The Disconnect Between Concept and Production

BusinessBrief

May 16, 2019

By Craig Johnston


Widely regarded as one of the most innovative vehicles never to go into production, the story of the Lincoln Futura is not unique. Those with vested interests in the automotive industry would surely motivate that there are any number of reasons why concept cars never make it into production but really, vehicle manufacturing is an incremental and conservative industry that develops at a very slow pace.


For decades no one has completely reimagined a car from scratch. At best, they have simply bolted the future onto the past.


True innovation is not incremental


The world has changed, however. If big automotive manufacturers want to remain relevant and survive, it is believed that they need to focus on three critical areas: reshaping their business models, digitizing their services and prioritizing to meet changing consumer needs.


It is here, at this critical next evolutionary step, that the story of the automotive industry intersects with the enterprise resource planning (ERP) industry.


ERP systems, delivered as units which include such modules as financial reporting, HR and sales pipelines are fast becoming outdated, having for decades innovated simply by finding better ways of reporting. Just as the motor-vehicle industry has for years innovated simply by making engines work better.


One of the biggest threats to the automotive industry is the rise of the sharing economy and driverless cars. To survive, car companies must transform themselves into technology companies, form new partnerships with tech giants and invest in emerging self-driving car technologies.


Supply-chain relationships also need to be expanded, fostering supportive and open ecosystems between suppliers, service providers and manufacturers. Something along the same lines needs to happen in enterprise resource planning.


Finding relevance in a market that is irreverent


ERP systems are also fighting to retain their relevance in its own version of the sharing economy, as it comes to terms with sharing in the form of cloud service applications.


Compared to smaller and more agile cloud-delivered applications, legacy ERP systems are struggling to remain competitive on price, feature relevance and customization metrics.


Similarly, vehicle manufacturers are also grappling with who they are and what they do (how does BMWs Sheer Driving Pleasure or Toyotas All about the drive fit into a world of driverless cars?), and their industry is being led in new directions by outsiders like the tech giant Google.


How, and what it means to be transported in a vehicle is becoming an entirely new experience for the end user, completely at odds with what the industry has pursued for a century or more. The difference is that industry outsiders understand that it is more about the end-user, than just the end product.


This shake-up is also taking place in the ERP industry. New entrants are creating smart ERP software systems and bots, using artificial intelligence, developed with cognitive capabilities through machine learning, enabling the bots to understand context and anticipate users needs. Interacting with users in a number of ways (voice or text) and on platforms like Skype, Slack and even Facebook Messenger, the bots are making a reliance on old-school, unwieldy and data field-intensive ERP systems obsolete, just like internal combustion engines will be.


Looking behind to the future


In a post-modern world where entire industries are being redefined and corporate behemoths are losing both their foothold and business to small disruptive forces, the ERP industry needs to take a long hard look in the mirror. Not only at itself, but to see what is approaching from behind… because Startups in the mirror are closer than they appear, even if youre in a Batmobile.


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