8 ways ERP can help lead your digital transformation
Digital transformation is often associated with highly innovative technologies like predictive analytics, AI, and robotic process automation (RPA). Common business applications like enterprise resource planning (ERP) systems don’t often inspire quite the same level of enthusiasm.
Yet, although ERP isn’t new or disruptive, the technology is advancing from the back office to the forefront of business digitization. While its customary focus has been to help organizations unite traditional business-management solutions, ERP also provides a flexible foundation upon which organizations can integrate more cutting-edge technologies. Put simply, a well-configured ERP solution can help organizations strategically advance their digital maturity and drive transformation.
Implementation of ERP and ancillary technologies won’t be easy, but here are eight tips on how to execute a successful deployment and get the most value from your IT investments.
1. Align ERP and digital strategy
ERP should be fully aligned with your organization’s digital strategy, as well as its business objectives and processes. IT and business leaders must ensure that ERP is embedded in the organizational culture and serves as the foundation for technology modernization. A certain amount of education might be necessary, since using ERP as a foundation for digital transformation will be a novel concept for some stakeholders.
Executive buy-in will be critical to ensuring that the implementation extends beyond technology. You’ll need to maintain an unwavering focus on re-engineering business processes and comprehensive change-management initiatives for employees.
2. Implement in phases
Chances are good that implementation of an ERP system will temporarily disrupt day-to-day operations. Keep in mind that typical deployments last roughly 10 to 18 months, depending on the size and complexity of the company and its operations.
A phased deployment can help reduce the risk of disruption. Many businesses opt to implement ERP by individual module, updating functional groups one at a time. Doing so enables organizations to better understand the implementation process, challenges, and expectations for value. Incremental adoption also allows for employee training, one business function at a time; deployment teams can apply lessons learned from each launch to continually enhance deployment processes.
Another option is an incremental deployment by business location or site. This approach can help ensure project success by implementing modules at an initial site that serves as a pilot. This will enable you to establish a reference point, experience, and roadmap for subsequent rollouts across the organization.
3. Rewrite the right business processes
Digitally delivered customer preferences, market shifts, and rapidly evolving business models have made efficient processes critical to operational performance. Deployment or upgrade of an ERP system provides an opportunity to re-engineer and document operational processes from the beginning of the project. The goal is to redefine and streamline your business processes in ways that standardize operations across functional units and enable integration of leading-edge technologies.
You can, for instance, harness the power of RPA to automate manual processes across multiple functions to quickly and efficiently make low-level decisions. Another way to streamline operations is the use of AI to automate tasks like end-to-end processing of invoices for accounts payable.
It’s important to note that simply applying new technology to old processes isn’t effective. Now’s the time to strategically rethink your business processes in ways that, in combination with new digital tools, can really transform the organization.
4. Maximize your data
Data is the lifeblood of your business, and ERP provides a centralized information platform and a single point of truth. But the insights you glean will only be as good as the underlying data.
You’ll need to maximize the utility of your data with a comprehensive data-governance program and strategy for cleaning, managing, storing, and archiving disparate types of information. Data must be interoperable across all relevant sources to achieve real insights into your business performance.
It’s also essential that data is accurate, particularly when implementing data-driven technologies like predictive analytics. When centralized on the ERP platform, this data becomes a single point of truth for analytics across the organization. It should be clean and consistent to seamlessly flow from the ERP across the ecosystem.
5. Make ERP customer-centric
One of the most powerful strengths of ERP is its ability to improve the customer experience. That’s also a key driver – and an ideal outcome – of digital transformation.
ERP can help you align internal processes to deliver on customer needs. Business leaders should first identify critical customer interactions and leverage digitized data to tailor the experience. You’ll also need to refocus business processes on the customer and combine the right technologies. ERP should be integrated with systems like CRM and e-commerce to unite customer data, as well as help enhance inventory management, pricing, and supply-chain operations.
6. A path to the cloud
While on-premise deployment remains the most popular option among midsize businesses, cloud adoption is catching up. It’s easy to see why: Cloud-based ERP solutions are scalable, cost-effective, and offer strong cybersecurity safeguards. The cloud also provides a modern platform for deployment of new technologies.
Some businesses we know are implementing cloud-ready on-premises systems that can be moved to the cloud later. Doing so enables them to transition to cloud at their own pace, based on individual business strategy, resources, and evolving customer needs.
7. Training for change
Organizational change management is critical to successfully adopting ERP. Many people resist new technologies, so you’ll need to identify and eliminate barriers that prevent staff from using ERP and ancillary systems. Communications and training will be the backbone of instruction, and will require carefully considered programs to effectively educate your people in the processes and procedures for using new systems.
8. The next level in digital maturity
If your organization currently has a robust, well-integrated ERP system, you could be poised to build on that foundation and maximize your ERP investment by adding on emerging technologies like AI, RPA, and advanced analytics. Doing so can open a world of new possibilities. Consider, for instance, that businesses are beginning to deploy AI-driven products that automate functions like accounts payable. AI tools, when integrated with ERP, can programmatically capture, process, and pay invoices, as well as extract business-critical information that can be parsed to better understand performance and profit.
Paul Ricci, CPA, Partner, Technology+ National Leader
Purvesh Sheth, Director, Technology & Data Practice
How can CohnReznick help you get the most out of your ERP system and IT Strategy?