Some of our recent clients and industry peers have been asking us how they can best incorporate best practices into their ERP software initiatives. After all, the reason most CIOs and other C-level executives select and implement new ERP solutions is to improve the way they do business.
The term “best practices” is a bit loose and vaguely defined in the industry. ERP vendors often interpret it as the way one of their biggest clients does business, which often becomes the pre-configured ERP solution for a given industry. However, best practices for one company may or may not relate to other organizations and is heavily dependent on the company’s business model, competitive advantages, and other considerations. In addition, given the diversity of functionality in most ERP solutions in the marketplace, who is to say which solution(s) provide the real best practices?
In addition to software vendors, some online tools and lower-end software selection consultants provide checklists or templates of “best practices.” While there are large volumes of such information, the relevance to any given specific company is questionable. In addition, best practices are not checklists of functionality – they are efficient business processes that provide competitive advantage to your business.
So how does a company leverage best practices during their ERP initiatives? Here are three tips:
- Focus on measurable business improvements, efficiencies, and non-value-added activities. Every company is different with unique competitive advantages. Some are extremely customer-centric, while others contain costs via efficient supply chain management processes. The key is to identify and measure the areas that are most important to your business and provide the greatest opportunities for ERP to improve your results. Once you have done this, it is easier to identify potential ERP systems that will provide more efficient or effective business processes to support your operations.
- Leverage benchmarks and data to drive improvements. Consultants with a broad view of the ERP space, your industry vertical, and data to support ERP initiatives are likely to bring best practices from other clients. Be leery of consultants or software vendors that have a one-size-fits-all canned best-practice solution.
- Standardize processes that aren’t differentiators to your business. If something isn’t providing a competitive advantage to your business, then chances are most ERP solutions have standardized functionality to provide standardized and proven efficiencies. Examples often include financials, A/R, A/P, fixed assets, and warehouse management. If a particular business function is competitive or unique to your business, however, it is less likely that most ERP software vendors will provide standardized best practices, and less likely that you would want to leverage generic functionality used by other companies. Examples of areas that are differentiators and more difficult to find in most ERP packages include product configuration, process manufacturing, and vendor managed inventory.
These are three starting points to help you on your journey to identifying and leveraging ERP software best practices. What are your thoughts? Take our poll and compare your opinion to others in the ERP and business community.