For many organizations, operational efficiency and positioning their organization for growth are major reasons for implementing a new ERP system. However, achieving operational efficiency requires more than just automating your organization’s current processes; it means improving them.
Business process reengineering (BPR) seems easy enough on the surface: reduce costs, improve productivity and enjoy the benefits of larger margins. In reality, business process reengineering requires a deeper analysis. Below are five common areas of inefficiency that you should address in your BPR journey:
- Manual Data Entry and Reporting
Manually entering data for reports not only takes unnecessary time, but it also puts companies at risk for several other organizational inefficiencies. Manually entered data is more likely to contain errors, acts as a road block to providing timely compliance reports and prevents organizations from diving deeper into business intelligence.
- Inaccurate Data
Poor data leads to poor decisions. When data is found to be inaccurate, a myriad of issues creating extra work and backtracking are sure to follow. Budgets and forecasts based on incorrect data severely skew a company’s view of their financial position and negatively impact the ability to make sound decisions. Not only does this result in lost capital, but it also can create a cultural issue of mistrust within the company.
- Data Silos
Data silos limit visibility of data between departments, cause duplicate work and reduce data integrity. This is a hard issue to fix as silos are not only a data structure but an organizational mentality. If silos can be broken down, a company will experience the free flow of information between departments, which eliminates duplicate work efforts and increases collaboration across departments.
- Ineffective Change Management
Organizational change management (OCM) directly affects cost savings and productivity levels, especially during ERP implementations. Without proper OCM, employees lack essential competencies and become wary of widespread changes. These doubts affect the work culture, employee motivation and overall productivity. This wariness can lead to less use of the new ERP system and lower benefits realization.
- Poor Talent Management
It is common knowledge that staff turnover is costly. Not only does the time, money and effort of recruiting new talent far exceed the cost to retain talent, but productivity and profitability is lost during transition periods. Engaging in BPR can improve recruiting methods and create meaningful interactions between leaders and employees – interactions that inspire, motivate and most importantly, improve overall efficiency of an organization.
When attempting to improve efficiency by implementing a new ERP system, it is common for companies to gloss over BPR efforts. It is important to keep in mind that the success of an ERP implementation hinges not just on the technical aspects but on people and processes.