In the race to digital transformation, does size matter?

Published 11/07/2019 by Jon Wrennall, Chief Technology Officer, Advanced

You would think that large organisations would be streets ahead of SMEs when it comes to digital transformation. After all, they have bigger budgets and more resources.

But, could this actually be their downfall? Large organisations are also more complex. They are faced with managing legacy systems, handling large volumes of data and, in some cases, following old processes that are no longer fit-for-purpose or even compliant with the latest regulations. What’s more, there are larger, more complex departments with multiple leaders and influencers all wanting to have their say on technology.

It’s no surprise, then, that decisions are generally made far more quickly among SMEs. They don’t face the same barriers that large organisations typically do. It therefore makes smaller organisations more nimble and better prepared to take advantage of technologies with little disruption or delay. The key element is selecting the solution that provides future scalability.

So what solutions are we talking about here?

There is no denying that Enterprise Resource Planning (ERP) software has established itself as a must-have business tool. It can consolidate all the core functions of an organisation into a uniform and enterprise-wide environment.

However, according to a Gartner report, traditional approaches to ERP result in inadequate foundations for digital business, with organisations focusing on monolithic strategies that do not support digital business initiatives. As such, the global research firm is advising organisations to adopt a postmodern ERP strategy that investigates beyond traditional ERP vendors — especially for differentiated and innovative capabilities.

At Advanced, we believe that a modern Cloud-based ERP solution will be an important part of this evolving IT ecosystem, and should continue to be the digital backbone of every SME. And it will offer an array of applications that combine information from across the entire organisation. In fact, it won’t be long before we see the death of on-premise ERP systems that are solely used for tracking manufacturing resources, orders and finances.

What’s clear is that organisations – both large and small – want a connected view of their business. The Cloud offers that, which makes it a key driver of postmodern ERP strategies.

But it’s not as simple for larger organisations. Given the fact their IT environment is more complex and they are often tied into legacy systems and processes, they will choose a mix of Cloud and on-premise solutions depending on their unique requirements. It makes sense because, in certain cases, some functions are best kept on-premise for the moment while other areas are prioritised for modernisation.

In fact, only 53% of large organisations believe the Cloud should be inherent in all business software they use. That’s according to our new 2019 Digital Business Report, in which over 500 UK senior business decision makers have their say on the state of digital transformation.

Almost two-thirds (65%) of large organisations say they should be using multiple software solutions rather than one single solution to run core operations. This multi-source strategy is favoured by respondents mainly due to the unique requirements of each department within their organisation (63%) – that’s 10% higher than when we asked SMEs (53%).

Many large businesses are therefore turning their backs on single-source ERP and using a small number of specialist solutions for functions like sales, finance and HR. It’s a smart move so long as these solutions – whether Cloud-based or on-premise – are integrated to provide a connected view across the business. Our same report suggests there is some way to go here, with only 56% of large organisations admitting that their business software packages integrate core functions.

This slightly increases to 62% when look at the SME findings, which is perhaps surprising, but it does support the fact that large organisations aren’t streets ahead in the race to digital transformation like we are led to believe. It seems an ERP system is giving the integration, visibility and mobility that SMEs need. Imagine the difference if they embraced a modern Cloud-based ERP system! It’s time for SMEs to give large organisations a run for their money and take the lead in driving connected technologies – and ERP is the place to start.