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We have seen technology evolve from centralized computing in the mainframe era of the 70s to decentralized computing in the client-server era of the 80s/90s and are currently witnessing a movement back to the concept of centralization with the advent of cloud computing. While we’re yet to see full adoption of the cloud, I believe we’re already beginning to move towards decentralization yet again albeit in conjunction with cloud. There is good reason to believe this – Big data is distributed database, blockchain is distributed ledger and IoT is distributed computing.

IoT is a game changer much in the same way today as desktop computing and cloud computing was in its day; perhaps more. This time, though, the concept of centralized (cloud) and distributed (IoT) is rather blurry because they will both co-exist and, in fact, complement each other. While IoT is now a household term and needs no introduction, the idea of IoT as decentralized computing needs to be understood.

The term ‘edge computing’ (which might well become the buzz word for the next few years just like data science was for the last few) is now beginning to be widely used to explain the working of IoT and, in fact, the future of technology. Simply put, edge computing means that the ‘things’ (of the internet of things) will not just act as sensors and actuators of a microcontroller but as moderately powerful computing devices that can perform a good lot of processing within the device without communicating with the internet (or the cloud) for improved performance. The device will be at the logical periphery (hence the name ‘edge’) of the system of devices and gateways. This has been made possible now largely because of massive reduction in cost and size of memory and processors. There is, of course, a lot more you can read up on why it’s important and how it is implemented. The primary focus of this article is to explore the possibilities this brings to the world of ERP and if we could be moving towards an era of distributed ERP.

The use cases for IoT in the context of ERP is numerous. It can be used for product improvement by making the product provide real-time feedback, it can enhance warranty services and warranty management, predictive plant maintenance, the list is endless. All these operate within the restricted paradigm of current idea of IoT where the device acts primarily as a sensor or an actuator – mostly sensor. But IoT takes a whole new meaning if you think of it as part of a distributed ERP system. A distributed ERP would mean that the data is located not just on a centralized server (either physical or cloud) but also distributed across devices and systems. This is an example where cloud and edge computing will co-exist and complement each other. In this scenario, a part of data which is relevant to the periphery device would be present within the device itself. This data may be generated on the device itself or may be user-generated and synchronized from another location. This would result in improved latency and better utilization of available resources. With the concept of distributed ERP, several new possibilities and use cases emerge.

  1. In case of predictive plant maintenance, an equipment acts as IoT device and the historical data of the equipment will invariably be present on it. However, if we can also store in it sales-related data and schedule lines, the equipment can fine-tune itself, with a little help from machine learning techniques, such that the promised delivery times are not compromised even in case of preventive maintenance, for example by shutting itself down at suitable intervals.
  2. In manufacturing concern, a production line acting as IoT device can feed the actual production data for a batch directly to the ERP database without user intervention (or without using an RPA tool). Now if this can be combined with data from QM module (and SD module, in case of MTO production), actual input to the production line can be calibrated to produce the desired product.


To put it simply, in a distributed ERP environment, each IoT device will be able to collect data from other modules and process information within its processor making it a much smarter and faster device. As devices become increasingly connected and user data maintenance reduces, the ability of devices to combine the data it generates with information from related modules will be instrumental in downstream reporting and decision-making.

Admittedly, despite rapid advancement, IoT is still in a nascent stage and distributed ERP as a concept has not yet been conceived. This article only explores the possibility of enterprise technology moving in this direction. But with all major vendors including SAP investing heavily in these technologies (SAP, with its investment in SAP Leonardo, stands the best chance in winning this game that it already leads in), we could be seeing ERP ecosystem shaping in this direction sometime in the next decade.

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