ERP and business management software in general has come a long way since the days of MS/DOS systems and green screens when I first started in the business over 15 years ago. The pre-Y2K the rush was often to get a system implemented before the collective computers and systems crashed and burned in the fiery aftermath of 4-digit date computer Armageddon. I often found customers sacrificing features and functionality just to get a system in place. However, now more than ever, with such a wealth of solutions on which to run a business, customers have a much broader choice of options, both in deployment as well as the features and functionality. Not only that, most business software users will have much higher expectations having implemented and used a wider variety of systems in the past – thus giving them a strong sense of what they want and what they don’t want. With this in mind, it’s important to recognize and successfully accommodate an emerging trend in the business software world.
Whether we’re talking Cloud/SaaS, On-Premise or any other method of using business software, it’s important to look at a more common model emerging among the consumers of business software solutions. It’s a given fact that software is headed more to a subscription model overall (we’ll save that for another conversation), but business software users demand even more. This model is what I refer to as the “solution hub and spoke”. Not to be confused with a similarly termed model in which companies have remote “spoke” instances of ERP systems with subsidiaries, this model deals solely with different software solutions within a company. In a nutshell, the “hub and spoke” sees the consumer choosing a core business management or ERP system as the “hub” of their business. It will do a variety of things, but must handle accounting and the basic business processes and transactions quite well -- at a bare minimum. From there, and this is the key, consumers have come to realize that the traditional ERP providers, SAP included, have typically not done well at providing point solutions that fit either their specific industry or a very specific need that’s part of a bigger business process. Examples of these “spokes” might include e-Commerce, 3PL, CRM, point of sale, 3rd party billing, Payroll, Budgeting & Planning, EDI, sales tax updates and a variety of others. These companies specialize in their respective functionalities, thus making is somewhat difficult for any given ERP vendor to compete head-to-head with much of what’s offered in those point solutions (nor would they necessarily want to in most cases). What’s more, the trend is that these solutions are often cloud-based (SalesForce.com, Magento, Volusion, SPS Commerce, Adaptive Planning, Zuora, Avalara etc) creating another level of complexity. This combination makes for a somewhat challenging implementation for a lot of ERP VAR’s.
The main challenge in the scenario of the “hub and spoke” is that these disparate systems will ultimately need to communicate to each other. Luckily, solutions such as SAP Business By Design were designed with the “hub and spoke” model in mind. For a company wishing to employ a number of these “spoke” solutions, it becomes important that their “hub” be as solid as possible and ultimately allow for the data to be communicated effectively as well as to be able to support an “n-tiered” cloud-connected solution. With ByDesign’s SDK as well as their A2X services, it starts to open up the possibilities to effectively create this “hub and spoke” ecosystem and get the respective pieces working together in unison.
For both the software consumer as well as the software provider (VAR’s included), this isn’t a model that will go away soon and all involved will benefit from realizing this emerging trend and embracing the benefits it provides. For the customer, there will be a number of services and features they can take advantage of in order to better run their business. For software vendors, such as SAP, they can focus on their core competencies while, at the same time, allowing and encouraging these level of integration. For the value added reseller, they often find themselves as the orchestrator of such composite systems and therefore it is imperative that they be able to successfully handle the integration of the “spokes” to the “hub” and successfully work with the various parties involved in order to create a stable and valuable overall solution.
The future looks to be interesting and full of new challenges for all involved. Evolve or get left behind.
