While gaming has led the foray into the metaverse, it is quickly capturing imaginations for business use cases, especially in the areas of workplace collaboration, innovation, consumer engagement, and employee experiences.
But what will it mean to the future of enterprise resource planning (ERP)?
ERP collects transactional data from multiple sources within an organization to provide a single source of truth. As an integrated platform, ERP exists on premises or in the cloud and acts as a central hub for daily end-to-end workflow and data management of core business activities such as finance, accounting, procurement, supply chain operations, etc.
Representing the next generation of the internet, the metaverse and Web3 technologies offer new advanced opportunities for businesses and consumers to engage, transact, socialize, and work. An evolving 3-D virtual universe, the metaverse is a fast-growing market anticipated to reach nearly $800 billion by 2024.1
1Source: Bloomberg, “Metaverse may be $800 billion market, next tech platform” (December 2021).
From a finance perspective, ERP is a central hub. And in finance, all roads lead to the general ledger. However, the centralized traditional rule-based transactional approach of ERP is disrupted by the decentralized nature of metaverse and Web3 technologies. These technologies enable decentralized transactions in a distributed and digital infrastructure that can handle massive volumes of data quickly.
So, based on such contrasts, how will ERPs be able to interact, relate, and account for transactions in the metaverse in the future? The answers will surely evolve over time as systems and technologies continue to advance. However, while the potential for a blockchain-powered ERP system may seem light years away, there are steps organizations can be taking to increase ERP platform readiness and seize near-term potential opportunities from rapidly evolving metaverse and Web3 technologies. To get started, consider the following:
- Assess the current landscape.
It’s important to understand your current business environment and the future strategic direction of your organization to assess the future business need for ERP. Are you planning to transact or interact in the metaverse? Does your organization see a future that leverages metaverse and Web3 tools for business application and customer interactions? Can your current systems handle high volumes of data? What changes does your organization need to be able to make this happen? For example, it’s necessary to determine whether your systems currently have the capability and flexibility to expand into Web3 models or to work with these new data sets. So, it’s time to begin understanding where your organizational ERP is today, identifying a business need (if applicable), and exploring options to be able to get there.
- Consider integration and expansion.
With this next surge of ongoing digital acceleration comes data, data, and more data. Meanwhile, many organizations are still saddled with legacy systems that lack the ability to process the high volumes of data that these new technologies will whip through easily. Therefore, it’s wise to start thinking through how to evolve the integration between old and new processes and mapping out more immediate needs versus long-term goals. With more data to leverage, think through a potential strategy to expand operational capabilities able to handle these new technologies. Seeking answers about these challenges now will help determine how to achieve greater efficiencies and effectiveness in achieving the desired level of integration in the future.
- Move to cloud.
If your organization hasn’t moved to the cloud already, it’s time to do so. The cloud helps solve the previous step of integration as it opens your ability to integrate with more tools. It provides flexibility and can scale quickly. The more platforms that an organization uses in the cloud, the easier it will be to integrate new data sets faster because that is inherently what the cloud does best. Moving ERP off the rigid structure of a legacy on-premise environment into a cloud platform simplifies the move to an integrated data model and will be necessary to achieve integration with metaverse and Web3 technologies. Moreover, the cloud’s ability to scale up or down quickly will prove beneficial during spikes in transactional volume or other data, which is something that an on-prem environment would not be able to handle.
- Understand it’s an evolutionary process.
The move toward Web3 is an evolutionary process that will happen overtime. It’s not about changing the business model overnight but a process of starting small and expanding as things progress. It’s also worth noting that the evolution in ERP may not only be about whether the technology can facilitate the necessary transactions but also whether the right rules and processes are in place to properly account for them in a future metaverse/Web3 environment. It’s also worth considering the possibility that future capabilities of the metaverse may require changes to historical accounting concepts down the road. This is due to the very nature of how Web3, blockchain, and smart contract technologies provide proof of ownership and on how digital assets are valued in emerging types of toolsets.
- Experiment, experiment, and experiment.
Take time to experiment even if the goals are far away. Blockchain is a good example of new potential as it is a proof-based technology already used a lot in finance applications. Experiment with this newer technology alongside current ERP processes so that your organization gets ready for what’s coming in the future. Begin testing. How does the data work together? Are there specific transactions that could lend itself to a metaverse model? Having the foresight of your industry, design a clear path to potential business opportunities in some relevant channels. We recommend starting small and experimenting as you build upon your ERP system.
These steps create a starting point to begin exploring the potential ERP opportunities within metaverse and Web3 environments. While many challenges still exist, including getting real-time data, integrating data between systems, upgrading infrastructure, ensuring security, achieving Web3 interoperability, and more, it’s worth getting a jumpstart on the future of ERP in conjunction with the vast new potential that metaverse and Web3 may bring to your organization.
For more insights on the metaverse, click here.