Press Release - 05.10.17

proALPHA ERP Trend Radar: Integration Capability, Innovation Rate and New Billing Models

proALPHA Celebrates "Living the Future for 25 Years"

Integration capability is key to developing the ERP system of the future. It is an essential component to map all value flows and workflows in a digitized manufacturing company consistently and in real time. Tomorrow's ERP systems will act as the central nervous system for IT processes in companies. This year, proALPHA is celebrating its 25th anniversary. On this occasion, the company looks back on a quarter of a century dedicated to ERP software and wants to illustrate three emerging trends.

Back in 1992, when the two brothers Leo and Werner Ernst founded W. Ernst Informatik GmbH together with Martin Wolf, there were hardly any ERP systems on the market suitable for small and mid-sized enterprises. A growing number of young ERP developers soon began to understand the importance of customizability when it comes to SMEs. Since then, ERP business has changed radically. The former supplier market has disappeared. Today, the ERP industry is oriented towards the customers' wishes, for instance with regard to innovation and investment security. In order to succeed in the future, providers will need to have enough resources to adjust to the changes perceived.

"Customers today expect continuous innovations and don't accept intervals of six or seven years," says Dr. Friedrich Neumeyer, CEO of proALPHA. "This can only be achieved with a suitable basis. The growing network in smart factories requires a deeper integration than ever. And it's no longer just software solutions that need to be connected with each other, but more and more machines, mobile devices and supplier platforms, all in real time.

proALPHA sees three essential trends that will change ERP business forever:

1) Increase in Integration Capability

ERP providers used to focus on process control. In a digitized future, this aspect will be of less importance. ERP providers will need to connect their products with a variety of IT and production systems. Solution partners and technology partners like other software companies or data center providers will play a major role in a company's long-term success. Only together will they be able to seamlessly connect their smart products. Providers will need to brace themselves for this by acquiring more expertise in areas like machine data input and processing, which represents the core element in a production environment characterized by Industry 4.0.

The actual revolution, however, takes place in the digitalization of products and machinery, creating the Internet of Things. Companies who want to offer intelligent products are facing great challenges, because the new business models need to be developed already when the products are being designed. For instance, when designing a smart machine, engineers already need to think of a software that will be able to access and process sensor data all over the world. These data are then compressed by an analysis tool based on individual evaluations. Whenever a machine's configuration is changed during its product lifecycle, this needs to be mapped in the data analytics model. In order for the new business models to become billable, an ERP system has to be integrated both horizontally and vertically. As the company's central nervous system, it controls a network of concerted processes covering all areas from product design to production and even the complete after-sales service.

2) Higher Innovation Rate

Small and mid-sized production companies continuously develop all-new products and processes. The ERP business will need to find ways to keep pace with this development. Here, too, a network of partnerships with customers and technology partners is a crucial success factor. It gives ERP providers and customers a platform to discuss technological innovations for SMEs and to develop ideas for their use in an ERP system.

As a consequence, ERP systems will feature a growing network of third-party solutions. By teaming up with partners, system providers can have a higher innovation rate than individual ones. Only this way the systems can meet the customers' requirements.

3) New Billing Models

Communication with the ERP system, which used to be performed by humans, will become more and more the task of machines and IT systems. Accounts payable, for instance, can be processed completely by machines already today. Digital processing will advance even further when sensor data on the machines can be read and compressed by analysis tools. The value-added chain of Industry 4.0 applications requires the ERP providers to think outside the box. They will need to develop new billing models since user-based licensing is starting to become a thing of the past.

"Each ERP system is basically a platform since it works as the company's central nervous system. In future, this platform will be more and more supported by a network of technology partners," says Dr. Friedrich Neumeyer. "SMEs will then have quicker access to innovations. We are convinced that we are prepared to meet the challenges of the years to come."


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