Last updated: The secret benefits of ERP, revealed

The secret benefits of ERP, revealed


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Is your ERP able to help you achieve your goals? Is it agile and flexible? Does it adapt easily to our rapidly changing world?

Or are you running software that may have once been state of the art, but is now stuck? Stuck because of customizations that built barriers to innovation? Or stuck because you can’t justify the cost and effort of upgrading because you’ll still be constrained by older technology?

If you’re stuck, your best path forward for getting the benefits of ERP is most likely replacing it. But for decades ERP replacement was likened to brain surgery, reserved only for dire cases. “Rip and replace” was to be avoided at all costs. Today, these perceptions are outdated.

Yes, early ERP solutions were rigid and inflexible, limited in functionality, hard to implement, and even harder to use. But the world – and your business – continued to change, and so have newer, next generation ERP solutions that are more flexible, technology-enabled, provide more features and functions, and are easier to install and use.

Benefits of ERP: Advanced technology holds the key

The benefits of ERP often remain hidden for those with lingering concerns about early ERP models, but in today’s fast-moving, global, digital economy, you can’t afford to ignore them. The top benefits of ERP are:
  1. Agility and flexibility
  2. Speed and connectivity
  3. Increased efficiency

The key to unlocking these secret benefits of ERP is in understanding the potential and then mapping out a plan to realize them.

What makes today’s next-generation ERP so different? A variety of different types of advanced technologies can be embedded in enterprise applications today. It’s through these kinds of embedded technologies that new ERP systems provide additional value. Of course, some vendors do a better job than others in leveraging them.

Table 1 presents some results from my study on the perceived value of several of these technologies. This study collected feedback from 464 survey respondents from companies of all shapes and sizes.

Table 1: Perceived Value of Advanced Technologies. Source: Mint Jutras 2019 Enterprise Solution Study

While a growing percentage of respondents perceive these technologies as providing strong value, on average (across all) 30% are unsure of the value. Essentially, they’re saying, “Show me.”

Let’s start now.

The LEGO approach to ERP

Development platforms and microservices architectures, on which applications are built, provide the perfect example of those secret benefits of ERP.

For the reader with a technical background, a microservice architecture is defined by Wikipedia as an architectural style that structures an application as a collection of loosely coupled services. For nontechnical readers, think of it as constructing a solution from a set of LEGO building blocks.

Think about how you build a structure from LEGOs. Each LEGO block is made of the same kind of material and connected to the other LEGO blocks the same way – in many ways they’re interchangeable. But by choosing different colors and sizes, and connecting them with a different design, you can make a structure that’s very unique.

And once constructed, if you want to change it, de-coupling some of the blocks and replacing them doesn’t destroy the parts that aren’t affected.

These platforms and technologies provide a level of agility, configurability, and extensibility that help respond to change.

Cloud and SaaS benefits for ERP

Whether you run an ERP on premises or in a private or public cloud, the ability to access anytime, from anywhere is a significant advantage. Cloud-enablement opens the door for the kind of connectivity you need as an active participant in the digital economy, yet only half of our survey participants perceived it as valuable. If we were to ask this question today, given the need for distancing and remote work, this would likely change.

But there are other benefits to moving to the cloud in general and SaaS in particular.

We see subscriptions to software rapidly replacing the traditional license. When you license a copy of the software you take on the responsibility for maintenance and upgrades. This is especially important in light of the fact that when asked to select the top three challenges in achieving maximum value from ERP, “cost and disruption of upgrades prevent us from innovating” was at the very top of the list.

With a SaaS solution, the solution provider assumes that responsibility and does the heavy lifting for you.

Embedded artificial intelligence

Technologies like machine learning, natural language processing and other forms of AI have become prevalent in consumer technology. Now’s the time to bring them into the enterprise, by adding value and embedding them.

Apple customers didn’t demand the ability to converse with their mobile devices. Apple just delivered it, not as an option and certainly not without adding to the cost. But they didn’t charge extra for it. Other device manufacturers followed suit. Pretty soon virtual assistants became commonplace, and people got hooked. It was only after this that people willingly went out and bought stand-alone devices like the Amazon Echo Dot and Google Home.

Make no mistake – the same thing is happening with enterprise applications.

Modern platforms add a level of configurability and extensibility that provide the agility needed to keep pace with the pace of change in technology and business. Cloud and SaaS add speed and contribute to affordability.

Pretty soon all sorts of AI technologies will be generally available for the enterprise, but you won’t be able to take advantage of them if you’re stuck on old legacy ERP.

ERP and the RPA advantage

Robotic Process Automation (RPA), as the name implies, is all about automating routine tasks in order to free up time for more strategic tasks that contribute more value. For decades ERP has claimed to streamline and automate these processes, but the term “automate” was used quite loosely, to say the least.

Today’s technologies truly enable these tasks to be performed with little or no manual effort. Examples of routine tasks that can be largely automated include:

  • The filing of travel expenses
  • Reconciling data for a month or year-end close
  • Three-way matching
  • Applying cash to outstanding invoices

Manual intervention would only be required when exceptions are detected. Of course, the more intelligence you can add to these automated processes, the fewer the number of exceptions.

Embedding AI and machine learning enables RPA to better detect anomalies and prevent errors. With these added capabilities, the more they’re used and the more data that is collected, the more they learn over time. Today’s “intelligent ERP” solutions are nothing like the legacy applications of yesteryear.

Get smart: Benefits of ERP with advanced analytics

Advanced analytics, often in the form of predictive or cognitive analytics, is another way to make ERP smarter. Early ERP solutions were notorious for being far easier to get data into than information out of. You had to know exactly where to look and how to get there to have any hope of getting answers. And you had to ask all the questions because the solutions didn’t offer much in the way of advanced notification of issues.

That’s all changed with new ERP systems. Today users are often greeted with role-based, personalized dashboards with visually appealing charts and graphs. These dashboards become their portal – a gateway so to speak – to all the data previously hidden in applications. They get alerts and notifications on those dashboards and on their mobile devices.

Not only have user interfaces become more intuitive, making systems easier to use, some have even learned to “listen” and “speak.”

All modern ERP solutions do a better job of presenting data to you. But data-driven decision-making requires more than just reporting. Predefined reports help you answer relatively static questions like: How much did I sell by customer type or region? Analytics present the bigger picture and can help you figure out what questions to ask like: Where and how will I have the most success in regaining and/or growing revenue?

Smarter analytics can spot patterns that produce fewer sales. They can do predictive scoring and modeling to identify those patterns early and exploit them for guided decision-making. The smartest solutions will then continue to learn, getting better at spotting issues earlier.

Evaluation tips: Improving for today, planning for the future

Now that you know the benefits of ERP, how do you go about finding the right solution?

While features and functions are important, there’s danger in making a decision solely based on what you need today, because it might not be what or all that you need in the future. Last year my Enterprise Solution Study found 90% of companies believe they face some level of risk in their business or industry being disrupted by new products, ways of selling or pricing, business models, or some combination of all of the above.

And don’t forget all the traditional forms of disruption like expansion, reorganizations, and regulatory issues. Any of those can have a cascading impact on business application requirements, making agility – the ability to easily innovate, evolve and change – even more important than current functionality. For that you need the right approach to innovation and the right architecture and platform to support it.

Other considerations:

  • The user experience, including easy navigation, visual appearance and personalization
  • Integration capabilities
  • Quality of built-in reporting and analytics
  • ROI in terms of real cost savings and/or generation of increased revenue

If you’re running an outdated ERP, don’t look to recreate what you’re doing today, but instead automate, improve efficiency and productivity, provide added visibility, and give yourself the ability to make more data-driven, strategic decisions.

ERP implementation, done right

An ERP replacement is more like a joint replacement than brain surgery. You suffer with that bum knee or hip until you can’t stand the pain any longer, or can’t function properly. Many ERP implementations today suffer from pain, and prevent businesses from being flexible and reaching their goals.

Here are a few recommendations for a successful ERP journey:

  1. Don’t wait until the patient is critical. Running an implementation project when the business is under duress doesn’t support careful consideration, planning, and execution. You’ll be tempted to take shortcuts that you may later regret.
  2. Need it but can’t afford it? Consider the potential cost savings. Most ERP solutions pay for themselves in less than two years. If capital funds aren’t available, consider SaaS deployment with less up-front cost.
  3. Set goals and measure. Before embarking on your ERP project, decide which metrics will measure success. Establish a baseline, set goals, and measure progress against those goals. When you reach them, set another goal. Continue to measure and reap more benefits.

An ERP implementation isn’t easy. Just like surgery, there will be some recovery time – that doesn’t mean your business stops. It just means you need to take extra care to ensure a full recovery, with the result being a healthy business that’s able to function better than ever.

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