How ERP can make good on the promise of real-time actionable intelligence

Mobile, social, analytics, cloud, the Internet of Things, nanotechnology, 3D printing and more – manufacturers are facing a barrage of information about how new disruptive technologies will change the face of their industry. But for manufacturers to embrace these technologies, they must have a clear understanding of the technology value-add within the context of today’s business environment – what I like to call ‘purposeful innovation’.

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Big data and the IoT as technology concepts are exciting, but what do they mean to manufacturers from a practical application perspective? As digitization becomes defacto on the manufacturing floor, there is great potential to improve responsiveness and agility, and adapt more quickly to customers’ changing needs. As more digitally controlled technologies are introduced, we build more connections. As we become more connected, building the IoT, we generate big data. And as the volume of data grows, we need new and faster ways to drive insight and actions, and easier ways to arrive at decisions.

So while these disruptive technologies are expected to improve responsiveness, they create new challenges in managing an increasingly overwhelming volume of data that must be converted into actionable intelligence. Manufacturers can’t afford to allow these technologies to inadvertently slow them down, as this would be contrary to the aforementioned goal.

When it comes to the IoT, it’s not about the data perse, it’s about what you can do with that data. As Industry Analyst Nigel Fenwick at Forrester Research has said: “It’s important to note that digital isn’t just about gathering new external connections; it’s about having the operational agility to act on them.”

Some of the manufacturing purists may argue that IoT isn’t new to them – after all, machines have had sensors for a long time reporting back information to the user –  like the ubiquitous laser jet printer that tells you exactly how much ink is left and even where to order replacement cartridges. However, what’s new is we now have the technology capabilities to enable the integration of information across the entire product lifecycle – from design, through engineering, manufacturing, delivery, and service — to deliver immediate and actionable information to the necessary departments and functions with greater speed, accuracy, and efficiency than ever before. Imagine the new printer that prints your production schedule at the beginning of the shift when it detects you have arrived on the shop floor and automatically emails you a PDF of that schedule?

This is about gaining instant access to information “in context” to the task or decision at hand. The value-add is aggregating data quickly to make meaningful decisions today that manufacturers couldn’t make yesterday. What’s ‘new’ and notable with the IoT is this ability to aggregate data, analyze it and even use it for predictive modelling.

With all this talk about the IoT, manufacturers may wonder – where does ERP fit into all of this new digital frontier? The reality is ERP is more relevant in this equation than ever before – as it’s the key to unlocking the value of IoT. To be able to realize the full value-add of big data/IoT initiatives, manufacturers need the ability to contextualize data and integrate it into downstream process flows. This is what ERP has always done, however today next-generation ERP platforms are more approachable and more powerful than ever – functioning as the fabric that connects people, processes, data and things in an intelligent and strategic manner that allows manufacturers to create value from new data streams.

To do this however, ERP systems must be reimagined to meet the needs of new and emerging technologies in the business of manufacturing. Responsiveness demands simplicity and mobility with tools designed to meet the specific needs of specific users. It demands new levels of collaboration throughout the supply chain, inside and outside the enterprise. It demands choice in the way information is presented, applications are accessed, and solutions are deployed. With an ERP system that delivers all this and more, manufacturers can check off a big box on their IoT readiness checklist and make good on the promise of real-time actionable intelligence.

 

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Customization –Doing it your way

Customizing the Cloud ERP system is one of the most popular problems faced by today’s companies and it is an important aspect of Cloud ERP since it impacts overall performance and efficiency, speaking time-wise. Customization also increases the flexibility which gives competitive advantage. The main problem is; most providers offer a standardized workflow to reach a higher number of potential customers. But keeping in mind that every enterprise is unique and incomparable, different enterprises have their own way of completing business processes in a way that will increase its efficiency. Enterprises should also adjust ERP systems according to their unique business requirements.

Cloud ERP

Security – Being in safe hands

Security matters most for almost every company and it is a major concern. In the Cloud ERP, data is stored on vendor’s data center which means security is in the hands of the provider. This may be positive or negative depending on the vendor. If a company can’t handle their security well –or lacks the support– they can confide in the vendor’s ability to protect its data. Some companies might feel uncomfortable with leaving the company’s security in someone else’s hands. But of course, it’s a matter of vendor trust. In conclusion, as long as you trust and put your data on one of the well-known vendors you wouldn’t face many security problems.

Availability – Are you able to use it?

Availability is another hindrance on the way to Cloud ERP. Problems regarding the availability occur due to the nature of the software model. To be able to use the Cloud ERP, internet connection and enough bandwidth are required in order to access the ERP which is under the cloud. There are many factors which will affect the stability of working with the Cloud system such as internet latency time and bandwidth charges. A user must be able to upload and download. An obstacle to do one of these tasks would end up with a loss for the company which would affect business’ performance.

User Training – How does it work?

Providing an effective and well-led training is critical. Once you have the right Cloud ERP solution, employees must know how to use it. Not investing enough in the user training may have dangerous consequences. Companies may see the user training as waste of time and money, but in the long run if not addressed properly, lack of user experience may end up making you lose even more time. User training will improve the confidence of the employees as well increasing their experience level. This will also prevent unwanted and unexpected mistakes done by the users.

Choosing the Right One – This or that?

There are many options to consider before adopting a Cloud ERP. Companies should review the systems which fits best for them. Choosing the solution which is cost-effective and suitable is early in the list. To reduce the costs, companies may also consider using a Hybrid ERP which integrates On-Premise ERP and Cloud ERP applications. Choosing the package which is suitable for your company will also save time and money since providers can offer tailored ERP solutions according to the size of your business. Ultimately, among all these options choosing the right solution will benefit the company and save a lot of time as mentioned.

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Yesterday´s Future is Today´s Reality – why running SaaS ERP is a game changer in the Industry. In the area of Business applications, cloud seems to be all over the place. But it has many facets which all have its right to exist, though it´s a fatal misunderstanding to see cloud simply as an alternative technical deployment option.

SaaS

From the new millennium SaaS models that have been adopted, initially with huge appetite in dedicated Line of Business areas. We would call them Cloud 1.0 solutions, mainly CRM, HCM, SRM, Travel Management. The hunger for faster innovation cycle and independence of corporate IT was huge and drove cloud to new heights. But moving into the cloud was not about a technological movement alone.

We would like to explain this via Customer Relationship Management: For CRM it was a fundamental mind shift towards tools supporting “The Salesman of the 21st century”, a highly social, collaborative and cross-linked persona who is able to manage customer relations in the most comprehensive and collaborative way. Sales Force Automation was legacy before that inflection point and Innovations often left this highly critical group outside as it was focused on the back end, often COO-lead processes to control sales and operations. A sales rep simply wasn´t in focus and so not able to win the battle for the customer by ignoring new possibilities.

Now, as this LoB markets have been settled in favor of SaaS, we again see the world changing in time-lapse. In a fully digitized world, information can be measured and made available across the globe instantaneously. Sailing on the back-wind of new technologies, this is a key enabler for companies to rethink their market position and strategy – and redefining business processes. Fundamentally, it means that a digital business need to deliver on the ubiquitous promise to truly serve a segment of one: The end consumer. The whole value chain becomes a highly flexible organism to be run in real time – it becomes a LIVE Business.

At the same time became the definition of ERP volatile in the market space. From post-modern ERP definitions that stopped beyond core HR and Finance to an ERP definition, which is now maturing and looking at a federated suite transforming into a digitized core-to-edge definition. When customers consider moving their ERP to a SaaS solution, it is driven by the need to get far beyond a new deployment option. Cloud adoption is not a technological decision, it is transformation to re-invent core ERP applications like accounting and finance, procurement, manage stocks, production and materials management, R&D – serving the needs of the digital economy.

As a result it enables enterprises running more flexible and foster innovations faster – this is the corporate imperative today. SaaS customers always run on the latest innovation and clients can focus on core business rather than keeping track with upgrades – after all, it´s software as a service.

A Short History of ERP and SaaS ERP

Since the 80s, companies like SAP have successfully shaped and anticipated market trends and helped countless businesses run better. As new mega-trends emerged or were inspired by SAP, like ERP itself, we restlessly drove the industry to solve the next decade’s needs. The achievements created during one megatrend became the status quo for the next, providing the building blocks to a new and even more innovative way of tackling the next generation´s problems, meeting new demands, and driving businesses to work increasingly in real-time.

ERP systems focused originally on automating back office functions. In the year 2000 ERP was coined the first time dead in an article. And re-invented within the same article again. Gartner described web-based software that provides real-time access to ERP systems to employees and partners including suppliers and customers. The new ERP expands traditional ERP resource optimization and transaction processing. Rather than just document the physical reality it became a connected platform to interact between Enterprises.

Later ERP was coined dead again many times (and for sure will be coined many times to come mostly by cloud 1.0 vendors that have no alternative), though the undisputed success of the business suite speaks for itself. Just look at the growth rates or talk to the leaders in companies that need to digitally transform. They know they need a new core – just innovate at the edges does not deliver the value they need. Additionally enterprises want to and can leverage on premise investments while growing into the next inflection point in global business. At the same time, business changed at an unprecedented pace.

Mid of last century, most companies could expect to last forever. In today’s fast changing world, companies are chased by disrupted everywhere. A shrinking life expectancy of companies on the Fortune 500 index from 75 years to 15 years as reported by Steven Denning (Forbes) and the fact, that 4 “Start Ups” (Facebook, Uber, Airbnb, Alibaba.com) today equals 60% of the market cap of the German stock market DAX speaks a straight language: Fast Innovators – hungry for success – disrupt established markets.

Not necessarily fueled with better products but better customer service strategies – focusing even on the customers of their customers (B2B2C). Smart companies leapfrog industry borders and sell additional products and services into existing markets and leave established market leaders perplexed behind. We recognized many Blue Chips has fallen flat and became irrelevant in one single decade.

Modern ERP need to support this fast and dramatic shift without losing its capabilities to run like a clockwork.

The Demand for an Intelligent Enterprise

Charles Duell said in 1899 – “Everything that can be invented has been invented”. No doubt, all established companies were truly entrepreneurs with tremendous achievements in their respective markets. They have each performed outstanding upon entering the market and they all had great advantages over the competition … for the time being.

A new dilemma arises once companies become market leaders: to maintain their hard-won position, they now put themselves on the defensive. The most innovative companies start becoming conservative the moment they become successful. True, this helps their business position. Unfortunately, this also potentially signals the beginning of the end of their innovation leadership.

For too many companies Digital Transformation is an excuse to focus on yester-years growth rates, at the end loosing against others because they do not challenge themselves early and often enough.

The digital economy it about the End-to-end experience. You don´t book an UBER because they run better cars. You book an Uber because you can start your journey wherever you are. At your fingertips on your smartphone. Easy to use, once you are registered, the same experience everywhere for global travelers. And you know what you get. You can visualize your position against the next free ride, what car, how does the driver look like, no local cash required, invoices via email for your expense report, fair prices as all is tracked via GPS.

The new technical possibilities and customer behavior makes the digital storefront a MUST have to compete and ultimately survive in the digital economy. Companies want to be where the customers are. It is a logical consequence of the Segment of ONE. Customers want to be treated as individuals, not in a segments with others any more.

But what´s next after digitizing my storefront? It creates a huge new promise to the market.

“Dear Mr Customer, I am a service (oriented) company and I will treat you exceptional well”.

This triggers an average invoice value decrease while the number of invoices is exploding – first of all no problem for a mature enterprise solution that thinks and acts end-to-end. Though similar impact you will have in your enterprise logistics, the average value and size of lots is going down while the number of lots is going significantly up. The direct consequence of this “UNIT of ONE driven order size” seeps throughout the entire organization. How can I keep my corporate functions working at scale in such an environment?

Also, think of adopting Big Data. How long have we been talking about Big Data in the Industry? Here is our question to you: How much has changed in the individual workplace of your employees since this term is socialized? How many better decisions have your employees made, because of smart insights? The standard answer we get, well….

At the end we would argue that Big Data is not the problem, the focus needs to be the “right” Data, leveraged in context of the adequate business process and brought to the attention of an end-user exactly at the moment he makes his business decisions.

The ability to ride through this digital storm requires adopting new perspectives and technologies.

To address this, customers need to automate repetitive tasks and decisions based on information available. It is time to rethink the core processes. With the combination of machine learning and predictive analytic´s, we are going to enter the decade of Intelligent Enterprise, automating standard business functions, and leaving room for differentiating activities to the individuals. It is about exception based handling and not filling the workdays with routine tasks any more.

Now, what defines a digitized core?

1. An architecture that delivers a scalable foundation to transact at highest possible automation

2. A system of intelligence that supports and steers the business using embedded analytic´s, simulation, prediction, and decision support to run LIVE business

3. An end-to-end experience that allows to be faster implemented, consumed, and adapted- with best information at the time decisions are made

4. An open architecture to allow connected-ness and adoption of micro-services

Key drivers for customers to move to the cloud

Driven by the subscription economy, the distance between the engineer and the end user of a product has been dramatically reduced – even more: the industry entered into a service business model. The result is an unmatched speed of innovation, simplicity and reduced time to value. This hits the companies´ core value, their brands. The currency of the past was a superior product; today’s currency is a superior end-to-end-experience of a product. Buying a product bonded customers for some time, the minimum span was the financial depreciation of the investment. A subscription economy is a highly volatile service business with different rules, focused on the essence of things and needs.

Moving a “companies´ Core” to the Cloud enables a fast deployment and improves time to value. Additionally, it fosters rapid innovation cycles and reduces TCO and TCI, matching a fit2standard and enabling agility in consumption. The end2end experience is at the heart of it, not the product on its own.

But for customers and partners there are new rules of the game to adapt and digitally transform as well. Technology induced innovation change the market demand fundamentally goes along with business changing capabilities for each Line of Business. Enterprise customers expect to re-define, innovate and digitize its core asset – ERP, and consume it as a SaaS model. The SaaS model is fast becoming a de-facto standard for deploying ERP across the market space. New digital advances have caused this tectonic shift in the enterprise technology as described above.

The latest wave of technology innovations was effectively leveraged by consumer driven companies, IT in the cloud was mainly deployed for the sake of a better customer service.

Enterprises are now catching up to digitize the core. By leveraging new technological innovations, it is now possible to eliminate many technical limitations in enterprise applications, a journey which nearly every company embarked on, the TOP expectations to be mentioned:

Fast time to value: Adoption of SaaS for Line of Business cloud solutions is already a commodity. Customers are now beginning to deploy core ERP in the cloud to regain velocity and adopt new technologies.

Shifting CapEx to OpEx also for Core ERP: Companies prefer to gain flexibility and grow the solution with the company in a flexible model without locking in capital. Especially a highly volatile market with mergers, de-mergers and divestitures driven by the digital transformation is in favor of highly flexible capital models.

Change to an Insight To Action driven model: Modern ERP systems are Systems of Intelligence”, not “Systems of Records” anymore. The transactional workload of an individual needs to be reduced to 10% exception based handling to keep the increasing volume of digitized companies manageable.

Fast(er) adoption of latest technological innovation: Faster adopt new technologies such as consumer-grade UX, IoT, Big Data adoption, machine learning, blockchain – to just mention a few – without long or additional implementation cycles. Simply consuming new innovation with the latest version every quarter.

Freeing up IT resources for strategic innovation topics and differentiating processes, like enabling the Enterprise for digital transformation and drive Innovations according to the Gartner Bimodal IT, while relying on the core to run like a clockwork in a federated environment.

 

Sven Denecken

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Enterprise Resource Planning (ERP) has been identified as a necessity for practically all companies, regardless of the size, and the sector. It is no longer seen as a matter of choice, but as an imperative. After all, which organisation would not benefit from a real-time integrated view of all its core business processes? It is universally acknowledged that an effective ERP system can streamline and improve every aspect of business.

improves

This is even more so when it comes to accounting and other financial aspects of an enterprise. In fact, the financial module is the flagship module of many ERP systems. Not only does it provide visibility into, and control over, a company’s most sensitive data, it also enables compliance with regulatory bodies, reducing risk in the process.

ERP for accounting

An ERP system is an indispensable tool for organisations to manage various aspects of their accounting process, be it taxation management, regulatory reconciliation, capital management, purchase management, accounts receivable, accounts payable, payroll management, and much more. It helps businesses to collate financial data from various functional departments, and generate financial reports such as quarterly, half-yearly and annual financial statements, balance sheets, trial balance, and so forth.

By providing a real-time look into the company financials, an ERP system allows companies to manage and analyze costs, and link them to various aspects of their business, thus improving performance and reducing back-office expenses. Thanks to standardized processes and a single, integrated solution, companies get the requisite flexibility to scale production, accounts payable, accounts receivable, and inventory to exact specifications. As a result, costs can be more carefully balanced over time, and configurations can be tweaked.

Easier variance analysis

By providing a clear view into the cost of manufacturing and any related expense, an ERP system allows companies to review the costs of projects, and adjust the same to balance allocations. Cost variances can be identified and addressed quickly to balance the allotted budget. Besides, companies can have a better assessment of why the variance is occurring, thus giving them time to initiate remedial action, long before the impact is felt on profits. And if costs are found to be lower than expected, then new standards favouring the company can be set.

An ERP system also enables a company to review costs over a period of time, or according to a specific classification. Companies can, thus, reference multiple cost balances and create cost tables in order to better analyze cost allocations, and make better-informed decisions. Companies can also provide best estimates to stakeholders, with more accurate profit predictions. Besides, an ERP system allows a business to focus more on data analysis, rather than just data entry.

In the end, when it comes to accounting and managing the financial health of your organisation, an ERP system not only streamlines your processes, providing greater visibility and control, it eliminates risks associated with manual processing, thus letting you breathe easier.

 

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Before selecting an ERP system, your ERP consultant should guide your organization through requirements gathering and business process reengineering. This is called an ERP evaluation, and here’s an inside look at what it takes, courtesy of Laura Florence, Senior Account Executive at Panorama:

How long does it take to do a selection project?

In terms of the first stage (ERP evaluation), we’re generally looking at three to six months, and that surprises a lot of folks, but there’s a lot of reasons behind that. We’re talking about an investment that is five to eight-percent of your annual revenue, and the project can take years to complete. An ERP system is designed to serve an organization for up to a decade, so if you make a mistake, this is a really expensive mistake that’s going to have long-term implications.

Now that we know we need to do a selection the right way, how do we go about it?

You start with the evaluation. Find an ERP consultant to take a look at your business requirements (e.g., the ability to handle multi-currency; the ability to track work in progress; the ability to define discounts based on a contract assigned by a client).

Business requirements don’t live in a vacuum; they are elements within business processes. While your ERP consultant is helping you define your requirements, they also will help you define your business processes.

If all you do is define your current business processes as the basis for ERP selection, you’re just automating inefficiency.

The next interim stage is to ask, “How do we go from our current state to a future state?” This is where business process improvement comes in. Organizations should hire a dedicated team of process improvement professionals with a strong methodology that utilizes Six Sigma. Once the team evaluates your business processes, they will recommend one of three options:

1. Out-of-the box. If your last ERP implementation was a decade ago, there’s a good chance that any new ERP system will inherently have the functionality you need. With your current ERP system, you may rely on customization or manual workarounds, but with the latest, greatest ERP system, your processes could require just a click of a button. ERP software, like anything else, is continuously improving. As user groups request new functionality, ERP vendors are continuously upgrading and developing their technology.

2. Processes First. You may be able to improve your business processes separate from technology, which is fantastic. You can realize immediate benefits when you change the way you do business to become more efficient and effective. If you change your business process before changing the technology, the technology adoption becomes easier, and, in terms of organizational change management, you have an advantage.

3. The Next Level. Your organization may require technology to take it to that next level of efficiency. In that case, your ERP consultant will document processes in terms of specific business and technical requirements and provide this to ERP vendors as you move into the selection phase.

How long will my organization’s ERP selection take?

As you can imagine, if you are manufacturer of widgets with a single location and single business function, the ERP evaluation process might only take a couple of weeks. However, if you have multiple business units and multiple locations across the globe, you need to gather requirements for each location while identifying which requirements can be consistent across locations and which should be unique. Your organization’s number of locations is the most significant variable determining the length of your ERP evaluation – it can range from a couple of weeks to several months.

 

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In tough economic times, it becomes tempting to sweat your assets. But running an outdated ERP system may become more of a liability than a saving in the long run.

erp software

These are the top signs that indicate it’s time for new ERP software:

1. Functionality gaps

If the software you’ve been using for years starts becoming outdated, you will start noticing functionality gaps, particularly when your business ventures into a new industry or embarks on new business models. Many businesses may try to address these gaps by adding external components to the system, or moving functionality outside the ERP system altogether. In the long term, independent and/or patched systems will need to interface and integrate to deliver optimal value, and ensuring that they do so can prove complex and costly. Investing in an advanced new ERP system ensures that all the functionality required by the business today is delivered in an integrated solution capable of meeting the business’s changing strategic needs over the next few years.

2. Updates and upgrades

It is important to consider how well your ERP vendor keeps you up to speed with advances. If you have had a system in place for years and little or nothing new has been added to the product, you need to be concerned. Technology and market trends constantly change, a fact that mobile app developers are well aware of. For that reason, you’ll find consumer apps being updated every four to six weeks, with a new version released every few months.

This approach is impacting development in the enterprise space as well, where businesses are beginning to expect their solutions to keep up with changing technology developments. Admittedly, ERP is significantly more complicated than a mobile app, but updates and upgrades should be released at regular intervals to ensure that the solution keeps delivering in a changing environment.

3. BI and graphics

Older ERP systems typically do not offer many built-in BI tools, allowing enterprises to analyse their data. ERP systems have been notorious in the past for their lack of visual appeal, with much of the available data displayed as text. However, in an app economy, users expect more from solutions. Today’s business decision makers are exposed to mobile apps that are attractive and intuitive, and want to enjoy the same experience when using their enterprise systems. They want instant access and the power to analyse their data using attractive, user-friendly interfaces. If your ERP software does not deliver, it is time to upgrade.

4. Cloud readiness

Worldwide, cloud is the future of enterprise systems; therefore enterprises should start preparing for the cloud now. ERP systems that are not cloud ready or already in the cloud, will not stand the test of time as businesses increasingly discover the benefits of cloud-based enterprise systems.

When considering a move from an outdated ERP system to one capable of meeting current and future enterprise needs, organisations typically raise cost, fears of implementation complexity and resistance to change as their main concerns. Until recently, these concerns may have been valid: as little as two years ago a seven-user ERP system may have required a significant investment and taken months to implement. However, times have changed. The same functionality in an on premise solution is now available on a subscription model with little upfront investment and implementation possible in as little as four weeks, often to the great surprise of customers.

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Ron Martin, Managing Partner of Enapps, an ERP supplier for SMEs gives seven tips for SMEs who may be considering an ERP business system.

ERP success

Know exactly where you are and where you want to be from a business perspective

You need to know exactly where you are, before you can move forward. By this we mean making sure that your current business workflow is well documented and understood by your senior management team, you all know and agree on the things which need changing and all want to move forward with the changes. Full management team buy-in is essential, since the project can very easily be derailed at a later date without it.

Should I commission an ERP consultant?

From our experience as an ERP vendor, unless you know a lot about ERP systems, it is money well spent to use an Independent ERP consultant. They will guide you around many of the pit falls and make sure that you are not being ‘ripped off’ by sanity checking the ERP vendor proposals. They will also chair your vendor meetings, make sure you get answers to the right questions and generally steer you in the right direction. Our only caveat is that you make sure that your consultant is truly independent, since many go under the guise of being fully independent, but clearly favour a certain ERP vendor or a couple of vendor(s). The best ERP implementation for your business requires a level playing field for all ERP vendors.

Think about your future business requirements right now

It’s fine to think about what you need right now for the initial ERP implementation, you most likely just need a fully integrated system which also automates the current manual system. Also try to think about what you may need from your ERP implementation 2-3 years down the line. Ask yourself if your ERP vendor of choice still ‘ticks all the boxes’?

Always see an existing client from your ‘ERP vendor of choice’ before you sign up

Most prospective clients spend weeks or months making their ERP decision, but don’t make the relatively short amount of time it takes to go and see an existing client from their prospective ERP provider. It may seem an obvious thing to do, but so many people do not do it. Also be wary of an ERP vendor that does not offer, or tries to deter you from seeing one of their existing clients. When you choose a client to see, make sure that you choose one that has ‘grown with the system’ so you are able to ask questions about the associated’ growing pains’. This will give you a huge insight into the flexibility of the ERP before you make your choice.

How do I stick to my budget?

You should always start out with a budget in mind, along with some contingency budget (we recommend 20%). Once the ERP vendor has an idea of the required implementation, they should give you an indicative budgetary price. Once the project has been fully scoped and both the parties agree on the output of the project scope, the vendor should then deliver a ‘firm price’ and the system should be delivered for the agreed price. The contingency should only be used if there is either some unexpected extra work from the ERP vendor’s point of view or some form of extra functionality which the client specifies, but was not originally known at the onset of the project. You should also make sure that you stage payments in line with the project milestones.

Have an internal ‘project manager’ for the ERP implementation

When you embark on a new ERP implementation, there is a lot of pressure on your organisation and by choosing an internal project manager you make sure that your company has a funnel which feeds in and out of the ERP vendor’s project implementation team. This is key when implementing a new system and serves to keep the project on time.

ERP Training

As with any new system, you will expect to be trained. Make sure that training is covered in the proposal from your ERP vendor. Also make sure that your whole organisation has been trained and is ready on the ‘Go Live’ day. Training is crucial to a successful ERP implementation.

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Now that the champagne has been polished off and you’ve rung in the New Year, it’s time to make your return to the office and attempt to shake the holidays from your mind. As your business returns to its normal operating activities, you may start to remember some of the inefficiencies you escaped and pushed to the back of your mind during your vacation. This is frequently when many companies start to proactively think about implementing new software to improve their outdated processes. As you prepare your company to search for new ERP software, here are 3 important questions that you will need to answer:

new ERP software

Cloud or On-Premises Installation?

A question as old as time itself (if time started 6 or 7 years ago), it’s a question that has plagued business decision makers tasked with finding a new ERP software system. Unfortunately, the answer to this question is not black and white, and is rather dependent on a number of different factors. We see a lot of companies select cloud hosted software as opposed to on-premises for convenience. By choosing software hosted over the cloud you avoid having to purchase new servers in addition to eliminating the need to employ the resources required to maintain those servers (i.e. IT staff). For many smaller start-ups or growing companies, the monthly hosted license fees associated with cloud software, are often more ideal than a large initial investment needed when purchasing the software outright.

But just because the cloud option makes sense for one company, doesn’t mean it will make sense for every other. Perhaps you are a large company with both financial and IT resources readily available. In this situation it may be more ideal to make one large investment and implement the software on-premises to reduce the ongoing monthly fees. Available financial resources, in addition to other factors such as poor internet coverage, may make on-premises a more suitable option.

Whatever option you select, it is important to note that there is no cookie cutter solution to this problem. Each individual company will need to sit down and assess their processes and current situation to arrive at a conclusion of what is the most ideal installation method for them specifically.

Customizable or Out-of-the-Box Software?

This is another difficult question that businesses must answer. For the most part, Out-Of-The-Box software will contain the basic features that drive most businesses to search for software in the first place. Basic accounting, inventory, & contact management features will come standard in many ERP packages, making out-of-the-box software particularly attractive. Unfortunately, just as when deciding between cloud and on-premises software, it is important to keep in mind that no two businesses are alike. Similar businesses may share similar processes; however, there are always unique traits to every business. This is where the flexibility of customizable software is very helpful. Although it will almost certainly be more costly, some software developers will work with your business to develop custom components to meet your unique business needs. These packages will offer both the standard features as well as the more unique components to provide a complete solution, albeit at a higher price point.

Once again the answer to the debate between customizable and out-of-the-box software is a situational problem. If you believe all your needs can be met with the features contained in an out-of-the-box software system, then that is the right decision for your business. Whereas another company may have additional features that they need, making a customizable software package the better decision for that business.

Should You Purchase from a Small Vendor or a Larger One?

Some people feel safer choosing a big vendor because of their large user base and seemingly plentiful support staff to handle any inquiries. Others stray away from larger companies for fear of being ‘a little fish in a big pond’, in that they won’t receive the personalized support that many smaller vendors are able to provide. The answer to this question seems more black and white. Whether it’s a smaller vendor or larger one; choose the one that cares about growing your business as much as you do. You want a vendor that will take the time to learn your business, specifically what drives your success and any areas for improvement. If you can find a vendor who cares this much and acts more as a business partner than a software vendor, it shouldn’t matter if they are small or large.

As you begin to think about new software, keep these questions in mind as they will most certainly come up as you start the ERP software search process. Although some of the questions are not so black and white, to answer each question you will undoubtedly have to sit down as a team and assess every aspect of your business. It will be time consuming and at times frustrating, but when it’s complete your business will be set up to reach unprecedented new heights.

 

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While it has taken longer, innovation and disruption is now fully underway in the ERP (enterprise resource planning) space. It promises to create a level playing field for small and medium sized businesses. Traditionally, ERP was expensive and designed for large organizations.

It is helpful to review traditional ERP before delving into the rise in cloud-based ERP. Enterprise Resource Planning is business process management software that allows organizations to manage and automate back office functions like product planning, marketing, sales, distribution, human resources and manufacturing into a unified, comprehensive structure. ERP software involves a suite of integrated applications that provide all the main areas of an organization’s operations in real-time. ERP emerged in the 1990s and has been associated with large organizations that had internal teams to customize and analyze data as well as manage upgrades and deployments.

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Today, cloud ERP has emerged as a viable solution for small and medium-sized businesses (SMBs) as well as large firms. In a study about Cloud ERP adoption by Gartner in January 2014, 47 per cent of organizations surveyed plan to move their core ERP systems to the cloud within five years. The reason is that core ERP requirements focus on administrative functions — financials, human resources and procure-to-pay — that have many cloud offerings.

While traditional ERP and cloud ERP have the same goal of unlocking the potential of organizations — large and small, there are advantages and disadvantages to both.

 

Pros and Cons of Traditional versus Cloud ERP

1. On-premises vs. Hosted vs. Cloud-based ERP

Traditional ERP solutions come in two forms, namely on-premises and hosted. For on-premises solutions, an organization must buy a software license, purchase equipment and deploy the product to their own data centre. Staff inside the organization must service and maintain the internal infrastructure. For hosted solutions, the organization will have an external services provider to manage the ERP system. This requires the organization to connect to a hosted service remotely to access a client-server application. A monthly or annual subscription fee is paid to the service provider to access the service. The external service provider is responsible for providing the people, expertise and equipment, allowing the organization to focus on what it does best.

Cloud-based ERP (also known as on-demand ERP) allows an organization to outsource operations, which is similar to a hosted solution. The main difference is that cloud solutions use a Software as a Service (SaaS) model. The application is delivered through the Web.

 

2. Cost Savings and Simplicity

The biggest benefit of a cloud-based solution compared to traditional ERP is lower up front costs and operating costs. For SMBs, the upfront costs of getting the right people and equipment is expensive and time consuming. The hosting option of using a third party provider is less expensive and offers the benefit of access to expertise and problem solving. Cloud ERP saves the company the most money in the short term.

 

3. Data Security

Traditional ERP is the most secure because skilled professionals configure, troubleshoot, deploy and manage the software and equipment internally. For hosted and cloud solutions, the customer must be comfortable and trust the third party company to house its data. The main fear for a customer is the loss of data that could result in higher costs with respect to data recovery. Most business that have their ERP housed internally are beginning to explore hybrid solutions involving hosted and cloud solutions for certain functions.

 

4. Performance Matters

Depending on a customer’s needs, performance is likely best with on-premises, followed by hosted and cloud ERP solutions. Cloud solutions for large and small companies may experience reduced speeds for transfer information due to service outages and slower connections.

 

5. Innovation & Disruption

Traditional ERP over the last two decades has led to consolidation of a few large companies. Consolidation has resulted in slower innovation and releases from the incumbents and opportunity from startups. Brian Bell, former chief marketing officer of Zuora, is quoted, saying,

“Nearly every industry is seeing this shift from a product-focused delivery model to a service-based one — which could be called the Subscription Economy. Traditional ERP — even if delivered through the cloud — isn’t designed to address the changing system requirements businesses are facing in the Subscription Economy.”

 

6. Hybrid ERP Solutions to Grow

To support the inflexibility of traditional ERP, executives are embracing a hybrid approach because no single ERP systems can meet an organization’s changing needs and requirements. Gartner predicts hybrid ERP environments will become the norm by 2020. Expect a hybrid approach where service centric functions like professional services, business services and digital media to move to cloud ERP while smaller core functions like financials and manufacturing will be on-premises traditional ERP. Of note, Gartner predicts total cost of ownership for hybrid solutions may increase if organizations don’t take a long-term planning approach. According to Gartner,

“By 2017, 70 percent of organizations adopting hybrid ERP will fail to improve cost-benefit outcomes unless their cloud applications provide differentiating functionality.”

With the increasing range of options that benefit small, medium and large businesses, it is clear the ERP space will continue to be disrupted over the next decade. For organizations that are unclear about next steps, it is important to become informed. Ask questions and take the time to find trusted experts to understand your needs and specific challenges and desired outcomes.

 

 

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One may think that enterprise resource planning (ERP) and customer relationship management (CRM) systems have been around so long that those products, and more importantly, their uses, are completely mature. Certainly they have peaked in terms of the value that they can provide to a business, right? Wrong. Nothing could be further from the truth.

It all depends on your definition of value. As one IT manager recently told me tongue-in-cheek, ‘My ERP system offers fantastic security – data goes into it, but nobody who needs the data can ever get it out’. That sentiment is not much different when it comes to CRM systems – they are great repositories for customer data, but have never been perfect at sharing that data with other systems. So maybe we have reached a temporary state of ‘maturity’ in terms of the level of information access that ERP and CRM systems can provide, but that is starting to change.

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Push ERP information to the frontline

Don’t treat your ERP system as a data silo that is for certain eyes only. Sales, services, and other front-line departments can use data from ERP to capture more business and/or improve customer satisfaction. Blur the lines between CRM and ERP systems by using integration to move information where it needs to go.

If your sales organisation has fingertip access to select ERP information in their CRM system, they can immediately address customer questions about product availability or review the status of credit checks for new customers without wasting time emailing or chasing your finance team.

 

Prepare for rapid change and plan an ongoing integration effort

Use of your ERP and CRM systems will change over time. Your finance, customer service, and other departments are using a changing mix of cloud applications today and will need more or different information out of your ERP and CRM systems tomorrow. Plan to address their changing needs for information by developing an ongoing integration effort that is agile enough to address big and small information requests. Select an integration platform, such as a cloud-based platform, that can integrate cloud and/or on-premises applications, and that will shorten the time for maintenance and support of integration.

The adoption of cloud-based integration platform as a service (iPaaS) products are a recent, but important, trend in integration. They are quickly becoming the integration option of choice because of their fit with cloud applications and the agility they bring to the integration process. In fact, Gartner recently stated that, ‘By 2019, iPaaS will be the integration platform of choice for new integration projects, overtaking the annual revenue growth of traditional application integration suites on the way.’

 

Set your standards high – regardless of your company size

There are ERP and CRM options for every size company, so an SMB shouldn’t settle for less than what they need. With cloud-based ERPs and CRMs on the rise, SMBs can find a system that fits their budget and provides the core capabilities they need without the extra overhead of ERP and CRM systems designed for large, multi-national organisations.

When it comes to integrating the back office and front office, an SMB can take advantage of those same iPaaS integration services that bring sophisticated integration capabilities to organizations with few IT resources.

The transformation of ERP and CRM systems from isolated data storage systems to information enablers promises to have a major impact on the overall agility of enterprises. With the lines between these systems blurred, information can be placed in front of those that need it most, eliminating countless undocumented processes that involve email, sneakernet, and other inefficient ways to distribute information. With these changes, the value of ERP and CRM systems most certainly hasn’t reached full maturity. We are just beginning to realise the potential value these systems can truly deliver to enterprise agility.

 

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