A great customer experience is not something that magically happens. It’s a mindset that’s built and reinforced by optimized processes and easy-to-use systems.
In terms of optimized processes, we’re not just talking about customer-facing processes, as customer-facing employees don’t spend all their time speaking with customers. We’re also talking about the transactional processes that happen behind the scenes.
These processes should be optimized, too. This is essential because when employees are frustrated with poorly designed processes and technology, customers notice. In addition, customers experience this frustration themselves when self-service portals are not optimized.
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The key to customer experience transformation is designing optimized business processes and implementing digital technology that supports these processes. More specifically, here are five tips for improving the customer experience at your company:
5 Ways to Improve the Customer Experience
1. Streamline the Processes of Customer-facing Employees
In many companies, customer-facing employees interact with a bevy of different enterprise systems, some of which are decades old or cobbled together. As you can imagine, trying to navigate through legacy software with inflexible options can cause significant frustration.
Many companies also have inefficient processes. While employees often become complacent with these processes, frustration inevitably arises during busy periods. For example, if a task takes days instead of hours, this inefficiency becomes more noticeable with a heavy workload.
Inefficiency is a problem that can be solved by focusing on business process management and allowing employees to provide input. This shows employees that you care about their pain points, and that organizational changes are meant to make their lives easier.
Giving employees the opportunity to suggest improvements is important not just for morale but for successful process improvement. After all, the employees who complete processes day-to-day are more familiar with the pain points than their manager is.
2. Eliminate Organizational Silos
The dream of many business owners is to lead a company that works together to achieve the same goals. The sad reality is that many companies have departments that operate in silos.
Silos generally manifest as companies create new teams around critical business functions. This effort often neglects the customer experience in favor of achieving a financial goal. As a result, different teams have different goals and benchmarks.
Ironically, when the customer experience at a company begins to suffer, the company often creates a new team called the “Customer Experience Team.” This team is just another silo.
What’s a better approach? Instead of making an individual team responsible for the entire company’s customer experience, consider making customer experience a priority for all business units. We recommend creating customer-focused metrics for every department and designating process owners to hold people accountable. This is the first step towards abolishing silos that damage the customer experience.
Abolishing silos improves trust and increases employees’ willingness to share important information. As a result, you will uncover more opportunities to improve the customer experience.
3. Empower Customer-facing Employees
A frustration that many employees have is the feeling that they must ask permission before acting. To address this frustration, it’s important to create a culture that encourages decision-making and process improvements at an individual level.
One of the best ways to empower employees to be proactive is to create incentives. In other words, consider rewarding employees for actionable suggestions.
In addition, your company should encourage employees to troubleshoot errors and solve inefficiencies on their own. Overtime, hundreds of incremental process improvements can result in significant cost savings.
While employees have many insights that mangers don’t have, they are bound to make mistakes. Not every improvement will be beneficial. It’s important not to punish these mistakes or you may dissuade employees from being innovative.
Instead of punishing the employee, make it a learning experience. Analyze what happened, why the problem occurred and what safeguards can be put in place to prevent a similar issue from happening.
Another reason to empower employees to suggest or make changes is that they hear the most customer feedback. This feedback is especially valuable when it comes to improving customer experience online.
In particular, it’s important to listen for feedback pertaining to the ease-of-use of the various channels customers use to interact with you. In addition, you should seek to understand the types of channels customers prefer to use.
4. Improve Employee Training
When was the last time your company’s new employee training book was updated? While it may not be feasible to update this resource in real-time, it is feasible to review and update your end-user training on a quarterly or annual basis.
During these reviews, you should assess what employees are doing in the field versus what they are being taught. This is important because there could be better processes being used in the field. When new employees understand these better processes, they are more likely to exceed customer expectations.
You should consider updating not just the content of your training but your training methods. One especially effective method is facilitating mock sessions with fake customers. This creates a safe environment where new employees can practice answering questions or running through scenarios.
5. Leverage Analytics
One of the most important aspects of providing a positive customer experience is ensuring employees have access to accurate data. In fact, analyzing customer data gives you the opportunity to provide customers with a more personalized digital customer experience.
For example, understanding the services most valuable to customers can give you a reason to expand upon a particular service offering. In other instances, you can use customer data to craft more successful promotions and better-targeted advertisements.
Accurate data is also useful to managers, as it allows them to monitor the performance of their employees. If one employee routinely belittles clients, then removing them can prevent poor reviews and the loss of customers. On the other hand, if one employee is consistently outperforming their peers, then it’s important to understand what they’re doing, so you can improve your processes.
Obtaining accurate, real-time data can be difficult without a modern ERP system. We recommend carefully evaluating ERP vendors’ customer relationship management (CRM) functionality to find the system that best supports your needs.
Optimized Processes can Improve the Customer Experience
Positive customer experiences are the result of integrated, optimized business processes. This means processes that make both employees’ and customers’ lives easier.
While business process reengineering is an arduous project, the good news is that employees can help suggest solutions. Customer data and feedback also is helpful when improving processes.
Panorama’s digital transformation consultants regularly use their process improvement expertise to enable companies to anticipate customer needs faster than their competitors. We take the time to understand customer journeys, and we can help your company create a customer experience that is memorable – for the right reasons.
One of the most challenging aspects of managing a company is assigning roles and responsibilities around business processes. This is challenging because processes often span multiple departments.
When a process spans multiple departments, this often means that individual departments only understand a small portion of the process. Without knowledge of how a process fits into the bigger picture, it can be difficult to identify opportunities for improvement. It’s also difficult to suggest process improvements when it requires approval from multiple departments.
Fortunately, assigning ownership of certain business processes to key employees can enable process improvement without creating cross-departmental friction. These key employees are called process owners.
A process owner is responsible for managing a process from end-to-end. Their responsibility includes implementation, maintenance and improvement of this process. Process owners are most effective when they understand how their process interacts with upstream and downstream processes.
Assigning process ownership is a business process management best practice that many consultants recommend. Unfortunately, according to our 2019 ERP Report, less than half of companies use consultants for business process management services.
2019 ERP Report
This year's report delves deep into the data to analyze what ERP industry trends mean for organizations now and in the future.
If your company is about to begin a process improvement initiative or an ERP implementation, it’s important to understand the roles and responsibilities of a process owner:
5 Roles of a Business Process Owner
1. Be Data Driven
To help your process owners become more data-driven, we recommend implementing technology with strong business intelligence functionality. This is important because process owners don’t have time to manually gather process performance data.
Many modern ERP solutions have business intelligence powered by artificial intelligence, which enables predictive analytics. This can warn of early failures or declining performance. It allows process owners to quickly identify bottlenecks and opportunities for improvement.
Once your process owners have access to data insights, you can hold them accountable for suggesting process improvements, determining key performance indicators and measuring business benefits.
2. Create and Maintain Documentation
The “bus factor” is a risk metric that measures the impact on a business if an essential person disappears. In other words, what happens if they get hit by a bus?
If a process owner disappears, can the company still function? While a process may still be able to be executed, there will be no one to monitor performance or resolve issues.
Process documentation can mitigate the bus factor. Effective documentation allows anybody to manage, troubleshoot and complete a process without asking the process owner for guidance.
When we work with clients, we ensure that process owners are tasked with developing clear and simple documentation. In addition, we ensure this documentation is updated as processes evolve.
3. Understand the Big Picture
Process owners need to understand how their processes fit into the grand scheme of the business. This is especially important when it comes to process improvement because it gives the process owner insight into what outputs are commonly used downstream. Reengineering a process around a rarely used output is not a good use of time.
Process owners should always be asking themselves:
What processes feed into my process?
What downstream processes rely on my process?
What is strategically important about my process?
What part of the business does my process contribute to?
No individual process operates in a silo. In fact, process changes often disrupt systems and processes downstream. When process owners understand this, they can help the company develop a change management plan that ensures a smooth transition for affected employees.
4. Provide Visibility
Process owners should work with other stakeholders to develop a process map of how processes feed into each other and what inputs or outputs are involved. This provides visibility into how processes operate, what groups are affected and who should be alerted of problems.
Process maps are useful in many scenarios. For example, if an employee sees a failure in a process and understands the downstream processes that are affected, they can warn the process owner in charge of those systems. This gives the process owner time to fix the problem, work around it or push back timelines.
Process maps are also useful when a company is gathering ERP requirements. Requirements gathering sessions are essential for a successful ERP selection.
5. Empower End Users
An excellent example of this mindset is illustrated in the Japanese phrase, Kaizen, meaning continuous improvement. Toyota is a company that embraces Kaizen principles. This means employees at every level of the company can make process improvements. While these improvements may only be tiny changes on a shop floor that save seconds, many small tweaks combine to make a noticeable impact.
Empowering employees to make small changes can result in significant business benefits. After all, end users are the closest to the work they do. In fact, no amount of management expertise can replace the knowledge that day-to-day experience creates.
Panorama’s ERP consultants can help you identify effective process owners and provide them with the tools and expertise to improve your processes and competitive advantage.
While financial firms are notorious for being slow to adopt new business processes, operations teams within some financial firms are finding ways to break down organizational silos and gain new efficiencies.
How are they doing this? To understand their path to success, it’s important to first understand the silo mentality within financial firms.
A Silo Mentality
In many financial firms, there is a disconnect between the front-office team and the operations team. One reason for this silo mentality is a front-office focused mindset.
The Front Office Drives Revenue
Front office teams drive most of a firm’s revenue, whereas operations teams are ancillary. Therefore, it is no surprise that most executives funnel more money into improving technology or sales materials for front-office teams.
This mindset is one reason why process improvement is not a priority for many financial firms. From the perspective of the typical financial firm, focusing on revenue can result in millions of dollars in growth, whereas process improvement or process reengineering may only save a few hundred thousand. Many companies view business process management as a cost saving measure, not a money maker.
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There are undoubtedly benefits when a firm focuses on efficiency. One company that represents this operations-focused approach is Bridgewater, one of the largest hedge funds in the world. Bridgewater relies heavily on algorithms and building custom software solutions.
Instead of operations being the neglected department, they work with the front office to design processes that allow analysts to dive deeper and work faster. The firm has a policy that rigorously vets and tests new technologies before adopting them. In fact, Ray Dalio, the founder of Bridgewater, states that “Bridgewater is even more a technology company than it is a hedge fund.”
How can one financial firm be so quick to embrace progress while other firms are so resistant to change? This is quite literally a million-dollar question, especially from an operations perspective.
In order for a firm to embrace a mindset of change, it is essential to make the the front-office team understand that the operations team is there for their benefit, and that change can make their lives easier.
3 Process Improvement Tips
Once a company changes its front-office focused mindset and breaks down its organizational silos, it can begin process improvement. Following are three tips for improving business processes:
1. Understand What the Front Office Wants
It can be difficult for operations to approach the front office to propose new ideas or changes. After all, disrupting the workflow of a portfolio manager working with billions of dollars can mean very expensive missed opportunities. However, it’s essential for operations to collaborate with the front office when it comes to process improvement.
All too often, operations teams work in a vacuum with no understanding of what the front office desires. This results in improvements that don’t solve front-office employees’ biggest issues.
The first step towards effective process improvement is for operations managers to understand front-office employees’ workflows. This includes common workflows (such as placing a trade) and uncommon processes that take a significant amount of time (such as monthly portfolio rebalances).
Nearly all financial firms still have labor-intensive, manual processes that can be overhauled. To identify these processes, we recommend conducting meetings to learn about the front office’s current headaches. During these meetings, try to understand what employees’ ideal workflows would look like.
Understanding each user’s workflow gives the operations team the opportunity to make small, incremental changes that streamline workflows – ultimately winning the favor to implement more significant changes.
2. Understand That Changes are Iterative
While it’s important to make end users realize that changes are for their benefit, do not overpromise. After all, large changes are iterative.
One reason for the iterative nature of change is that processes need to be tested, especially if they are heavily driven by technology.
When testing a process, never present a test to end users that has questionable calculations. First impressions are important, and the smallest error will make the end user question all numbers they see in the future.
Even if all numbers and calculations are accurate, a proposed process may not be wildly popular the first time it’s demonstrated. This does not mean the process should be discarded. Just be sure to take stakeholders’ suggestions into account and fix whatever shortcomings were noted. If stakeholders have opportunity for input, and they see an efficiency gain, they are less likely to deny the change.
However, some stakeholders, especially traders, can be set in their ways. They may push back simply because they are unwilling to change. Often, you can convince these individuals by crafting a simple message like, “you save two clicks each time you do this.” While this may sound small, a trader that places fifty or more trades a day can save a significant amount of clicking in a day.
Panorama often helps clients develop communication plans as part of their change management initiatives. These plans outline different messages that are likely to resonate with each type of end user.
3. Document and Share Process Changes
A process change is of no use if only one employee adopts it. This is why it’s essential to document process changes and share them with all end users. Knowledge preservation is especially important when a new employee joins the company or critical individuals leave the firm.
For traders and portfolio managers, providing a one-page print out can help them adopt business process changes more easily. This sheet might provide answers to frequently asked questions, freeing up resources within operations to focus on more critical tasks.
For more significant process changes affecting multiple departments and involving new technology, formalized training is necessary. When Panorama helps clients manage change, end users attend customized training sessions that familiarize them with the new processes within their own functional areas.
Shifting the Front-office Mindset
Within many financial institutions, inefficiency is primarily a result of a disconnect between front-office and operations teams. The two teams should not operate in silos but in collaboration to bring process changes that benefit both parties.
A critical step towards collaboration is eliminating the front-office focused mindset in favor of a team-oriented mindset. While this can take months or even years, it is essential that the front office understands that the operations team is there to help them – not hinder them.
While the operations team will never be the primary revenue driver for the firm, it’s a powerful ally to the front office. Operations teams that understand their role should instill this “alliance mindset” into the front office, so both parties can suggest and adopt process improvements.
Panorama’s business transformation consultants can help your company break down organizational silos and encourage collaboration, regardless of what industry you operate in. We’ll listen to every department’s unique needs, ensuring organizational and process changes benefit the whole organization.
As the e-commerce industry shifts from global to international, efficient shipping processes become vital for business success and continuity. If you’re looking to expand your shipping and delivery infrastructure, choosing the right e-commerce shipping model can help you lay a steady business foundation that promotes a positive customer experience.
In-house Shipping vs. Third-party Shipping
In-house shipping is a delivery model that places all shipping responsibilities on the business. Any task that relates to the delivery infrastructure is managed in-house by the personnel of the company. Often, companies that opt for the in-house shipping model operate their own storage facilities and vehicle fleets.
Third-party shipping is a delivery model that enables companies to delegate some or all delivery tasks to a third-party provider. From delivery fleets, fulfillment centers, packing and storage, to technological solutions—third-party delivery companies provide products and services designed to make shipping operations easier for business owners.
2019 Top 10 Distribution ERP Systems Report
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If you are equipped to handle in-house shipping, you may reap the sweet fruits of your labor. Otherwise, you might benefit from delegating the responsibility to those that can make it profitable for you.
Know Your Supply Chain
Supply chains are the foundation of the delivery ecosystem and can either make or break a business. Unfortunately, supply chains are also very complex to create. The supply chain contains every aspect of making a sale, from the raw material of the product, the design process, the storage facility, the wrapping, delivery and any stage in the process until the product reaches its ultimate destination—the consumer.
Delivery is present at many stages of the supply chain. Any delay in the delivery, even the smallest, may disrupt the entire process and the supply time. To keep customers happy, supply time should be as promised with an emphasis on fast and scheduled delivery.
In-house Shipping—Control Your Supply Chain
Pro: Ultimate Control
Keeping shipping in-house enables companies to create their own delivery infrastructure. When you create every aspect of your supply chain, you are better able to improve business operations. You can continually improve deliveries and ensure that logistics are managed in accordance with the needs of the company.
Con: Operational Complexity
There are many things that can go wrong with in-house shipping. Inadequate delivery personnel can cause delivery losses or bad customer experience—which often result in monetary loss for the company. Inefficient management can turn daily delivery operations into a nightmarish mess in which orders get lost, forever buried in a poorly managed email account or incompatible CRM software.
Third-party Shipping—Monitor Your Supply Chain
Pro: Increase Efficiency
Prioritizing tasks can help you ensure each aspect of the business is run at capacity. You can do that by evaluating the company resources. If you don’t currently have the experience and skills needed to run a delivery operation in-house, you can hire an expert or choose among the many third-party service providers.
Nowadays, there is a third-party solution for almost any delivery need—from drop shipping, fulfillment centers, delivery trucks and storage facilities.
Con: No Flexibility
Most third-party shipping services come at fixed models and fixed prices. You have no control over the design of the delivery infrastructure, and you’re paying to use the service as is. While this model provides a solution for companies looking to scale slowly without incurring setup overhead, it doesn’t allow for much modification, if any.
Know Your Tech
It is almost impossible to run a business efficiently without the use of advanced technology. The technology you choose should fit your company’s unique business processes. Your ERP software should support you and not the other way around. Technology, after all, is intended to make life easier for people.
In-house Shipping—Design Your Tech
Pro: Ultimate Flexibility
One of the pluses of an in-house shipping model is the ability to customize the delivery technology solution according to your current IT infrastructure, or to choose a suite of solutions that integrate well with your existing ERP systems.
When you have control over the technology, you have control over the data. Data can be analyzed and turned into insights that improve business continuity and drive more sales.
Con: IT Overhead
Technology doesn’t manage itself. It needs professionals who understand it and have the skills to monitor, maintain and manage it. While IT talent doesn’t come cheap, it’s often an investment that pays off in the long term. Outsourcing IT often results in long wait lines to get proper support and fixed solutions that may not be right for your company.
Third-party Shipping—Use Their Tech
Pro: Enhanced Functionality
The technology provided by third-party shipping services usually comes with all the bells and whistles. These companies have a lot of experience and have spent substantial resources on efficient technologies. From delivery route optimization for faster delivery to smart tracking and live alert for customer convenience, third-party shipping services provide the full delivery experience.
Con: Fixed Infrastructure
While many third-party shipping providers can integrate with existing systems, they are usually ready-made technology products. You can’t make any changes to the system or customize it to fit the needs of your company. For better or worse, you can only use the system as it is offered by the third-party provider.
Know Your Budget
The budget is the heart of the company. It’s in every company’s best interest to ensure the budget supplies money efficiently to all departments. The importance of a budget for delivery purposes can be determined according to the type of business and the volume of deliveries the business is estimated to draw or currently sustains.
In-house shipping is a hefty undertaking that adds lines over lines to the delivery budget. The total monthly expense of in-house shipping is made up of many variables—from vehicle costs such as insurance and maintenance, employees costs such as wages and training, and storage facility costs such as space and equipment.
In-house Shipping—Govern Your Budget
Pro: Cheap at Scale
By managing shipping operations in-house, you gain full control over your budget. Yes, there’s a level of control in choosing a third-party provider. The difference lies in the ability to make changes at every level of the delivery infrastructure.
If a certain vehicle is proving to be expensive in lease and maintenance, you can replace it with another model to reduce costs. For example, a vehicle running on a hybrid engine can reduce fuel costs. In-house shipping enables you to improve every aspect of the delivery budget and continually reduce costs.
Con: High Set Up Costs
Before you can get to a point in which you’re running a profitable and efficient delivery machine, you need to set it up. As with every endeavor, the initial costs of getting the operation up and running can be expensive. The exact sum varies from business to business, so be sure to create a comprehensive estimation of the initial capital needed to set up your delivery operation. While online research is always good, it doesn’t replace an individual evaluation of the numbers as they apply to your company.
Third-party Shipping—Maintain Your Budget
Pro: Scalable Costs
If you have no experience in delivery operations or no desire to take part in that aspect of the business, you can take advantage of the services offered by third-party shipping providers. Often, third-party delivery providers help e-commerce owners start small and scale slowly by eliminating the need for setup capital. Often, third-party delivery services help e-commerce owners run a one-person business, further reducing the costs usually allotted for staff.
Con: No Transparency
When you outsource delivery tasks, you aren’t able to control how the budget is handled. You pay a monthly fee for the use of the service. You can’t know how much of the money goes towards training the drivers, vehicle costs or administration. You forfeit that right in favor of using a pre-existing infrastructure. Be sure to choose a third-party provider that can be a trusted partner for the long term.
Bottom Line—Know Your Business
Choose a delivery model that fits your business. Consider your business resources—including talent, tech and money. If you’re running a one-person e-commerce show, third-party providers can help you clear time for more important priorities. If you’re looking to improve your existing delivery ecosystem, you can integrate to a third-party solution. You can also go with a hybrid model that incorporates the strengths of both.
Panorama’s ERP consultants can help your company determine a delivery strategy that continually improves your bottom line.
Written by Limor Wainstein. Limor is a technical writer and editor at Agile SEO, a boutique digital marketing agency focused on technology and SaaS markets. She has over 10 years’ experience writing technical articles and documentation for various audiences, including technical on-site content, software documentation, and dev guides. She specializes in big data analytics, computer/network security, middleware, software development and APIs.
Note: The inclusion of guest posts on the Panorama website does not imply endorsement of any specific product or service. Panorama is, and always will remain, completely independent and vendor-neutral. If you are interested in guest blogging opportunities, click to read more about our submission guidelines.
When companies want to increase efficiency and run a lean company, many turn to value stream mapping.
Value stream mapping is a proven Lean Six Sigma technique that provides high-value information and a bird’s eye view of different factors within an operation. It optimizes processes by focusing on the actions, timeframe and people involved.
You might be familiar with a process map, but a value stream map can provide a much broader view of your process flows. It is especially useful during an ERP project or digital transformation. Why? Well, according to our 2019 ERP Report, the top reason for ERP project budget overruns was scope expansion. In our experience, a major cause of scope expansion is a failure to define business processes before ERP selection.
2019 ERP Report
This year's report delves deep into the data to analyze what ERP industry trends mean for organizations now and in the future.
Value stream mapping is a tool that helps companies understand the flow of information or materials. This tool should do the following:
Provide a broad range of information.
Cover the value stream from end-to-end.
Include a high-level view of a business process.
Account for management and information systems support.
Identify decision making flow.
While this may seem like a lot to expect from a simple pen-and-paper tool, the idea is to take a process that might seem complex and simplify it as much as possible.
This tool plays a significant role in reducing cycle times, eliminating decision-making blocks and reducing unnecessary information transfer or approvals. It’s meant to remove steps that waste time and resources.
Ultimately, you should use this tool to align business process with the company’s overall goals or their goals for a specific product or service.
Value Stream Mapping vs. Value Chain Mapping
While companies may use the terms value stream mapping and value chain mapping interchangeably, these two tools provide very different functions.
Example of a Value Steam Map
“Value Stream Map Parts” by Daniel Penfield is licensed under CC BY-SA 3.0
A value stream map is a high-level view, documenting a business process – usually, the manufacturing of a product, service or task. The map serves to identify waste, reduce waste and help management choose the paths that provide the highest value to customers and other stakeholders. The map outlines processes, key people and the business architecture involved in delivering a product or service.
Example of a Value Chain Map
“SCHH Value Chain” by Pan491 is licensed under CC BY-SA 3.0
A value chain map shows a business function with its performance metrics. The map shows the current process and the aspects of each step that contribute to success. The map is very direct and focuses on the smaller, but still important, aspects of a process.
How Does Value Stream Mapping Add Value?
A value stream map adds value in the same way that many other Lean or Six Sigma tools do – it eliminates waste. Saving company resources, not just money, can have a positive impact on the culture, processes and eventually the bottom line.
This tool provides the following:
Easy assessment of bottlenecks.
A useful resource for management and executives.
A way to initiate countermeasures in a visual manner.
Unlike other tools that aim to increase efficiency, a value stream map illuminates immediate options for process improvement, such as reducing lead times. On top of everything else, a value steam map is simple to understand and easy to modify.
While obtaining buy-in for process improvement isn’t always easy, many companies hire ERP consultants to help align stakeholders around common goals. For example, many of our clients’ project teams know that the project budget allotted by leadership isn’t enough, so we take the time to educate executives about the importance of success factors like business process reengineering and organizational change management.
Practical Uses
How can you put a value stream map to use in your company? Historically, the this tool has thrived in manufacturing settings since Toyota began to implement this type of system in the early 1950s. Today, value stream mapping is proving useful across a variety of industries.
When it comes to manufacturing the practical uses are clear. Each product that has a value stream map can increase the efficiency of manufacturing and eliminate the risk of overproduction.
In healthcare organizations, this can show doctors where a patient is in their recovery plan. These maps also can eliminate unnecessary testing, reduce wait times and lead to more cost-effective treatment without compromising the quality of care.
Administrative staff are learning to love value stream mapping as it eliminates duties that overlap or are blatantly unnecessary. A value system map can reduce quality control to one step rather than multiple quality checks that often bottleneck administrative work.
Benefits of Value Steam Mapping During an ERP Project
If your ERP implementation isn’t resulting in as many business benefits as you expected, you should consider value stream mapping.
Maybe you have yet to select an ERP system. In this case, a value stream map is especially useful during the early stages of selection when you’re conducting business process management activities.
It can show employees how and when they become vital to a process. You can also use it to identify when performance metrics become available and use the ERP system to leverage this data.
One of our recent clients, a large supply company undergoing an ERP project, found process mapping helpful in identifying aspects of their company culture that could impede change. Documenting pain points and sharing their findings with executives allowed them to establish project buy-in.
This week has been outstanding! Kim and Christi are an excellent cultural fit for our company, and they did an incredible job of facilitating our [Value Stream Mapping] Workshop. Honestly, I’ve participated in activities like this many times over the course of my career, and this was the best one ever!
Dan Callari
Director, Information Technology, Bob Barker Company
Challenges
Creating a value stream map usually takes several weeks. It depends on how stasis your current processes are and the scope of the map. While the time investment may be intimidating, recruiting the right project team members can make the effort less taxing.
When creating maps, you of course want people who are intimately familiar with the processes being mapped. However, you also want to include people who have no day-to-day familiarity with the processes. You need people who will question small steps and why certain restrictions are in place. A third-party, like an ERP consultant, can be helpful since they will look at your processes with a fresh eye.
Best Practices
There are a few key components that play directly into the success of value stream mapping. First of all, you should ensure the map is realistic. The map of the current value stream cannot be optimistic when it comes to time aspects, such as how long it takes to receive goods from a vendor. Additionally, your future state map must strive to both restrict the ability of overproduction, while also removing constraints.
Does Your Company Need a Value Steam Map?
Enabling continous improvement, this tool is well worth the time and effort spent creating it. Whether you’re having problems with a supplier, struggling to meet customer demand or trying to make the most of your ERP software, a value stream map can provide actionable insights.
Panorama’s ERP consultants can help you visual your end-to-end processes to enable you to make smart decisions during ERP selection and throughout your ERP project.
Improving sales isn’t about bringing in better salespeople. Instead, you need to understand how you generate leads and convert those leads into sales. In other words, improving sales is about improving your business processes.
Think About Your Sales Funnel
The first step to improving your sales processes is documenting them. Your sales funnel is good place to start. Document how you attract leads and eventually convert them into customers.
How many steps are in your sales process and what are they? More importantly, what purpose do they serve? Answering these questions will make it much easier for you to improve your processes.
Consider using value stream mapping, a technique that focuses on removing waste and identifying opportunities for improvement.
Establish KPIs
Key performance indicators (KPIs) are metrics that can provide you with tangible goals for improving your sales processes. You need to establish KPIs for each step in your sales funnel and measure your conversion rates over time.
When setting up targets, make sure you’re being realistic, and allow some flexibility to make changes along the way.
Automate Some of Your Processes
The next step in your journey to optimize your sales processes is to get the right tools. More specifically, you’re going to need a CRM system – or an ERP system with CRM functionality.
A CRM system can make your sales team more efficient. For example, it can track who is responding to your marketing material, and help you identify which leads are more likely to turn into customers. You also can learn about people’s demographics and interest profiles and use this information to help you sift through your leads and move those less likely to turn into sales towards the bottom of the list.
CRM systems put all your data in one place and make it easy for your team to share information. This ensures organizational alignment, which is critical to digital transformation.
Determine How You’re Going to Improve
There are generally two ways to improve your sales:
Increase the volume of each sale
Increase the number of customers
Typically, you should be able to make improvements in both areas. Consider offering some promotions that bundle different products together or use your CRM software to send follow up emails to previous customers.
To improve your conversion rate, you can do some A/B testing in your CRM system to find out what content is most effective.
Start Optimizing Today
Improving your sales processes to boost revenues is a long process, but it’s one that is well worth undertaking. It will help you improve margins in a sustainable way, so your business can continue growing and maintain its competitive advantage.
About the Author: Kevin Conner is the founder of several successful startups. His current focus is Broadband Search, a service dedicated to helping people find the best value internet service provider in their area. These businesses have given him the opportunity to work closely with many different sales teams, giving him an insider’s perspective on what works and what doesn’t.
Note: The inclusion of guest posts on the Panorama website does not imply endorsement of any specific product or service. Panorama is, and always will remain, completely independent and vendor-neutral. If you are interested in guest blogging opportunities, click to read more about our submission guidelines.
Many organizations begin ERP selection without a solid foundation of business process management. When they look at the mass of ERP systems to choose from, they have no idea where to start because they don’t know what technology will enable their business processes or competitive advantage.
Clearly, business process management is important. At the most basic level, business process management helps you define business requirements that you can submit to your long-list or short-list ERP vendors.
SAP vs. Oracle vs. Microsoft Dynamics vs. Infor
Clash of the Titans 2019 highlights the challenges implementing organizations experience when working with these top ERP vendors.
However, the value of business process management goes beyond business requirements:
5 Areas Where Business Process Management is Useful
1. Competitive Advantage
Misalignment between processes and strategy makes it difficult to deliver customer value. Business process management gives you the opportunity to design your processes to support your digital strategy and competitive advantage. Business design sessions bring together stakeholders from across the organization to promote strategic alignment and find opportunities to improve your competitive advantage.
You can protect your competitive advantage and minimize software customization by viewing processes through three lenses. Backoffice processes, like invoicing or procurement, can usually leverage out-of-the-box software functionality. Other processes are industry differentiators. These will guide your choice of ERP software since some ERP systems may not support niche functionality. Finally, there are processes that provide competitive advantage, such as product development or ecommerce. These may require software customization. While expensive, customization for the sake of competitive advantage is always worthwhile.
2. Employee Buy-in
Defining your business processes allows you to identify organizational changes and communicate them to employees. Imagine telling employees, “there will be change,” without being able to outline specific process changes. This would not elicit buy-in.
Business process management also helps you understand roles and responsibilities as well as changes to organizational structure. This understanding facilitates change management activities as it enables you to develop a targeted communication plan.
Another way to elicit buy-in from employees is to involve them in business design sessions. When employees are allowed input on the changes made to their own processes, they will naturally support these changes and encourage others to support them, as well.
3. Organizational Alignment
When we say that business process management can lead to organizational alignment, we are talking about a certain approach to business process management. One approach relies on functional thinking, which is a way of thinking about processes in terms of specialization. The other approach relies on end-to-end process thinking, which looks at the entire value chain, including the intended purpose of each process and hand-offs between functions. The latter approach leads to organizational alignment.
Another name for this approach is value chain mapping. What does it look like? It’s all about breaking down functional silos and gaining end-to-end process understanding, visibility and control. You bring together various stakeholders to look for ways to increase efficiency across functional areas and not just within functional areas. By integrating processes across silos, you ensure everyone is working toward the same goals.
While many ERP consultants take a functional approach to business process mapping, Panorama uses value chain mapping. Make sure your ERP consultant takes this integrated approach.
4. Removing Workarounds
Ideally, business process management will remove 90% or more of the workarounds your employees use to complete tasks. Employees use workarounds when processes are poorly defined. Sometimes, the current technology cannot support efficient processes anyway.
When mapping your business processes, be sure to differentiate between workarounds and actual processes. You don’t want to include workarounds in the business requirements you submit to ERP vendors as each requirement may add additional implementation costs. You can remove workarounds by designing new processes that negate the need for extra steps.
Another cause of workarounds is a lack of effective employee training. Fortunately, an ERP implementation is a great opportunity to train employees. You can use process documentation to design customized training materials. Training should be recurrent enough to support long-term retention and customized enough to address each employee’s unique processes.
5. Continuous Improvement
Business process management provides a foundation for building a center of excellence, which allows you to continuously improve. During business design sessions, you can develop key performance indicators (KPIs) to regularly measure performance improvements and project cost savings, such as decreased turnover.
While most organizations only measure improvements immediately after go-live, many benefits are achieved overtime, so you should continue to measure improvements years after go-live. This is especially true if you have a center of excellence since you will always be improving processes.
While continuous improvement is essential, it can be mismanaged. It’s important to involve the IT department in process changes as your ERP system should continually be configured to support new processes. If your technology cannot support these processes, employees will use workarounds and create new inefficiencies.
What is Your Business Process Management Approach?
An end-to-end process mindset can help your organization realize the benefits of business process management. However, according to a recent study by the American Productivity & Quality Center, the biggest challenge organizations experience with end-to-end process thinking is convincing executives of its value.
How can you overcome this challenge? Panorama’s ERP consultants can help you articulate the benefits of value chain mapping so you can obtain buy-in from executives.
While most organizations are racing to ERP go live, some are taking the time to reengineer their business processes. They are not concerned with implementing an ERP system as quickly as possible. Instead, they’re focused on beating the competition by designing differentiated, efficient business processes. They may lose the race to the go-live finish line, but they’ll win the race that actually matters – the race to grow their customer base and increase revenue.
Here are seven tips for improving your competitive advantage through business process reengineering:
1. Budget adequate time and resources
Business process reengineering takes time. In fact, it takes more time than the technical configuration, testing and implementation of ERP software. It probably took your organization years to adopt your current processes, so it will likely take some time to change those well-established processes. You should ensure sufficient time for defining, improving and implementing new business processes. Benchmarking against organizations of similar size and industry will help you set realistic expectations for your project.
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2. Define business requirements before selecting ERP software
Organizations often find that modern ERP systems are too flexible to simply start using out of the box. Even the simplest business processes have multiple workflow options. This complexity will slow down your project if your business processes aren’t well defined before the design and build phases of your implementation. If you start your project with a clear vision of your business requirements, you will minimize the amount of time you spend with expensive technical consultants. You’ll also ensure your competitive advantage isn’t lost to standard software functionality.
3. Improve business processes before selecting ERP software
Just as you should define business requirements before software selection, you should also improve your processes as early as possible. This is also the time to consider whether your processes align with your long-term organizational strategy. Waiting until the last minute to improve processes may leave you with no choice but to keep all your existing processes, whether or not they are optimized. Operational efficiency can differentiate you from your competitors, so now’s your chance to surpass them through process improvement.
4. Don’t treat all business processes equally
Many organizations are overwhelmed by the number of business processes they need to document, analyze and improve. They don’t realize they can start by focusing on just the processes that are competitive differentiators. These processes should drive your selection of ERP software and shouldn’t be constrained by software best practices, which may not be best practices for your unique operations. For example, your customer service may be a source of competitive advantage. If so, customer-facing processes should be a priority during business process reengineering and requirements gathering.
5. Integrate business process re-engineering with change management
Resistance to change is one of the main reasons business transformation takes longer than expected. Ensuring employees understand and accept new processes is challenging because people naturally dislike change. Before training employees, you should identify the gaps between your current and future state, so employees understand new processes in the context of their day-to-day jobs. A comprehensive change management plan includes more than training. You also need to strategically communicate with employees to ensure they accept new business processes before go live and adopt those processes for the long term.
6. Integrate analytics into business processes
Several ERP vendors offer innovative solutions that leverage business intelligence and predictive analytics. These systems use artificial intelligence (AI) to turn massive amounts of seemingly unusable data into actionable data. But what good is this data if you don’t have a plan for acting on it? When defining your future state business processes, you should include processes for analyzing and acting on data. Chances are, most of your competitors don’t have a strategy for leveraging AI nor have they implemented this innovative technology.
7. Measure results and make incremental improvements
Measuring post-implementation results helps you stay on track to realizing expected business benefits. If you’re not achieving a particular benefit, you should determine root causes and pain points. Continually measuring incremental benefits realization allows you to make corrections as needed. Misalignment between business requirements and software functionality can deter benefits realization. Lack of employee buy-in can also create a roadblock.
Why Improve Your Processes?
Every organization deserves ERP software that supports their business processes. The only way to ensure you select such software is to improve your processes before selection.
Business process reengineering also ensures your chosen ERP software aligns with your long-term organizational goals. ERP systems are a big investment, so they should support your processes for the next five to ten years.
Most importantly, business process reengineering helps you beat the competition by ensuring your ERP system enables differentiated, efficient business processes.
Panorama’s ERP consultants can help your organization improve its processes before selection. We have seen organizations save time and money during implementation by investing in pre-selection activities like business process reengineering.
When the Titanic sank, researchers furiously worked to determine the causes, so all future ocean liners could safely transport passengers. When an organization experiences a material operational disruption – such as the inability to ship products or close the books – it should work just as furiously to determine root causes, so it can learn from its mistakes. Often, these mistakes are related to business process management.
Excavating the Wreckage
Here’s what you might find in the wreckage of an operational disruption:
Low morale among employees
Heavy customization and/or software functionality inadequate for your business requirements
Low benefits realization
Broken glass
Learning From Failure
Don’t let your operational disruption discourage you from attempting business process management again. While it can be a daunting process fraught with risk, it’s the only way your organization can grow and innovate. Here’s how you can learn from your mistakes.
Forgive
Whenever you experience failure in any area of life, your first order of business is to take a deep breath and forgive yourself and others. Only then, can you have a clear head to focus on the facts without allowing emotion to determine your path forward.
Analyze
You can conduct a lessons learned meeting to review project deliverables. While you want to focus on causes, it also is important to look at effects. Quantifying the direct and indirect costs in terms of time and money will give you an idea of the benefits you’ll need to realize to achieve a positive ROI on failure.
Disseminate
Sharing lessons learned with the entire organization creates a culture of transparency and trust. Every department has something to learn from the post-mortem so be sure to spread the knowledge and empower employees to help you succeed in future initiatives.
Components of Successful Business Process Management
While it’s normal to experience a decrease in productivity after implementing new business processes, operational disruptions can be avoided by developing an effective business process management plan.
Business Process Mapping
This involves mapping your current state business processes at a high level, while looking for pain points and opportunities for improvement. There are several degrees of improvement you can choose. Maybe you just want to remove waste. Maybe you’re striving for ultimate efficiency. In rare cases, you may want a radical change where you start from scratch. Once you’ve improved, optimized or reengineered each of your processes, it’s time to map your future state. If you’re implementing new technology, you’ll want to map these future state processes in granular detail to serve as the basis of your software selection.
Organizational Change Management
As mentioned earlier, implementing new business processes often causes a decrease in productivity. Organizational change management can reduce the degree of this productivity drop and shorten its duration. Business process management cannot succeed without customized training and targeted employee communication, both of which should begin before software selection.
Continuous Improvement
A mentality of continuous improvement will ensure that your processes remain optimized overtime and evolve with the needs of your organization. Setting KPIs will allow you to regularly measure performance and determine when processes need further improvement.
SAP vs. Oracle Case Study
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
Business Process Management Tips for an ERP Implementation
If you’re improving your business processes in preparation for an ERP implementation, you’re probably wondering how software functionality might affect your business process management strategy. The short answer is, it depends.
Basic software functionality is probably adequate for your core business processes, like accounting and inventory management. However, processes that are industry differentiators or sources of competitive advantage – such as CRM or eCommerce – should not be constrained by basic software functionality. Instead, you should dedicate significant time to mapping these processes before you evaluate software. Naturally, you’ll want to plan for the time, money and resources of these efforts. While it’s a larger upfront investment, these processes will deliver a higher ROI if they continue to support your competitive advantage.
Understanding the Wreckage
Now that we know what successful business process management looks like, let’s go back to the wreckage, and see if it makes more sense.
Low morale among employees
If employees are resisting organizational changes, you may have neglected to map your current and future state business processes and identify gaps for training purposes.
Heavy customization and/or software functionality inadequate for your business requirements
If your software doesn’t fit your needs and requires extensive customization, you may have allowed software vendors to wow you with shiny new features instead of scripting the demo based on your business requirements.
Low benefits realization
If your business transformation delivers fewer benefits than anticipated, you may have failed to improve key processes with the most potential to improve efficiency and reduce costs. Or, you may have standardized processes that should be competitive differentiators.
What’s Your ROI on Failure?
Today, we’re better at saving people from shipwrecks, and this is partially due to what we’ve learned from the sinking Titanic. While these lessons learned could never outweigh the loss of life, operational disruptions are different. An operational disruption could eventually bring enough benefit to your organization to outweigh the damage. If you follow our tips for learning from failure and our steps to successful business process management, you can begin to transform your organization and achieve your vision. Your ROI on failure is up to you.
We are at a pivotal juncture in the world of ERP software and enterprise technology.
This may be the first time in my career when there was so much excitement and uncertainty in the enterprise software space. On one hand, major vendors are promoting exciting new flagship technologies. On the other, many CIOs and other executives are nervous about the relative immaturity of these new products.
In many ways, 2018 will bring exciting new trends to be aware of. In other ways, the coming year will bring more of the same.
Here are my top five predictions for the ERP software space in 2018:
1. Capital Investments in Digital Transformation Initiatives will Continue
With the global economy continuing to improve, more companies scaling for growth, and capital investments continuing to gain momentum, more companies will be more likely to invest in their digital transformation initiatives. Other contributing factors to this trend: more companies are reaching the end of their legacy system lifecycles dating back to Y2K system replacements, and more industries are going through major, market-driven transformations (think: the retail industry grappling with the disruption of Amazon and the e-Tailing trend). All of these factors will lead more companies to revisit their enterprise system strategies going into the new year and beyond.
2. Cloud ERP Software will Reach a Tipping Point
The trend toward cloud systems has been gaining steam for several years now, but this is the first year where major vendors are all doubling down on their cloud offerings. SAP S4HANA, Oracle Cloud, Microsoft Dynamics 365 and Infor Cloud vendors are all examples of the flagship products being aggressively promoted by the top ERP vendors. The only thing complicating matters? The relative immaturity and lack of proven track record of these systems, along with executives’ continuing comfort level with on-premise deployments. The coming year may be the year where one of these two conflicting pressures win out and cloud systems are either more widely accepted – or the trend proves to be a short-lived fad. (Watch for our upcoming 2018 ERP Report to see if cloud adoption regains momentum after giving up market share last year).
3. More Organizations will be Forced Off Their Legacy ERP Systems
As more ERP vendors (link to /resource-center/erp-database/page) increase their investments in cloud solutions, they will likely continue paring back R&D in some of their legacy products. For example, products such as Oracle EBS, Microsoft Great Plains, and Epicor Prelude are likely to see rapid deterioration of focus and support for these products as they are sunset. Vendors will be less likely to introduce new functionality or provide long-term support for these dated products, leading many organizations to conclude that they have no choice but to migrate to more modern enterprise technologies. When combined with trends #1 and #2 above, executives are more likely to reconsider their platforms of choice moving forward into the long-term.
SAP vs. Oracle Case Study
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
Due in part, to #3, while on one hand we predict more organizations moving toward new technologies, we also see more executive teams being skeptical of ERP systems (link to /erp-software/ page) as we have known them over the last 20 years. Organizations are too painfully aware of the historic and ongoing challenges with the enterprise software status quo, so they will be more likely to consider alternatives to big, complex, monolithic ERP systems. Potential alternatives include less risky upgrades, more attention to business process reengineering, and point solutions. Whatever the exact alternatives pursued, the coming year’s focus will be on fixing more immediate operational issues and pursuing more low-hanging fruit.
5. Organizations Grow Increasingly Allergic to Organizational Change Management
This is one of the most interesting (and surprising) trends that we are seeing in the market. An increasing number of organizations are becoming seemingly allergic to the term “organizational change management” – while at the same time recognizing the need to address the people side of their digital transformation initiatives. On one hand, they recognize the risk of not addressing organizational change, but on the other, they are jaded by past org change failures.
In other words, organizational change management has a branding and PR problem. This starts with calling is something more specific, such as people enablement, workforce transition, business process implementation, and whatever other words of choice fit. However, words are just words, so it is even more important that organizations recognize the need for proven organizational change expertise and toolsets – something most ERP vendors, consultants, and system integrators aren’t good at.
2018 Will Be a Year of Transition
These are just five of the biggest predictions that we see in the coming year. It will clearly be an interesting year of transition. How will you navigate these changes to make your organization more successful in the new year and beyond?
The first thing I ask when I meet a client is “what’s happening in your organization?” 99% of the time the answer is “we are looking at what we do and how we do it, and we have figured out that our technology isn’t supporting our business.”
As I constantly approach all types of organizations, these are the three typical scenarios I usually find:
A young organization that started with Excel and QuickBooks, maybe some software associated with a piece of equipment they bought, more likely they outsourced to ADP for human resources, and now they’re ready for a more sophisticated integrated solution.
An established organization that implemented an ERP system 20 years ago, and it was a great fit back then but in the intervening years they have grown, changed, and customized processes; often they have woven a web of support processes and technology that has turned into a cocoon. Now they cannot make upgrades to the system functionalities and they are looking to get up to date.
A larger organization that perhaps has grown through mergers and acquisitions and now has multiple locations, multiple business units – all with their own systems – sometimes they have even the same software but a different instance, or are using it in a different way and they are looking to be a single company with a single consistent solution.
The unifying thread for all of these examples is that there is a need to follow the data, from vendors to the end customer, and across all functional areas. The ability to make good decisions that are enabled by visibility into the data is the number one benefit our clients are looking for. Well, that data is following a stream of business processes. Certain business processes can be the secret sauce that makes your organization different from others and keeps you competitive, or they can be the weight that drags you down and kills your efficiency, profitability, and ability to grow.
Every time we assess an organization, the first thing we do is looking at your current state. We use this as a tool to define the requirements of a new system and to define the “as is” and then look forward to a future state – the “to be”. We identify the pain points in your current processes and what is their cost, in order to set a foundation for measuring the return on investment for the ERP initiative. The goal is to improve efficiency. Typically, we find that solving those pain points comes down to either an organizational issue (communications, organizational structure etc..), business process, or in some cases, a strictly technical issue, such as the ability for a system to handle a certain level of transactions per second.
SAP vs. Oracle Case Study
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
From a process standpoint, we find that it’s generally one of these three situations among organizations:
Manual processes: having to work between multiple applications or systems, download information from one and manually enter it into another.
Duplicate processes: having to handle the same information in different ways because they have multiple systems, managers or business units with different requests.
Legacy process: we have always done it this way.
Identifying the challenges of an organization is the logical step to improve their processes. It doesn’t always require new technology – sometimes it can be as simple as physical processes – for example, one of our clients was a food company, during the process of mapping their current state we found out that they were pulling materials they used most often from the back of their warehouse, while materials they used rarely were up front. Simply by swapping out the location of their inventory, we were able to make them more productive and efficient.
The question that often comes up is “why wouldn’t we just adopt the processes defined by the software? That must be a best practice, right?
We have a global ERP study that we’ve been sending out for almost a decade. What we have found over time is that the success or failure of an ERP implementation most often comes down to people and process. Think of it this way: business process is the DNA of an organization, it’s what differentiates you from other companies. It may be that adopting out of the box functionality will work for you, or it could be that it will make you lose your competitive advantage. But if it turns out that it would make sense to adopt a new practice, it will be essential to manage the change with your people. It is important to identify what is in it for them to do things in a new way, to train them well and then follow up to make sure they don’t slide back into the old ways.
If it turns out that a new software solution takes you 90% of the way but doesn’t support your business model 100%, then it’s time to invest in customization. It’s not just automating processes, it needs to involve what you do and why you do it, before getting to the “how”. That is exactly where business process management comes into place. As you can see that there is no way to address a technology solution or digital transformation without addressing your business processes. Investing the time to define and improve how you do what you do will make all the difference in the success of your ERP initiative.
Business processes are the DNA of your organization. They make your organization unique, and differentiate it from the competition. While you can purchase an ERP system with built-in business processes, you should stop and ask yourself if you really want to do this. Do you want to “work for the software,” or do you want the software to work for you?
If you chose the second option, you are well on your way to making your processes more effective and efficient than your competitors.
Identifying Inefficiencies
When evaluating your business processes, you should determine whether they contribute to your organization’s bottom line. Regardless of industry, most organizations have one thing in common: inefficient processes. Whether these processes are manual, duplicative or customary (we’ve always done it this way), they are hurting your bottom line and need to be improved – especially before you select new ERP software.
Quantifying the Cost of Inefficiency
The cost of inefficiency is very real and very tangible, even though it may not seem as concrete as the known line items in your project budget. How much time is being wasted on current activities and how much time could you save with automation? Apply these time savings to decreased labor costs and other process benefits, and you will understand the measurable cost of inefficiency.
Selecting Enterprise Software
Once you’ve evaluated and improved your processes through business process reengineering, you can find an ERP system that’s a good fit for your organization.
Buying an ERP system is like getting married – you’re in it for decades so you want to make the right decision. A third-party can be your matchmaker and help you find the enterprise software that’s just right for your organization and its optimized processes.
SAP vs. Oracle Case Study
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
When an upstream petroleum oil exploration and production company needed to transition their ERP system from SAP to Epicor9, the company requested professional help in evaluating its business processes.
Following a proven business process reengineering methodology, Panorama mapped the company’s current and future-state business processes to ensure accurate input into the new system. In addition, Panorama oversaw the company’s project plan, milestones, resources and budget.
In the end, the oil and gas company saw quantifiable improvements to its operational efficiency and effectiveness. These improvements were realized less than one year after the beginning of the engagement.
Let’s Do This
Business process reengineering can yield enormous costs savings for your organization and ensure that your digital transformation achieves a positive return on investment. However, improving your business processes is no easy task. Organizations should engage an ERP consultant with a strong methodology and a proven record of success across industries.
This may prove challenging, but I’m going to attempt to explain business process management in less than 500 words. So take your seat, pull out a pencil and hold onto your hat because this is going to be quite a ride.
Business Process Management Defined
Business process management is a holistic approach used to evaluate and improve an organization’s business processes. This is often performed before the organization implements new ERP software. With or without new technology, business process management can enable an organization to improve efficiency and reduce production costs. An organization pursuing digital transformation may use business process management to change their company’s entire business model.
The Importance of Business Process Management
When you automate an inefficient process, you only make an inefficient process faster. Many organizations implementing ERP software choose to improve their business processes before stuffing them into an ERP system.
Today’s ERP software is very flexible and can accommodate a process in a variety of ways. This is why so many organizations take the time to envision their future state processes before selecting enterprise software. These organizations save time and money by determining their software configuration requirements early in project. They also can more accurately estimate customization costs.
SAP vs. Oracle Case Study
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
An organization examines only its key processes – the ones that serve as competitive differentiators. The organization documents its current state process and defines key performance indicators. Then, the organization improves these processes to optimize efficiency while ensuring that controls are put in place to monitor efficiency on an ongoing basis.
Business Process Reengineering
If an organization finds that no amount of improvement can make a process more efficient, they may completely remove the current process and redesign it from scratch.
Business Process Optimization
An organization evaluates and improves all of its business processes, including those that are not a source of competitive advantage. This approach looks at the organization from a financial perspective to determine how to reduce production costs.
Business Process Management Essentials
Business Process Mapping
This involves the outlining of current state processes, the identification of pain points and the gathering of business requirements. The result is a clear map between an organization’s current state and its desired state. Business process mapping facilitates requirements gathering and provides a baseline for developing a business case and outlining expected benefits. The business case is often used to gain executive buy-in.
Business Blueprinting
This is the final step of business process management. Once an organization has improved its processes, they provide their chosen ERP vendor with a business blueprint. This details how the ERP vendor should configure each business process within the ERP system. The blueprint provides specifics on workflows, business logic, checklists, triggers and notifications.
Coffee lovers, you know this too well. It’s early. You’re trying to get your “morning burst of energy” (aka caffeine), so you drive to your local coffee shop. There are two types of people:
1. The people who go through a drive thru line AND 2. The people who park their car and grab their coffee inside
However, the coffee shops who have a drive thru option can have a tough job.
They have to keep both lines moving at a very fast pace. You can’t have a terribly long drive thru line (people will see how long the line is and decide to go elsewhere), but you also have to cater to those who came inside to grab their coffee. Both lines are full of people who need fast service.
If there is anything we all know about coffee shops it is that people can get very angry without their caffeine. That’s why baristas need to be as efficient as possible. They’re in the trenches. They can realize what needs to be done in order to make everyone’s morning move smoother.
Let’s take this as an example: In order to move both lines along quicker, a barista may ask for the cappuccino machine to be moved to a more centralized location so that there is not as much running back and forth between the two lines (drive thru and in-store customers). The barista making the claim for the move is most likely a subject matter expert because they experience this issue on a daily basis. This is when a Six Sigma Quick Hit called a “DMAIC” can be used. DMAIC stands for: Define, Measure, Analyze, Improve and Control. Out of all of these steps, the “control” proves to be the most challenging.
For the most part, this process is straightforward. To “define” a problem, talk about the problem, why it is a problem and why it should be addressed. This keeps your problem in scope.
As for “measuring,” it basically means the consumption over time. You probably have that number, so establishing your baseline for comparison is usually not the issue.
The “Analysis” can employ a number of techniques depending on the situation including fishbone, root causes, and analysis of variance. Pick the best analysis tool for your situation and remain consistent.
Now it’s time to “improve.” A lot of people get bogged down on whether they are taking the best approach on this. Remember, business process reeneingeering is iterative. Apply an improvement, measure, analyze, improve, measure, analyze, improve. Record your data over time and stick with what is working. Record the process change as a marker on the graph so you know what worked at a particular time. Now comes the tough part… “control.”
You get measurable results and then you have a “Eureka!” Moment. When this happens, a lot of people will run off to tell everyone that they were were “right” the whole time. Slow down. Without the “control,” your process will slowly revert back to what it was before. It may sound crazy, but there is a reason why it was that way to begin with.
Let’s go back to our barista. Imagine that one of the measurables was that a cup was consumed from the cup counter hopper. If the user moved the cappuccino maker over next to the cup dispenser, then you should see an activation from the cappuccino maker within seconds.
Compare that to the data from our baseline (which would have been at least 10 seconds because they had to run across the store). If the investigator sees inconsistent or erratic times from the cup hopper to the cappuccino maker, then that is a red flag and a follow-up conversation with the barista should be conducted. (This is when some organizational change management comes in handy!)
You must control your new process and verify it with quantitative data collection and identification techniques. At the very least, give it a solid month or two of implementation so that you have the data to back up the process improvement initiative. After that, even if the users revert to old ways, you have the report to tell the boss that it worked, but that it needs oversight, executive buy-in or a corporate mandate.
Process improvement is not “hard,” but it requires a methodical approach. Most of the time we eyeball process improvements and hope for the best. Depending on your pay scale, this can be expensive or at the very least, divert unnecessary resources away from primary operations. If done methodically and with an iterative approach, the tasks of the DMAIC process can be relatively passive. Give it a try, you might just like it. Either way it shows you’re a go-getter and know how to make things happen.
Organizations implementing ERP software are ultimately looking to improve their business productivity and efficiency through innovative technology. To achieve this goal, organizations should ensure that organizational changes promote their long-term business strategy. Companies that are hoping to maximize business benefits from their new ERP software must rethink their business processes and continuous improvement strategies in order to achieve ERP success.
Business process management, coupled with continuous improvement, is imperative to any successful ERP implementation. In order for a business to thrive in a competitive marketplace, it must focus on process excellence, which ultimately leads to innovation. Business process management and continuous improvement create value across an organization by challenging the current state of the business and determining the efficiency of current state processes. When companies challenge the status quo, this will nurture continuous innovative thinking.
Managers must foster an environment where empowerment is given to all members of the organization before, during and after the ERP implementation. Supplemental education after the ERP go-live can create new thought processes and approaches since employees have already gained an understanding of the basic ‘block and tackle’ processes of the ERP system. They can subsequently challenge the status quo to seek business and process improvement.
An innovative organization involved in continuous improvement is agile and nimble. Such an organization is able to experiment with different solutions to a problem and can further understand business needs and industry opportunities presented through the agile learning process. Once the continuous improvement model is adopted, businesses can benefit from the outcome of performance improvement to fix short-term issues and develop a long-term strategy.
Continuous improvement must be adopted throughout an organization to achieve ERP success. If your organization adopts this philosophy and shifts its culture towards innovative thinking, you will increase your competitive advantage within your industry, leading to long-term success.
When most companies contact us for help, they immediately assume that their current systems are the root cause of many of the operational pains that they are feeling. Processes are inefficient, employees hate the current systems, data is a mess and there is no way to scale for continued growth in the future. So, they often assume that new ERP systems will provide the silver bullet they need.
But when we dig a bit deeper, we often find that technology is not the root cause of the problems. In order to truly transform their businesses to get to the next level, organizations often need to address deeper root causes: improving business processes, better defining roles and responsibilities, better training employees and a host of process- and people-related issues are common drivers of improvements.
Enterprise technologies may be one component of your overarching business transformation, but we see our share of initiatives that lead to several non-technical work streams. Here are some reasons why your business transformation may not need to involve technology – at least not yet:
Without business process reengineering, new technology will simply pave the cow paths. Too often, companies jump into their enterprise software initiatives without redefining their business processes. This typically leads to “paving the cow paths” – in other words, simply automated your already broken business processes. Business process reengineering is an important first step and foundation to an effective ERP implementation, so even if technology is a key part of your roadmap, make sure that you’ve done the heavy lifting to redefine key business processes prior to implementing a new system.
Technology is useless without the right guiding enterprise and IT strategy. It’s easy to quickly embark on a new technology system because it will be an improvement over what you currently have – regardless of whether or not it fits into your strategic plan. There are simply too many options and variables to consider in the technology space, which can cause some to stumble when those decisions don’t fit your overall strategy. For example, a risk-adverse company that is focused on revenue enhancement and is also sensitive to biting off more than they can chew may be better off defining a strategy that puts sales-related technology (such as CRM systems) front and center, rather than more traditional, back-office ERP systems. Technology can actually be a hindrance to your overall transformation efforts when it is not aligned with your overall corporate, operations and technology strategy.
Organizational change management is what ultimately drives transformation – not technology. Technology may enable it, but it rarely drives true transformation. Instead, people and processes are what will drive the change, so it is important to ask how important new technology is in the grand scheme of things. For example, your organization may have an outdated legacy system that hasn’t been upgraded in a decade. It’s easy to point at the system as the problem, but perhaps people aren’t using the system correctly and your team hasn’t taken full advantage of what that old system can do for you. It may turn out that technology still becomes part of the answer, but it is important to consider organizational change management as a potentially lower risk, lower cost and higher ROI type of alternative to a full-blown ERP system.
Even if it really is time for a new ERP system, the other non-technical aspects of your initative will drive true business transformation. Let’s assume that your business transformation can’t happen without new technology. That may very well be true – and it is true for a majority of our clients– but it is important to recognize that it is one of many important components considered for your transformation. Especially in uncertain times of slow economic growth or flat revenues and profits, it is important to take a measured approach that looks at your transformation from all angles. Be sure to consider how CRM systems, HCM systems, eCommerce, and/or other enterprise technologies might address your needs relative to a higher-cost and higher-risk ERP software initiative.
You may very well find that new ERP systems or other enterprise technologies are key to your transformation effort. If that’s the case, then make sure that the timing for new technology is right and that you’ve addressed people and process issues first and foremost.
Many ERP projects fail because they don’t adequately address these important organizational change management issues.
Whether you’re implementing new ERP software or undergoing business transformation, your organization’s success depends on the amount of time and money you invest in business process reengineering. This 60-minute webinar outlines the components of business process reengineering that you need to include in your project plan.
The rock band REM once sang, “It’s the end of the world as we know it, and I feel fine.” After a lifespan of over 50 years, we’ve reached the end of “ERP software” as we know it as well.
As a company that has built an entire business around providing independent ERP consulting services, it may seem ironic that we are officially calling ERP software dead on arrival. It may come as a shock to some, but it’s not really much of a surprise if you look at the history of ERP.
A Brief History of ERP Systems
Beginning around 1960, Material Resource Planning (MRP) was developed as an early iteration of ERP to help manufacturers better manage and automate their manufacturing and inventory management processes. The evolution of this software continued through the 1980s and 1990s, when the rise of MRPII extended its reach to integrate outlying functions within these companies. This included warehouse management, financial reporting and order entry. This was the birth of ERP as we have recently come to know it.
The late 1990s saw the rise of SAP, Oracle, JD Edwards, and other key ERP vendors, which began dominating and integrating the complex needs of Fortune 500 companies. The 2000s saw the rise of Tier II providers, such as Microsoft Dynamics, Infor, and Epicor – some of whom have moved up to become Tier I providers.
The Current ERP Landscape
Over the last 10 years since Panorama Consulting was founded, there have been a number of trends that have foreshadowed the current death of ERP. For example:
Consolidation among current ERP vendors. There are smaller barriers to enter in the market, but the proliferation of players has been leading to more consolidation than in years past.
More options in the market. These days, companies don’t need to settle for a behemoth ERP system. Instead, there are a multitude of options: SaaS, cloud, on premise, best of breed, point solutions, business intelligence and a host of others.
Enterprise software is available to companies of all sizes and industries. When I first started in the ERP consulting industry 20 years ago, ERP was mainly for bigger manufacturing companies. Now, companies of all sizes and industries have a wide variety of viable options.
ERP systems have a bad reputation. For all their upside potential, too many ERP implementations still fail after all these years (see our 2016 ERP Reportfor the most recent data).
A weak global economy has made companies too risk-adverse to take on ERP implementations. Just as we saw during the financial crisis of 2008-2009, companies have pulled back on capital spending over the last several months. There is a lot less tolerance for big, expensive, time-consuming and risky ERP implementations that are historically notorious for blowing past time and cost budgets, while at the same time under-delivering on business benefits and ROI.
This has all coalesced into a market that does not bode well for many ERP systems. In fact, this long-developing landscape has led to the inevitable destruction of ERP software as we know it.
What this Means to the Future of Enterprise Software
Don’t fret: all is not lost. The future of enterprise software is brighter than ever – it just entails a much different landscape than many CIOs and ERP consultants are ready for.
Here are a few things that CIOs and executives can do to navigate the new realities of the post-ERP world:
Make Enterprise Strategy Front and Center. With so many options in the marketplace, a plethora possible directions to go and the many pitfalls of a rapidly-changing landscape, your enterprise strategy should determine which direction you pursue. In the past, companies jumped head first into an ERP selection and implementation process, but now, smart companies are defining a smart enterprise strategic roadmap to drive technology, process and people decisions.
Technology is an enabler of business process improvements, organizational changes and overall business transformation. As mentioned above, ERP implementations have long under-delivered at too high of a cost – mainly because many executives focused too much on technology rather than processes and people. Now, the smarter and more successful organizations are viewing enterprise technology as just one component of an overarching business transformation.
When in doubt, punt on the technology. In times of uncertainty, doubt, and tight budgets, the last thing you want is to over-invest in a large ERP project that may not deliver a strong ROI. That explains why we are seeing so many companies punt on their software decisions and instead ask us to “get their houses in order” by improving their business processes and organizational structures. You can always implement technology later, and people and process changes can typically yield more immediate results at a lower cost, so there is no harm in waiting to potentially bite off more than you can chew.
What’s Next?
This may seem like bad news for some, but it is great news for most organizations. Organizations no longer need to feel as though they are backed into the corner of a “big bang” and hard-to-digest ERP implementation. Instead there are plenty of options and lower-hanging fruit to choose from.
Even as a company that has carved out a niche as being the leading independent ERP consultants, we recognize the evolving needs of our clients – and these changing needs have provided new ways for us to improve our clients’ businesses via enterprise strategy, business process reengineering, organizational change, business transformation and a host of other areas that both play to our core competencies and meet the evolving needs of our clients.
Enterprise technology will always exist, and so will Panorama Consulting’s role as the world’s leading provider of independent enterprise consulting services, but it is indeed the end of ERP as we know it. And I feel fine.
If you would like to discuss this topic and how it may influence your own organization, feel free to reach out: info@Panorama-Consulting.comor 720-515-1ERP (1377)
As those of us in the U.S. prepare for a long Independence Day weekend, it is a good time to reflect on the role of independence for those about to select and implement new ERP systems.
Historically, ERP implementations were an all-or-nothing proposition: you would evaluate a few options, then purchase and implement a single ERP system for the entire organization. This approach, of course, was before the advent of independent ERP consultants – a role pioneered and perfected by Panorama Consulting.
Now that times have changed, there are alternatives that can and should be considered from a technology-agnostic, independent perspective. Unless you are an industry incumbent with goals misaligned with your customers, an ERP implementation doesn’t need to take the “usual” approach. There are a number of methods for finding an enterprise strategy that is based more on your organization’s specific needs and less on what ERP vendors want to sell you.
For example, below are three alternatives that you may want to consider along with the “typical” ERP implementation scenario:
Consider best of breed ERP systems. Most of our clients begin their ERP implementations with the vision of deploying a single system across the entire organization. While this may be a means of standardizing operations across the company, it isn’t always the best option since there could be functionally-focused systems that can better address specific business needs. For example, Salesforce often provides better CRM functionality than many ERP systems, while Workday often provides better HCM functionality. In other words, choosing an ERP system doesn’t need to be an all-or-nothing proposition; it often makes sense to find a core ERP system to handle financials, inventory management and other core functions, but use bolt-ons to handle more advanced functions, such as demand planning, product configuration and project management.
Just say no to ERP software. It may sound crazy, but it can be extremely beneficial to at least consider “none of the above” as one of your ERP software scenarios. For example, what is the cost-benefit of keeping your current system and instead focusing on making improvements to your processes and configuration of the system? What about an upgrade of your existing software? Many companies we work with rush down the path of selecting a new system without fully considering lower cost, lower risk and higher benefit scenarios. Although it may seem like an absolute must that your current system be replaced, it is important to consider lower cost and lower risk options, such as business process reengineering or organizational change management improvements to your existing environment.
Watch for the technically-focused ERP implementation. When you are an ERP vendor, your primary incentive is to sell software and get your technical resources billable. When you are a company implementing ERP software, on the other hand, your incentive is to improve your business operations by whatever means necessary. Unfortunately, these two incentives are often at odds with one another throughout your ERP implementation. It is important to remember that you don’t have to purchase too many modules or licenses to start the meter on expensive technical resources right away. For example, many of our clients opt to focus on business process reengineering before they begin technical configuration, which is a more effective best practice. Whatever you do, it is important to treat your project as a business implementation instead of a technical project focused too much on the software itself.
While there is no simple, one-size-fits-all answer to how to start and move forward with an ERP implementation, these three tips will help you consider your options from a different perspective. Only by objectively and independently assessing your full spectrum of options will you find the best option that makes the most sense for your organization.
Last week, I wrote a blog about why there is never a good time to start an ERP implementation. While these reasons are all valid, some organizations just aren’t going to be able to stomach the cost and risk of a new ERP system with an uncertain economic environment.
For those organizations that are in no way ready to start a new ERP project: there is still hope. Here are five ways to deliver a positive ROI to your organization without yet taking on the cost and risk of a new ERP system:
Initiate a business process reengineering engagement. Your organization is probably wasting a lot of time, money and resources with inefficient and manual processes. While a new ERP system is one way to address those issues, business process reengineering can be a lower-cost and lower-risk way to get more immediate value from your efforts. Look for ways to leverage business process and industry experts to redefine your business processes in a way that takes advantage of low-hanging fruit and delivers immediate value to your company. The other big benefit of this approach? This work will help accelerate your ERP implementation once you are ready to start.
Explore how to get more out of your current technology. You may have an old, outdated and difficult-to-use legacy system, but can you apply band-aids to get more out of that system for just a few more years? Perhaps an upgrade or reconfiguration will buy some time until you are ready for a more suitable long-term solution? While not necessarily ideal for the long-term, this solution can help ease the pain in the short-term while you gain the appropriate approvals for your larger-scale ERP implementation. Leveraging a technology-agnostic firm like Panorama can help you get the most out of your current technology.
Define an enterprise and IT strategic roadmap. Many companies aren’t sure where to start when commencing their ERP initiatives. This can lead to a sense of fear and paralysis. The market has a multitude of technology options – SaaS, on-premise, best of breed, single ERP, cloud, etc. – but those decisions don’t need to be complicated. Determining the right technologies that are best aligned with your overall strategic objectives can ensure that you are focusing your efforts on the technological options that make the most sense for you. Learn more about Panorama’s IT strategy options here.
Implement organizational changes. It may be that some simple organizational changes will enhance your current situation. For example, we are working with a large manufacturing and distribution client that has put their ERP project on hold. In the meantime, they are looking for ways to tweak employee roles and responsibilities to get more out of their system. They are also identifying potential pockets of resistance to address now – paving the way for their ERP implementation once it resumes next year.
Explore niche enterprise technologies. Enterprise technology doesn’t need to be an all-or-nothing proposition. It may be that certain technologies will deliver more low-hanging fruit in the long-term. For example, several of our clients are evaluating CRM systems, HCM systems, eCommerce, Point of Sale, Business Intelligence and other technologies that aren’t as expensive as full-blown ERP systems. One recommendation would be to make sure that you’re not backing yourself into a corner in the future with whatever system you might be considering, so make sure potential future ERP acquisitions support and integrate with the system you are currently considering.
If you need to make some changes, but are nervous about fully committing to an ERP system, these are some ways that you can move forward without breaking the bank.
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Organizations today are not just implementing ERP software – they’re leveraging ERP software as part of their digital strategies and holistically addressing people, processes and technology.
Learn and network with other professionals. Attend our Business Transformation & ERP Bootcamp this November
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2020 Top 10 ERP Vendors Report
Our 2020 Top 10 ERP Vendors Report highlights the vendors that our ERP experts have found to be strong in functionality across a variety of industries, including manufacturing and distribution, professional services, retail and more.
Looking for ERP selection advice? Our report provides that, as well!
Clash of the Titans 2020
SAP, Oracle, Microsoft and Infor each have a large market share, especially when it comes to targeting enterprise-level organizations. This report analyzes some of the notable differences between these four ERP vendors. These differences may help guide organizations in their ERP selection decisions.
Business Transformation & ERP Boot Camp
Join us November 6th and 7th in Denver, CO to learn how to optimize your supply chain and transform your organization.
The ERP systems featured in this report were chosen based on the strength of their distribution functionality as well as the amount of research and development invested in these products.
SAP vs. Oracle: A Case Study
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Deciding between SAP and Oracle is difficult. This the client needed software that would position their organization for continued growth, but internal bias put functional fit in the back seat. Ultimately, Panorama’s independence and expertise gave the client the insight necessary to make an objective decision.
2019 Top 10 Distribution ERP Systems Report
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The ERP systems featured in this report were chosen based on the strength of their distribution functionality as well as the amount of research and development invested in these products.
Clash of the Titans 2019
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SAP, Oracle, Microsoft Dynamics and Infor each provide robust ERP systems that can transform your organization. The data points in this report highlight common challenges that implementing organizations face when working with each of these ERP vendors.
2019 Top 10 Manufacturing ERP Systems Report
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Panorama Consulting Solutions developed the 2019 Top 10 Manufacturing ERP Systems Report to analyze the strengths of the Tier I and Tier II ERP systems best suited for the manufacturing industry.
2019 ERP Report
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The 2019 ERP Report delves deep into the data to analyze what ERP industry trends mean for organizations now and in the future. The findings from this year’s report point to one important concept: ERP projects are most successful when focused on integrating people, processes and technology.
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Last week, I wrote a blog about 
