What is the role of ERP in the retail business of today?

By Christine Bardwell – December 7, 2012
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In the past decade and a half, large scale IT transformations have been seen as the best practice approach to creating modern technology landscape. Mostly these projects have seen 15 year old home-grown mainframe systems replaced with an architecture that places ERP at the core. Such projects are highly budget and resource intensive, often requiring highly skilled systems integrator partners to spend 4 - 6 years implementing and tweaking the chosen ERP system to be fit for the specific needs of the business. The ERP system then becomes the core master data platform in which all other process-based applications link.

This is the reality with which most IT managers will be highly familiar today. However, a new reality must now emerge. The retail business landscape is changing and the IT organisation needs to keep up.

Much has changed since ERP systems first made an appearance in the 90s. The very idea of ERP was conceived in a time before anyone truly understood the impact of web technologies, and more specifically, the impact the internet would have on the world of business and our daily lives. It has changed the way we interact and the way we shop. It has provided us with instant access to the latest information and has heightened our sense of power as consumers. If we're not happy with the service we have received, we can let our friends know in seconds. We can shop around the best prices. The next web store is just a click away.

Competition is intense. Retailers therefore need to provide at least one or more of the following in order to meet customer expectations to differentiate:

  • the best price
  • the best service
  • the best and most differentiated experience

What is fundamental here, is that the customer be placed at the heart of the retail business and IT strategy. Sure, the old age saying goes 'the customer comes first', however retailers have been - and many still are - mostly product focused businesses. This is changing as retailers shift their priorities, but the IT organisation is lagging behind, struggling to find a way to meet the new demand from the business.

Earlier this year, IDC Retail Insights released the O3 Retail Model which does just that - it is a new IT landscape model designed to put the customer at the heart of the retail business.


But does ERP have a place in this new reality? The primary purpose of ERP, i.e. to manage orders, finance and accounting are still requisite to business, but spending time integrating and developing the system to take on an infrastructure base platform role no longer seems like a logical step.

In 2013, IDC Retail Insights will aim to answer this question in research outlining best practices for the retail architectures that are relevant to business today. 

But in the meantime, what do you think?

See also:OmniChannel retail IT M&A predictions for 2013


About the author

Christine Bardwell

IDC Retail Insights Manager, EMEAIDC Retail Insights

Christine Bardwell has developed extensive insight into retail technologies, but specifically consumer facing technologies used by retailers, both instore and online. She is an expert in ecommerce…

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Christine Bardwell
December 7, 2012
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