Forrester SaaS Transformation Playbook Details Why ERP Fails to Meet the Needs of Modern Organizations

By Erika Malzberg February 11, 2019

In Forrester’s new SaaS Transformation Playbook, author Duncan Jones identifies the ways in which ERP vendors fail to meet the needs of modern organizations: “Forrester Analytics data shows that two-thirds of software decision makers in enterprises plan to replace or complement their enterprise resource planning (ERP) software with software-as-a-service (SaaS) applications or have already done so.“

According to the report, this is because “the mega-suite era is over. Last decade’s business application strategies have failed to deliver the systems business leaders need, creating a rift in satisfaction levels between technology management professionals and their business colleagues.”

To bridge the rift, businesses are seeking new solutions that can manage the shift to new business models. And these new solutions are often SaaS.

But migrating to SaaS poses some organizational challenges. So the purpose of this report is to help develop a SaaS execution plan that takes into consideration customer needs, organizational needs, business agility, and technology standardization.

ERP’s Can’t Handle Business Model Complexity

At the heart of this report is the notion that ERPs are insufficient to manage the complexity posed by new business models. Instead of monolithic business systems built for product-centric businesses, modern businesses today require agile, flexible systems.

Key Takeaways

The report is full of great insights and advice for SaaS migration. Here are the key takeaways that resonated with us:

Put your customer at the center. The report notes that application development and delivery (AD&D) leaders “have inherited an inflexible portfolio of legacy applications that prevent them from delivering the smart, flexible, user-centric applications their enterprises need on their path to digital transformation.” Forrester advises businesses to take into consideration customer needs in order to guide the addition of SaaS solutions to their stack.

Embrace business freedom. Shifting to SaaS solutions give businesses the opportunity to reassess stagnant traditional systems. As the report notes, “Your SaaS migration road map should also define the likely role of your main incumbent software providers. This is a once in a lifetime opportunity to re-evaluate your key supplier relationships and use the crucial road map decisions to refresh and/or reconfigure them.” Businesses don’t have to try to use old infrastructure to solve for new business problems when there are new solutions custom-built for every use case. Instead, the report urges, “Evaluate each product on its merits and balance the advantages of buying from a known, reliable supplier with the benefits that independent, focused, SaaS-native vendors can deliver.”

Pursue SaaS solutions for specific BU needs. Business units should be empowered to act independently. As the report notes: “You can implement select modules at early adopters and then extend that to other modules, and other BUs, without forcing any BU to change its current solution.” This enables you to make smaller investments as you begin to explore as-a-service offerings. There will be opportunities in the future to expand and standardize.

“Balance speed with consistency.” The goal of shifting to SaaS applications is to build some agility into your organization. The beauty of SaaS solutions is that they don’t require the same huge time and monetary investments as traditional ERP systems, so you can move fast, implement quickly, and immediately start seeing results.

Be agile…but do your due diligence. While you want to move quickly to execute on your SaaS migration road map, you still need to do your due diligence. Follow a “robust selection process” which includes, of course, researching independent analyst reports on top vendors in the market.

Zuora: A Model SaaS Solution

Jones uses the example of Zuora to illustrate some of these best practices in action:

“A personal care product company, for instance, created a new business unit to deliver an innovative type of subscription service and decided to implement a specialist subscription billing product from Zuora because its ERP suite could not handle the new business model.”

Implementing SaaS: A Critical Priority

As noted in the report, “modernizing legacy applications and implementing more SaaS are high or critical priorities for 38% and 36% of software decision makers working at enterprises.”

Read the full report to get started on your SaaS migration initiatives: Create a Collaborative SaaS Migration Road Map That is Fast, Not Perfect.

And download the latest Forrester Wave™ to see why Zuora was named a leader in Recurring Customer and Billing Management.