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7 Business Process Reengineering Tips For Competitive Advantage

7 Business Process Reengineering Tips For Competitive Advantage

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.

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.

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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 reengineering 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 Reengineer Your Processes?

Every organization deserves ERP software that supports their business processes. The only way to ensure you select such software is to reengineer 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 at least 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.

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Advice for Global Organizations Pursuing Digital Transformation

Advice for Global Organizations Pursuing Digital Transformation

Digital transformation can be daunting for any organization, but it is especially challenging on a global scale.

Global organizations typically want to standardize business processes across international operations, but they also need the flexibility to serve diverse customers, employees, economies and regulatory bodies.

The decision to globalize or localize isn’t black and white. Every organization has different operational, organizational, cultural, regulatory and financial considerations. Let’s discuss some of the pros and cons of standardization and differentiation. We’ll also provide tips on how to balance globalization with localization.


Benefits of Global Standardization

International organizations, particularly those that acquire other companies, often have non-standardized business processes. Standardization allows these organization to scale for growth by consolidating business processes. Consistent processes drive operational efficiency and enable global visibility into operations. Financial reporting, for example, is faster and easier when processes are standardized.

While standardization can require a large investment in business process reengineering, you’ll ensure that all processes at all locations are designed to bring you competitive advantage. Global organizations lean toward standardization when they want to deliver quality goods or services with a high degree of predictability.


Benefits of Localization

Localization reduces change resistance because you’re adapting to the unique needs and requirements of different locations. Instead of changing local business processes to align with processes at your headquarters, localization allows you to retain the unique processes suited for each location. Certain locations may need flexibility to manage data and transactions in local languages and currencies. Some countries have intricate requirements when it comes to taxes, currencies and regulatory reporting. Differentiating your processes based on location ensures you stay compliant and avoid penalties.


Balancing Globalization With Localization

If you want the best of both worlds, you should be strategic about which processes you standardize and which you differentiate. Some processes should always be standardized. These include processes such as back-office functions that enable a shared services strategy. Other processes, such as regulatory and reporting processes, should typically be localized. While you may want to localize customer-facing processes, you should probably globalize processes that don’t add as much value.

A balance between globalization and localization becomes even more important when you consider organizational change management. The need for organizational change management at global locations typically increases the more you standardize your processes. While standardization may save money in the long term, you’ll need to invest in extensive organizational change management in the short term. This means more than end-user training. It also involves communicating change impacts and project status updates.

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How Much Organizational Change Management?

The most challenging aspect of a global digital transformation might be aligning corporate culture around a singular goal. You must account for cultural differences and language differences.

Executive support is especially important during global projects as local entities may be extremely resistant to globalized processes. People can’t embrace what they don’t understand, so you must communicate the reasons for transformation and how it will benefit employees and the organization as a whole.

Organizational readiness assessments are also critical to global projects. You can assess risk by analyzing your organizational attributes as well as the characteristics of proposed changes.


How Much Software Customization?

Does globalizing your business processes reduce the amount of software customization you’ll need? Sometimes, but not always.

While you may be standardizing your processes based on a global standard, you’re not necessarily standardizing your processes based on software functionality. However, there is typically an overlap between globalized processes and processes that are standardized based on software functionality, as they both mostly involve non-value add processes. It’s probably safe to say that more globalization usually equals less customization (but more organizational change management).

Another strategy for reducing customization is to allow flexibility in each location’s choice of software and vendor. This can make globalization more difficult than usual but not impossible.


Defining a Support Structure

While you’re determining which of your processes should be globalized versus localized, you should consider whether your support structure will be globalized, localized or customized. Many companies choose to centralize ERP support and helpdesk functions, while others choose to offer decentralized support to cater to diverse locations. The sooner you define a support structure, the sooner end-users will adopt new processes. This is true for both on-premise and cloud ERP implementations.


Defining a Master Data Strategy

Master data is an important but overlooked aspect of the global vs. local conundrum. Not only do you need to cleanse and migrate master data, but you need to define how it will be managed going forward. For example, will local offices have the flexibility to manage their own local chart of accounts, or will changes require centralized and global governance? The same should be decided for other types of master data, including customer, supplier and inventory master records.


Final Piece of Advice

This may be your first global digital transformation, but it’s not ours. Our digital transformation and ERP systems experts understand the challenges of both globalization and localization and how to find the right balance based your organization’s unique objectives.

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