For companies that have implemented ERP, whether it be SAP, Oracle, Sage, Microsoft Dynamics or one of the lesser known ERP products, it is widely acknowledged that the idea behind implementation of ERP was to bring improved effectiveness and efficiency to the information systems that the business is reliant upon.
For companies that have implemented ERP, whether it be SAP, Oracle, Sage, Microsoft Dynamics or one of the lesser known ERP products, it is widely acknowledged that the idea behind implementation of ERP was to bring improved effectiveness and efficiency to the information systems that the business is reliant upon.
There is a strong business case for picking best of breed solutions but there is also a strong case for homing relatively homogenous and standardized business processes like inventory management and financial accounting in an ERP installation. Given the diverse nature of personnel practices and regulations across the globe, the inherent nature of different demands from different business units in terms of and language differences it comes as no surprise then that often HR and HCM systems are among the last to be consolidated with the rest of ERP.
The choice of ERP as the consolidating central nervous system of business Information technology is often driven by the level of confidence that IT managers have in the understanding of all of the business’ requirements and their general understanding of what ERP is all about.
Messrs Liane Elbertsen, Jos Benders and Ed Nijssen of the Nijmegen School of Management in their article ERP use: exclusive or complemented? Industrial Management & Data Systems, Vol. 106 Iss: 6, pp.811 – 824 concluded that if managers perceive ERP as more complex and less compatible (with the requirements of the business), they actually adopt more ERP modules. Additionally, less competent managers seemed more prone to ERP vendors’ marketing activities which significantly affected the number of ERP modules adopted. When embarked upon, an ERP system is not just any old “IT solution” but becomes a state-of-the-art form of organizational advancement. This means that an ERP implementation inevitably means instituting organizational changes which increase the complexity of using an ERP system.
Although the ERP system is meant to become an all-embracing technology solution, often times it is dealt with as an island of excellence apart from the rest of the IT infrastructure that the business relies upon. This becomes particularly true if the business uses a partner to care and feed for the ERP solution and has no competency internally in the organization.
The net result is that the business funds a partner to provide application management services and develops no in-house competency. There is nothing fundamentally wrong with this approach except that this approach moves back towards the old data processing center approach that was popularized in the 1950’s and 1960’s when many business in the SMB segment didn’t run their own systems and instead relied on a data processing bureau to process their data for them. Things are not quite as bad as the DPB model but there are some challenges with maintaining agility when your core IT system is completely in the hands of a commercial partner.
Even when the support and sustainment of ERP Is not outsourced there is a tendency to perpetuate an atmosphere and mystery around the ERP system. Administrators and techno-functional resources keep their functions and tasks shrouded in secrecy in the misguided illusion that this helps with job protection. In reality, ERP systems are so vast and cover so much complexity that there are only relatively few people who can really claim deep cross functional knowledge and even this is largely constrained by their specific experience with working with a given ERP system. It’s easy to suggest that more time and effort should be spent on embracing the rest of the IT support organization and empowering them to get in on the ERP action but in reality that will never happen.
Instead business and to a certain extent IT is forced to deal with ERP as a bit of a black box technology that the business uses to transact, internally and externally. Very quickly though it is also recognized that there are growing dependency in many parts of the business and the business partnerships on data housed in that ERP system. As a consequence of this growing reliance on ERP data, businesses are looking to more generic platforms to surface ERP functions and reface ERP tasks And expose ERP data.
ERP systems have notoriously voracious appetites for data, so much so, that often the initial inefficiencies in using an ERP system emanate from the business not being well prepared for the multifaceted and complex data requirements that new standardized and ‘optimized ERP transactions require. ERP systems also have the more unsavoury moniker of being a bit of a data vice. ERP’s database is a repository that doesn’t easily support business reporting and free access of data. This secondary problem has resulted in the rise of data reporting and data warehousing technologies to perform data cube based modelling of data and data reporting.
It is unlikely that ERP will disappear altogether; although those who tout a subscription economy believe otherwise – too many core functions need tight integration and already have optimized workflow and process flow bound into the end to end process. Besides; your systems, ERP or otherwise, will always be hungry – simply switching to an SAAS model won’t change that; in fact it is likely to just make data processing and data entry more complex and tougher on business users.
Best of breed solutions, SAAS or otherwise, will continue to challenge, just as Salesforce.com has in the past and others will in the future, but there are some interim steps that ERP owners can take to feed ERP’s appetite and service the data demands of the business community and its partners without having to necessarily remove all the impermeable city walls that ERP has historically represented.
By building on the existing successes that thousands of ERP customers have already invested in helps to make cumbersome ERP-bound business processes more efficient. This is furthermore achieved in days and weeks instead of months and years which is the most common time-line that has to be endured with ERP functional enhancements.
There are many ways this can be done, either in mass scenarios, which incredibly still represent a significant benefit to the business or in the increasingly appealing space of forms wrapped with workflows that lead to the progressive layering of data before the final, push to or pull from ERP. These are achieved furthermore, without the need for programming. The point here is that the CIO, IT Manager and enterprise technology architect have something additional to consider when they want to spend their precious technology budget dollars.
Assuming that improving data syndication, process improvement and automation requires more investment in ERP itself assumes that ERP is everything that the business has in terms of a technology stack and we know that this is truly not the case. Often ERP represents the final resting place of data that constitutes transaction of record for audit and accounting purposes but often the process of gathering up and collating the data or making decisions on data is done outside of ERP and only put into ERP when a legal document is required or downstream tightly integrated process step needs to be triggered.
Author Bio:
Clinton Jones is a Product Manager at Winshuttle. He is experienced in international technology and business process with a focus on integrated business technologies. Clinton also services a technical consultant on technology and quality management as it relates to data and process management and governance. Before coming to Winshuttle, Clinton served as a Technical Quality Manager at SAP.