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.
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.