockchain industry young, recently hatched, dragon. Nobody really believes in dragons, right? Neither did I when one of the founders of OriginTrail, CTO Branimir Rakic, spoke to me. We were discussing creating the platform based on blockchain that will fulfil business needs. In that time, that technology was all hyped up about cryptocurrencies and speculative market. After I was introduced to one use case of the OriginTrail platform about food origin traceability that has already been implemented on several pilots, I had a revelation.
I started to think about numerous problems regarding supply chain that I came across as an ERP business analyst. I asked if OriginTrail could implement logistics metrics regarding order and deliveries across supply chain — it could. I asked if OriginTrail could implement inventory optimization across the whole chain — it could. Any other use case that I was struggling with in ERP integration between 2 entities during my career could be easily solved by the OriginTrail platform that is based on blockchain. And not only for two neighbour entities (vendors and customers from my client) but for the entire supply chain.
OriginTrail platform is designed to overcome one step forward, one step backward problem. It is designed to be a powerful tool for all members in supply chain and to enable development of further applications. I must emphasize all members. Supply chain individual members become part of a team that has the same goal — all stakeholders can easily collaborate to optimize volume, performance, and efficiency of the whole chain. To do that, all stakeholders should agree on mutual goals with standardized transparent contracts, so reliability and integrity of data are ensured.
A supply chain is optimal only if all of its parts are optimal. But each ERP system deals with only one point of the supply chain as a primary data tool for its owner. It has some integration with outside world at its best-case scenario. OriginTrail platform takes it further. It is enabling good players to become an excellent team for the benefit of all stakeholders involved. Blockchain technology is making that happen.