The decline and fall of ERP and why universities should care about it

As summer winds down and my kids return from camp, one of the enduring highlights in the mail is the letters from 13-year-old Zev. His letters from Tamarack, Michigan, usually take a week to arrive, but they're worth the wait: crazy remarks punctuated by whatever junk food he could find. Here's an account of a trip he took:

Everyone complained that they were hungry. And to make matters worse, we had to use the bathroom in front of a Subway and a Dairy Queen. We protested and refused to get back on the bus until we got something to eat (which the counselors were not very happy about). Some people took it seriously, but me and my friends made a joke out of it. When strangers walked by, we pretended we were lost, and I sat next to the wall and played my harmonica.

(Yes, Zev brought his harmonica to camp.)

The next letter reported another bus ride out of the camp.

I drank an entire bottle of Diet Dr. Pepper. (I was going to get Cherry Dr. Pepper but that has 70 grams of sugar.) It was SO GOOD and I also ate half of my friend's Pringles pizza. So that helped when the bus couldn't make it up this super steep hill. We had to get out and climb up ourselves so the bus had less weight. Half the kids started crying because they thought the bus was going to fall down the hill. And my friend Daniel threw up, which made five other people throw up. It was pretty crazy. We finally made it to the campsite. Everyone was pretty exhausted by this point. We had to unload all of our stuff and set up the tents. My friend and I played spear throwing with the tent poles and he won. ☹

In the best camp stories, something is about to go horribly wrong. And that's exactly the state of entry-level employment in America—with socioeconomic advancement and educational attainment that couldn't be higher. So bear with me for a moment while I introduce a topic that I guarantee you'll receive with about as much enthusiasm as Zev did when I first talked to him about camp years ago.

For over 30 years, large companies and organizations have run functions such as finance, human resources, supply chain, sales, business intelligence, and project management using enterprise resource planning (ERP) software such as SAP and Oracle (formerly PeopleSoft). ERP became the operating system of late capitalism; everything ran on it. Because these systems covered so much digital terrain, implementations were complex and often had disastrous consequences. If you work in higher education, your first encounter with ERP may have been a PeopleSoft implementation that was years behind schedule, millions over budget, and resulted in a headline-grabbing lawsuit.

Because the primary benefit was accessing a unified database of information from across the organization and connecting to a single general ledger, ERPs were one-size-fits-all solutions that were neither tailored to a specific industry nor specialized enough to allow functions to be managed entirely (or at least well) in the system. Because ERPs only captured part of the workflow, the typical use case was to log completed work in the ERP rather than executing it from start to finish. For most professionals, working with the ERP was more about extracting data to analyze and manipulate outside of the system than actually working on the platform.

With the shift of software to the cloud and the rise of function-specific SaaS products such as Salesforce (CRM/sales), Workday (HR), and ServiceNow (IT), ERP now seems as outdated as the letter-writing tradition, albeit with less charm and fewer funny stories. Specialized SaaS platforms allow professionals to do most or all of their work entirely in software. How? Because they have digitized virtually every possible workflow—or at least best practice workflows—for relevant business functions. These new platforms are rigid but highly configurable digital reflections of the enterprise. And while SAP and Oracle have tried to respond with new modules, they are limited by not being cloud native and lacking the focus, function, industry, or workflow expertise to compete with specialized SaaS.

Why should we care? Because the decline and fall of ERP has already changed the entry-level jobs that colleges supposedly prepare their students for.

In the heyday of ERP, knowledge and experience of PeopleSoft or SAP was only found in job descriptions for IT positions: administration, configuration, or support of the ERP itself. Of these, there were thousands—not millions—of positions accessible to college graduates. However, ERP-related positions in finance, human resources, supply chain, sales, business intelligence, and project management did not require ERP knowledge or experience. Why should they? Because ERP's functionality was limited, these roles did not require working in the ERP system, just checking in now and again. So managers believed new employees could learn everything they needed to use the system and then get to work. This made millions of ERP-related jobs perfect for college graduates.

Thanks to digital transformation and the rise of specialized SaaS solutions, almost all good jobs today are no longer located next door, but are offered full-time on these SaaS platforms. That's millions – not thousands – of entry-level positions. And because specialized SaaS solutions are industry and function specific, job descriptions increasingly require not only platform knowledge – usually mentioning the specific SaaS platform – but also experience in the industry and/or function. Since these platforms are supposed to cover 100% of the workflow that used to be handled via ERP + Excel (or paper or manually), hiring managers today look for candidates who already know the industry and/or function. Because if they don't, they're screwed from the moment they start working with the platform.

To choose an example as exciting as ERP, let's talk about finance. Every organization of a certain size has a finance function and either a CFO
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or controller responsible for accounting, reporting, and budgeting. 70% of CFOs say they continue to rely on Excel for budgeting and forecasting because ERPs lack the ability to perform full financial planning and analysis (FP&A) in the platform. This is not ideal for two reasons: (1) reconciling data across different spreadsheets can be time-consuming; and (2) Excel documents reflect a single point in time and need to be updated or revised in subsequent months. Hence the rush to specialized CFO SaaS platforms like OneStream—easier and less expensive than the many ERP modules required for FP&A. But the bigger reason is that CFOs are being asked to provide more value than just closing the books and distributing reports. They play an increasingly important role in strategic planning and value creation discussions, and often directly inform or influence operations.

Consider a global manufacturer experiencing sudden price increases from its suppliers. In the old days of ERP, the trend might not have been identified until after the month-end close—typically 2-3 weeks into the following month. Then the CFO (or more realistically, a recent college grad working as an analyst) would export the data to Excel and run scenarios to find options so that the unexpected cost increases don't result in a missed quarter. That probably takes another week or two, so there's no action plan for at least a month. In contrast, a SaaS platform like OneStream presents real-time data with company-wide reports by location, product, and business unit and notifies the CFO (a recent college grad working as an analyst) the same day. Then—again using real-time data—OneStream runs rolling forecasts for different scenarios and makes a recommendation—all on the same day. The result is an immediate turnaround plan, not a months-long delay that could jeopardize the quarter and the CFO's job. Hence OneStream's rapid growth and successful IPO last month.

When the above tasks were still done by extracting data from SAP and then manipulating it in Excel, few finance departments bothered to list this detailed workflow in job descriptions, let alone require SAP knowledge or experience. But now that the work is increasingly being done entirely on specialized SaaS platforms like OneStream, finance is listing OneStream knowledge and finance experience in job descriptions.

We see the same pattern repeating itself across all companies, affecting millions of jobs, especially in the private sector; the public sector is still catching up in ERP. For young people looking for a good first full-time job, the consequences couldn't be worse. Jobs that were once entry-level jobs – jobs that didn't require any prior knowledge or experience in a particular industry or job function, let alone with a particular SaaS platform – are simply no longer accessible to college graduates or even candidates with a college or professional degree.

The displacement of ERP by specialized SaaS is the reason for the experience inflation that affects millions of new and recent graduates. A LinkedIn study found that 60% of applicants for entry-level positions with a software component require years of experience. Most good entry-level jobs require entry-level candidates to demonstrate that they have practically done the job before, which makes the whole entry-level job thing ridiculous. It means that colleges urgently need to address a topic that they are by design meant to avoid and ignore.

However, universities cannot claim they don't know about ERP. Like governments, they rely on ERP for their day-to-day operations. However, universities are already way ahead when it comes to leveraging powerful SaaS platforms like Salesforce (CRM) and JAGGAER (procurement) and engaging trusted higher education-focused service providers like Cloud for Good (an Achieve Partners portfolio company) and RiseNow to implement these platforms and really make them work.

As colleges go through this transition, they should also think of the many graduates who invested and borrowed a lot of money to get a good first job, but who are now more lost than Zev in front of the subway/DQ.