Organisations tackle the ERP Innovator’s Dilemma – ‘keeping the lights on’ budgets fall to just 36%

Boomi, a Dell Technologies business, has revealed the findings from its ERP Innovator’s Dilemma survey. The independent research of 825 EMEA-based Enterprise Architects revealed how EMEA organisations are tackling ERP application modernisation and revealing how they will overcome barriers posed by the complex hybrid IT environments they operate in.

The research reveals EMEA organisations have broken the cycle of spending the majority of their IT budgets, historically between 70% and 80%, on “keeping the lights on” (KLTO) activity. This reduction in KTLO spending, to just 35% has enabled significant IT budget to be diverted in favor of IT modernisation, 33%, and innovation, 32%.

The research also reveals the majority, 68%, of EMEA organizations are focused heavily on moving enterprise applications to the cloud and are specifically focused on modernising legacy ERP applications to enable strategic growth, 53%, rather than remain a cost-centre. 

EMEA organisations are rethinking their view of ERP: from fearing it too complex to be modernised to embarking on a large-scale migration of ERP applications to the cloud. For EMEA organisations, the benefits are clear: assurance of uptime, performance and security, according to 58%; driving business growth, 55%; and improving IT agility, 52%. 

Derek Thompson, VP of EMEA Boomi said “IT leaders can be rightly proud of the clear actions they are taking to further innovation, while at the same time driving down spend on decades-old technologies, and it is encouraging to see the marked increase in investment towards application modernisation and digitally driven business innovation.”

The ERP Innovator’s Dilemma
Boomi’s new research points to a new technology conundrum which leaves European organisations with a critical choice: boost investment in what most presume is the costly, complex process of ERP modernisation – or get left behind by less risk-averse competitors. 

We call this ‘The ERP Innovator’s Dilemma’, a concept borrowed from The Innovator’s Dilemma, a concept created by Clayton M. Christensen In his best-selling management book, The Innovator’s Dilemma (1997).

EMEA organisations know tackling The ERP Innovator’s Dilemma is paramount to completing their key goals of delivering excellent customer experiences, 52%; integrating their applications, 47%; and achieving IT agility, 40%. When asked how they intend to meet these goals, EMEA organisations cited focusing on: standardising and consolidating applications, 76%; migrating infrastructure to the cloud, 79%; and consolidating legacy infrastructure, 69%. 

The main challenge faced by EMEA organisations is the lack of integration technologies which can ingest data from any device/data source, 51%, followed by the lack of right integration skills is a major obstacle, according to 39%. To tackle this, they are turning to IPaaS to solve specific use cases, whose benefits are already evident: designing and scaling APIs, 23%, improving business with partner networks, 19%, and synchronizing data across the enterprise to drive business outcomes. 

Respondents predict increased efficiency will result and cite the majority of ERP deployments will be implemented in house, with maintenance undertaken by a third party. This will free up IT teams and budget to innovate more. In fact, 56% of EMEA organisations predict ERP deployments will be 100% cloud by 2021, and pure on-premise deployments will plummet to 0%.

“EMEA businesses are recognising the opportunity that Cloud based applications provide them in shifting their investments to more strategic growth initiatives, be those applications ERP, CRM or iPaaS. ERP modernisation requires integration modernisation and Boomi is excited to be leading the industry in delivering on a platform designed for the 2020s – the data decade”, continued Derek Thompson, VP of EMEA.

Methodology

The independent survey was carried out by Coleman Parkes on behalf of Boomi, among 825 Enterprise Architects, across 12 sectors in 12 EMEA regions. 

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