Innovation’s secret weapon: Cloud ERP
One of the hardest – and yet, most important – problems in business is knowing how to introduce innovative products customers will want to buy. Get it right and you have a product like the Apple iPhone or the Nest thermostat that define your fortunes. Get it wrong and you have a product like Coca Cola’s New Coke (remember that?) or the Ford Edsel that their parent companies (and the market) wish they could soon forget.
One school of thought – popularized by Eric Ries in his book “The Lean Startup” – on how to solve this conundrum is to first introduce new product ideas as experiments into the market and see what works. In this model, a company with a new product idea conceives of a minimum viable product and introduces that to customers to gauge their reaction. If their reaction is favorable, this is a signal to move forward with a full-scale introduction. If not, then the minimum viable product can be withdrawn without too much fuss or loss of investment.
While this makes intuitive sense on paper, it is a difficult process for most large companies to execute. The surprising reason, often times, is actually the constraints created by their legacy ERP system. Legacy ERP grew up around the idea of coordinating the many moving parts of an organization to efficiently deliver products and services to customers. The ideal legacy ERP creates “best practices” that maximize the efficiency of business processes. (SAP, a major vendor of legacy ERP solutions, actually makes it a key marketing point to tell you what you get from them are “best practices” based on their 40+ years of experience.) In the process of establishing these best practices, however, what happens is business processes become hard coded and rigid. Fundamentally, though, innovative products and experiments require new processes, different from the ones set in place for established processes. These agile processes are the exact opposite of what most large companies that rely on legacy ERP have set in place.
If large companies want to be more innovative, the answer is to replace their legacy ERP with a new technology called Cloud ERP from providers such as Kenandy. Cloud ERP enables speed in deployment which means a large company can quickly set up a new process to test out a market. Cloud ERP also enables elasticity, which means a company can turn off business processes if their experiment or product fails to gain traction in the market. Differently from other Cloud ERP providers, Kenandy brings the additional advantage of being built on the Salesforce1 platform. Salesforce1 is a leading Platform-as-a-Service (PaaS) and enables companies to quickly build extensions to existing processes – extensions that may be used to test out new innovative ideas in the market.
Large companies have no dearth of innovative ideas. They never have. They have just been constrained by rigid legacy ERP from testing these to see what will work in the market. What’s exciting to see is what awaits us as large companies increasingly adopt agile Cloud ERP and can finally unlock their innovative potential.