Gartner predicts that by 2016, the impact of cloud computing and the emergence of postmodern ERP will mean “legacy status” for highly customized ERP systems, and urges CIOs to take action to address this “fast-approaching reality”.

“The need for agility and responsiveness has led highly customized ERP implementations to an impasse, creating a subset of legacy ERP installations that must be dealt with constructively,” said Andy Kyte, vice president and Gartner Fellow. “Early ERP adopters, particularly large enterprises in energy, manufacturing and distribution industries, are paying the penalty of a decade or more of excessive customization. Businesses looking to improve administration today can take advantage of lower costs, better functional fit and process flexibility offered by blending cloud applications with on-premises applications in what we now refer to as ‘postmodern ERP.”

“When ERP was in its heyday, CEOs and business executives wanted reliable and integrated solutions, so they seized upon ERP as the way to provide this,” Kyte added. “Business stakeholders still want these same qualities, but now they assume that these qualities will be present in any software solution, and their requirements have switched to the twin concerns of lowering IT costs and seeking increased flexibility. A system that is not sufficiently flexible to meet changing business demands is an anchor, not a sail, holding the business back, not driving it forward.”

Gartner also made a couple other bold predictions. By 2018, it says, at least 30% of service-centric companies will move the majority of their ERP applications to the cloud.

Even sooner – by 2017 – it says, as many as 70% of organizations adopting hybrid ERP will fail to improve cost-benefit outcomes unless their cloud applications provide differentiating functionality.

Gartner research VP Carol Hardcastle finds the outlook “worrying”.

You can find Gartner’s actual report on all of this here.

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