Forrester: Seven trends to shape the future of enterprise applications and ERP

Over the next five years, technology changes will disrupt our long-held beliefs about the ownership and value of core enterprise application, writes Paul D. Hamerman, vice-president and principal analyst at Forrester Research. These changes will introduce new levels of process flexibility, improve the transparency of ownership costs, and accelerate the speed of process execution. As outlined in recent research from Forrester, seven technologies will drive this transformation: software-as-a-service (SaaS), mobile, business process management (BPM), usability, platform-as-a-service (PaaS), social networks, and elastic computing.

However, these trends have far-reaching implications that extend beyond the technologies themselves. With applications evolving towards greater levels of flexibility, business experts will increasingly play a more active role in defining the business processes, rules, organisational structures and performance metrics within the software. Already, we recognise that buying decisions and ownership responsibility for applications such as customer relationship management (CRM) and human resource management (HRM), and potentially enterprise resource planning (ERP), is shifting more to the business side of the house. Forrester refers to this ownership shift as "IT to BT", and it represents a unique opportunity for business process professionals to help IT and business stakeholders leverage innovative technology to transform business processes and improve application flexibility and value.

• Trend 1: Cloud deployment models change application economics – Traditional on-premises applications have reached breaking point: software upgrades have become so costly and difficult that most customers defer for four years or longer. Customisation further complicates the upgrade challenge, and supplier support deadlines and technical obsolescence, rather than business value, drive upgrade decisions. However, SaaS - and, more broadly, cloud computing - represents an alternative deployment model that is much more predictable. As SaaS adoption grows, we expect that application economics will change for customer and supplier alike.

• Trend 2: Mobile technology accelerates business processes – Mobile technology - including devices, software, networks and product distribution channels - is evolving at breakneck pace. The potential of mobile applications to transform business processes hinges not only on the speed and convenience of mobility itself, but also on the unique capabilities of the devices to sense, respond to, deliver and capture information in real time. Enterprise application suppliers, however, will struggle to adapt their product development cycles to the pace of the mobile world.

• Trend 3: Business process flexibility evolves via embedded modelling tools – Enterprise application configuration and process management has historically been the domain of technical specialists within IT, prioritising and queuing the change requests coming from business stakeholders. The end result has been a low level of business flexibility, where processes often adapt to the limitations of the software or customisation layers are built onto the applications. Package configuration tooling that is flexible, graphical and model-based - no coding required - is evolving and will become a way to differentiate between packaged application suppliers. Building out these capabilities may prove challenging, given the high degree of flexibility, variability and adaptability built into BPM services, so packaged application suppliers may need to acquire some of the remaining pure-play BPM suppliers instead.

• Trend 4: Application user experiences advance to the next level – Packaged application software was initially designed to optimise the capture of transactional data, using bland, character-based user interfaces (UIs) with rows of input fields and field descriptions. The addition of colours, drop-down lists, icons and other features has done little to advance application usability beyond the data capture orientation of the most frequent users. Today, applications have reached a turning point. Suppliers now design newer user experiences; their products have rich graphical features that deliver business intelligence and interactive displays that enable decision-orientated activities and real-time customer interactions. The focus is moving from data capture to business outcomes, extending the application reach to a more diverse array of user roles.

• Trend 5: Extensibility improves via platform-as-a-service – While most packaged applications offer some proprietary tools to customise or extend, the cost of doing so and the downstream impact on upgrades have caused many companies to seek alternatives. This often leads to decisions to buy and customise or build from scratch to meet business requirements outside of the relatively commoditised core packaged applications. Looking ahead, expect to see PaaS, a set of rapid application development tools for extending apps to the cloud, disrupt the notion of "build versus buy" in applications. Instead of build versus buy, the application platform will enable "buy plus build". Standard functionality plus PaaS extensibility means that ERP and other complex applications can be more effectively aligned with business requirements.

• Trend 6: Elastic computing platforms scale transactions and analytics – Forrester defines an elastic application platform (EAP) as an application platform that automates the elasticity of transactions, services and data, delivering high availability and performance using elastic resources. EAPs will deliver faster performance and be more cost-effective to use. Yet the benefits from a business process perspective will likely gravitate towards the insight and predictive analysis that come from processing massive amounts information instantaneously. This will not only help large companies efficiently manage high volumes of transaction and internal data, but will also help many companies draw insight from the vast data resources that exist in public and industry domains.

• Trend 7: Collaboration comes to applications in context via social tools – Rampant adoption of social-based communications in the consumer world has left application suppliers scrambling to harness this technology within, or alongside, business applications. In the near term - the next one or two years - social collaboration will sit alongside enterprise applications, as only a few enterprise application suppliers will harness it successfully in the context of enabling business processes. Effective use of social collaboration in enterprise applications and business processes will take several years to mature, eventually becoming a relatively ubiquitous and standardised feature.

Paul Hamerman is vice-president and principal analyst at Forrester Research, where he serves business process professionals. His coverage includes the ERP market, financial management and human resources management systems and business processes, and business performance solutions. Paul blogs at: http://blogs.forrester.com/paul_hamerman

Previous Forrester articles in the series:

• Justifying your cloud investment: high-performance computing
• Cloud predictions for 2011: Gains from early experiences come alive
• Harnessing mobile UC to transform the business
• The six roles that drive successful business process transformation
• Own nothing - control everything: five patterns for securing data on devices you don't own
• Make mobility standard business practice
• Personal device momentum will challenge traditional mobile sourcing strategies