Earlier this week, I gave a presentation to a client on the east coast that we are guiding through the software selection process for a potential new manufacturing ERP system. One of the executives asked a very insightful and important question: should we be defining our business processes, workflows, and internal controls before or during our ERP implementation?
This is insightful because marketing messages from most ERP vendors suggest that their software will handle the business process side of the equation for you. In other words, implement the software out of the box, adopt it as-is, and it will drive the improvements that you will need to make. However, the particular executive team that I was meeting with is fairly well-versed in the challenges of ERP software initiatives and understands that it’s not quite that simple.
There are three problems that this executive team pointed out with this marketing hype.
Three Problems With Waiting Until Implementation to Define and Improve Business Processes
1. Our business processes aren’t well defined or documented. This company, like many we work with, has a highly tenured and experienced workforce. While this can be an overall asset, it can be difficult to get strong documentation in place because everyone works from what’s in their brains rather than documented business processes. In addition to being a challenging, time-consuming and costly way to design new manufacturing ERP software, ill-defined business processes also typically result in misalignment and a lack of consensus across the business.
2. We are lacking internal controls and standards. Most ERP vendors pride themselves in providing flexible and robust software. Along with that flexibility, however, comes even more of a need to establish tight controls and procedures. The software won’t establish those things for you and, in the case of this particular client, the challenge is further magnified by the fact that they expect to engage in high growth and potential acquisitions in the future. If these processes, standards, and controls aren’t in place, it’s going to be very difficult for this client to effectively integrate a new company and/or scale for organic growth.
3. ERP software can not tell us how to run our business. It sounds great in theory: software that does all the heavy lifting of process design for you. This client understands that they want the software to make their lives easier, streamline business processes, and centralize information, but they also understand that they need to define their processes first. They also realize that many of their planned process improvements can be implemented even before they’ve finalized their ERP software selection.
So if the implementation phase is too late to define your business processes, then what is one to do? The simple answer is to facilitate an ERP business blueprint process. This structured and technology-agnostic approach, which Panorama is providing to this and several other clients at the moment, focuses on defining processes, identifying the organizational impact of the corresponding changes, and refining an implementation plan based on the outcome of this blueprinting exercise. The beauty is that it gets your whole business on the same page in terms of how the business will look going forward, and it also provides a clear and more effective roadmap for your chosen ERP vendor to configure the software.
Learn more about our ERP business blueprint services.