What leaders need to consider before implementing ERP
Implementing an enterprise resource planning system is more than just an IT project, it is a business-wide strategy to unlock multiple benefits for stakeholders
September 8, 2020 by JP van Loggerenberg
The conversation on digitalization has grown louder, and more urgent lately. Experts everywhere are telling CEOs, CTOs, and COOs that they have to go digital, in order to remain relevant in their market. This picture is often painted as an all or nothing endeavour, but the truth is it’s not.
As a manufacturer, digital transformation in your business is a huge step, and can be a very expensive one, particularly when you start considering the Industrial Internet of Things (IIoT), artificial intelligence (AI) and robotics.
While manufacturers are taking notice of the possibilities that digital transformation can bring to their business, they are not always sure which technologies are relevant for their business, or understand how best to leverage digital opportunities.
Digitalization can create efficiencies in your business, could open up new revenue streams, and it can position you as the technological leader in your industry – depending on how “all-in” you choose to go. The truth is, however, that there is much value to be gained in starting slowly, creating a digital strategy, and making sure you have the fundamentals in place.
A future-fit ERP system can help you to make the transition to digital
ERP (enterprise resource planning) provides the platform to automate, integrate and digitize business processes. An effective ERP system offers multiple benefits. It can improve overall business performance and help your organization with digital transformation.
Before expanding into complex and more costly technologies, it is important to get the foundation right by investing in a robust and scalable ERP solution, prior to expanding into more complex and costly technologies.
An ERP can help you to automate and integrate core business processes such as taking customer orders, scheduling operations and keeping inventory records, and financial data.
Correctly implemented, it can also provide intelligence, visibility, analytics and efficiency across every aspect of a business. This will enable employees to contribute at a higher level, and make decisions from a well-informed position, and will foster better communication and collaboration across the business. Knowing where to start is often the biggest challenge.
Implementing an ERP system is more than just an IT project, it is a business-wide strategy to unlock multiple benefits for stakeholders. Its drivers, and business objectives are firmly rooted in the business, and it has a major impact on its people, processes and culture, so it is important to have the right approach and attitude when embarking on this journey.
To give the implementation the best chance of success, you must have top management support, and clear goals, and objectives.
Top management – preferably led by the CEO – must remain responsible and accountable for the implementation project. They will need to manage the project and be prepared to accept that there will be setbacks that could happen along the way, but how they are navigated will determine the outcome.
Before you choose an ERP software your end goal or your definition of success – be it increased efficiency, cost control, quality improvement, process optimization or overall profitability — must be clearly defined and understood.
You need to know what specific measurable benefits the system needs to deliver, and be able to manage stakeholder expectations and gauge whether your various stakeholders (including your employees, management, and customers) are happy with the delivered outcomes.
Change management, communication and user education will also be important role players. You will need to communicate early, often and in-depth with your people, or they won’t commit to using the system.
Training on the system must be mandatory, and users must understand how it works and why it was necessary to implement the ERP. Training should be ongoing as the scale of the implementation and the capabilities of the ERP system grows.
It is critical to understand that your ERP solution requires ongoing attention, oversight and support throughout its life cycle. Without the correct level of attention and maintenance, your system won’t work effectively.
Remember to focus on the foundational pillars
If you are considering making the move to digital, remember to keep the three foundational pillars of customer experience, your own operational processes and your business model, top of mind when making your decision.
1. Customer experience
If you have no customers, you have no business, which is why your customer should always be at the heart of everything you do.
Today’s business landscape is a lot more fast-paced, and customers are a lot more demanding than before. Standard product offerings are no longer enough, and personalization and customization are the calls of the day.
Manufacturers need to understand, profile and categorize their customers, and your ERP can help you do that by providing a socially informed, analytics-based segmentation of your customer base. This will help you to better connect with your customers and service them more easily.
2. Operational processes
Operations are the foundation of any manufacturing business. By digitizing, you can standardize on your business processes and streamline operations.
While there are a wealth of technology solutions available, micro-services architectures or platforms, cloud enablement and software as a service (SaaS) are the primary foundational technologies being implemented in manufacturing currently, and these should be embedded in your ERP solution.
These types of technologies help manufacturers leverage IoT-driven data, by connecting it to other tools and technologies, like predictive and cognitive analytics, artificial intelligence (AI) and machine learning (ML), which are becoming increasingly appealing.
For these and other technologies to be truly transformative however, they must be able to integrate with enterprise applications like ERP.
3. Your business model
If you’re on a digital transformation journey, you will probably also need to consider making the transition to cloud.
Whether you run a solution on your own premises, or in a private or public cloud, or a hybrid, the ability to access critical information anytime, from anywhere, and to scale up and down quickly in response to events, all within a more secure environment, creates a significant advantage.
It opens the door for the kind of connectivity you will need as a full and active participant in the digital economy.
Get the basics right
Smart manufacturing can be enabled by digitalization, and it is about adding a level of intelligence and connectivity to both the manufacturing process, and to the business of manufacturing.
By getting the basics of your ERP implementation right – ensuring the project engages key stakeholders, having clear objectives and an end goal in mind, ensuring that you have effective change management in place, and taking the three pillars of digital transformation into account – you are more likely to be successful in your digital transition journey.
It is important to do your due diligence, and carefully consider the reasons for wanting to digitally transform your business.
Having a clear line of sight into your current state of readiness, your operational processes and the potential cost implications of transitioning is important, or the transition could cost you more than the benefits that it offers.
By making sure you have a strong foundation, you can help your business to become more agile, efficient, innovative, and ready to embrace the opportunities that digitalization presents.
JP van Loggerenberg is chief technology officer at SYSPRO Canada.