Moving to the Front Office
For a long time many people have been predicting the demise of ERP and while I share those sentiments, demise takes many forms. The one we all understand well is the crash and burn variety but that’s not the only and perhaps not even the predominant approach.
The crash is at best the final step. Humpty Dumpty must have teetered and lost his balance but all that gets recorded is the fall and crash. The truth might be more interesting. For instance, rather than disappearing all at once, I’ve been writing about ERP’s decline as a movement, one application at a time, from the back office to the front and from the data center to the cloud.
Beginning in 2008 when Zuora was founded, billing and payments began moving from the back office but not simply because it was cheaper to do it in the front office. The billing business process began changing all the way back in 2000 when the first SaaS companies went live. As you know billing for SaaS services is a much different activity than billing for sprockets and widgets.
SaaS based billing and payments became a front office application because billing went from a one-time thing to a constant need driven through customer service and online sales and ERP centric billing couldn’t keep up.
We’re seeing the same thing happening in another part of ERP, this time in human resources or human capital management. When HR consisted largely of managing payroll and tracking employee education it made sense to keep HR close to the money in the ERP system. But today, HR is rapidly becoming a front office function where managers and their direct reports leverage social tools and expect to be able to capture and check on important job related information in the moment.
Also, regular people have come to increasingly rely on their smart devices for many of their computing needs due to their increased mobility. Companies want to bring their businesses into the presence of their customers and to get closer to them means relying on mobile devices. So, HR isn’t just coming to the front office, it’s coming in all right, but it’s also going right out the front door.
We’re not done yet either. Sales and marketing are getting a major facelift as social media reshapes those business processes. Salesforce has (with a few others) been a major driver in that reshaping too. It has aggressively applied new thinking to old processes by adding social technologies and approaches, which has led to more collaborative business practices. More people now know what’s going on in their businesses than ever before because of social approaches and that’s a good thing.
But what happens if you’re a small company and the challenge isn’t internal lines of communication but how to approach the very large marketplace? Arguably, your business process challenges are different. Sales might be more focused on online processes and ecommerce and marketing will be socialized which brings me to the topic of Infusionsoft, a company with an integrated sales, marketing and ecommerce solution for small business. It’s an idea with some legs as the company’s 12,000 customers would attest.
Earlier this week there was an eye-popping announcement by Infusionsoft. None other than Goldman Sachs led a $54 million dollar investment round for the company. Not only is the raw number interesting but so is the leader of the syndicate — Goldman, of Wall Street fame and all that goes with it. Of course the press release calls it “growth capital financing” and when I hear that I think it isn’t the same thing as venture capital but I am seeking confirmation. Financing has the aura of a loan rather than an investment. But be that as it may, fifty-four is still a lot of millions and to invest it in a company that addresses the SMB market is a head turner.
Now, sales and marketing are decidedly front office functions but ecommerce offers a nice intersection point between front and back. Companies like NetSuite offer a nice ecommerce package that runs off their back end ERP, so does Oracle just to pick a couple. That looks old school but NetSuite is also a SaaS company in the CRM and ERP markets and they’re doing what they can to disrupt ERP in their own way too.
So, I think we’re in a transition state when experimentation is the rule of the day and where certain functions live and how they work is all up for grabs. Social makes the front office even more distinct from the back office taking the company to the customer while traditional ERP functions continue transitioning to places that are also closer to customers.
So while my attention has been on ERP as the candidate that will meet some kind of end, it looks like CRM with its renewed focus on customers, is changing just as much. But where CRM appears to be changing itself, ERP looks like it’s being dragged into the new century.