ERP is Dead - Long Live ERP

The reports of my death are greatly exaggerated

• -ERP,  probably
• This year there have been two massive fundings in the ERP world. $500 million for Cin7, and another $500 million for “upstart” Odoo. Cin7 is about 11 years old while Odoo is over 20 years old.

From Odoo’s funding announcement:

Andrew Reed, partner at Sequoia Capital, added that the market Odoo is addressing "just requires more gestation time than most startups both because the core system is very complex, and making it simple to use for small businesses and various countries is no small feat."

There’s been a theory that ERP is going the way of the dinosaur, to be replaced by a frankenstein of SaaS solutions. Expense tools such as Expensify combined with punch out systems like Coupa would be used by pure accounting systems like Quickbooks to provide an ever more interconnected suite of apps that would be cheaper, more flexible, and have just as much functionality as an SAP. Augmenting these applications, data warehouses such as Snowflake and Domo would provide analytic tools that would replace the data analysis functionality of an ERP. Why install an SAP when you could generate the same reports and provide the same functionality for cheaper over several applications? With these fundings, this theory doesn't seem to be panning out.

It turns out tying a handful of applications together is more difficult than it sounds. At Thruline we’ve seen multiple attempts to integrate accounting systems such as Quickbooks into several other applications. While these integrations work while a business is small (< 5 million in revenue), the increasing complexity of integrating multiple pieces of software becomes much too burdensome as a company grows, leading to an unmanageable web of applications. At that point, businesses overwhelmingly migrate to an ERP, like Odoo. The power of an ERP comes from the fact that the product suite is greater than the sum of its parts. There is value in having all of a company’s processes in one place - even if each individual solution may not be considered the best in the industry.

The advent of AI has called up a new generation of ERP focused startups, such as Cognizant, Doss and yes - Thruline. These startups are building a new generation of ERP that delivers the full product suite (inventory, accounting, sales, purchasing) at the earliest stages of a company’s lifecycle. By leveraging newer solutions, these startups can generate customized workflows designed to match a company’s business from day one - replacing the web of SaaS software holding companies back.

It’s an exciting time for ERP - the industry seems to be backing ERP’s promise of an all in one solution, and newer players are entering to disrupt the market. Seems like ERP isn’t dead after all.

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