Digital Transformation Predictions for 2019

Traditional ERP implementations are increasingly giving way to full-blow digital transformation efforts.
Eric KimberlingNovember 8, 2018
Digital Transformation Predictions for 2019

As someone with a 20-year career in ERP consulting, I can tell you that the market today is in significant flux. Here we present our predictions for how the ERP market — and digital transformations — will unfold in 2019:

1. Traditional ERP implementations will become increasingly obsolete. Implementing ERP like it’s 1999 didn’t work then — and it’s definitely not working now. In 2019, more companies will find success by broadening their view of enterprise technology.

Instead of viewing ERP implementations as a way to automate back-office functions or to automate already-inefficient business processes, more technologically innovative organizations will find success by breaking with the status quo.

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For example, more forward-leaning organizations are finding success focusing on true digital transformations vs. traditional ERP implementations, which is the wave of the future. As a result, traditional implementations will continue to fade in 2019.

2. More companies will focus on two-tier digital transformation approaches. Instead of assuming that a single software solution or single vendor can deliver the breakthrough capabilities required for the future, more companies are finding value in a two-tier approach involving multiple systems for different functions.

For example, divisions of larger parent companies are finding value in the approach. The parent may be rolling out a standardized back-office system such as SAP S/4HANA or Oracle Cloud ERP, while the divisions may roll out more customer-facing systems that are more aligned with their culture and needs.

The proliferation of technology options and integration tools makes this a viable option for many organizations we work with.

3. Implementation readiness will become a prerequisite for transformation success. Too many companies have jumped blindly into their ERP implementations without a clear plan or organization. We can expect that to change in 2019, largely because more companies are apt to deploy multiple technologies when compared to the past.

We are seeing more companies begin with a “Phase 0” implementation-readiness stage to build a strong foundation for implementation success — before the meter starts running on the army of implementation consultants.

4. Cloud ERP will reach the tipping point of adoption. Some have been touting the death of on-premise ERP for years now. I have not  — until this year.

I don’t know that on-premise will ever completely go away, but 2019 will be the year that cloud ERP reaches the tipping point of adoption. Software vendors and the entire ERP ecosystem are all investing too much money in their flagship cloud products for this not to influence adoption rates. Next year will be the year this materializes in very real ways.

5. Digital transformation failures will continue to increase. Most predictions tend to be optimistic, but there are some not-so-positive trends on the horizon as well. A number of broader trends will coalesce to increase the failure rate of digital transformation initiatives.

For example, customers are being forced off their legacy systems simply because vendors are investing a disproportionate share of research and development dollars on the newer cloud solutions. Vendors aren’t yet explicitly saying they need to get off the legacy systems, but customers are seeing the writing on the wall.

Also, vendors and implementation teams are spending a disproportionate amount of time trying to sort out the complexities of these new technologies. This is taking away focus from important things like change management and process improvement. This has always been a problem in the industry, but even more so now with all the new cloud technologies.

6. Organizational change management will be crucial digital transformation success. In fact, organizational change management is the biggest key to digital transformation success — and it always has been. In the coming year organizations will begin to recognize this fact and invest accordingly.

Advances in technology have made transformations more complex. Changes to business processes, organizational cultures, and business models have made change management strategies indispensable to success. Organizations will continue realizing this as predictive analytics, artificial intelligence, machine learning, and other technological advances put more “people” pressure on digital transformations.

7. Digital strategy will become a prerequisite for digital transformation success. The digital transformation space is becoming more complex from a technological, operational, and organizational perspective. The proliferation of technology options and the impact on businesses is greater than it has ever been. This all points to the need for a clear digital strategy to help effectively navigate various options.

Eric Kimberling is the CEO and founder of Third Stage Consulting Group, which advises organizations on ERP software selection, implementation, and management.