The changing role of erp in the business and it environments
ERP has been a structuring and standardizing agent in business since its inception; a tool which, through automation, would result in higher productivity in the workplace – allowing users to do more with less. Importantly, ERP was very proficient at automating repetitive tasks and reducing, or in some cases, eliminating error. However, ERP’s focus on structuring workplace routines meant that similarly important aspects for business growth such as innovation, creativity, or initiative received less attention.
Historically, enterprise software has ties to the military organization and, consequently, ERP’s basic structure has emulated (whether by coincidence or design) a ‘top down’ formulation which encourages a passive work environment , where individual tasks are performed in isolation of the other, obscuring the importance of the whole picture. In the early days of ERP that limitation was tolerated by most users and remained largely unchallenged. Today, the business environment has evolved dramatically and has rightly begun to challenge that status quo due to several drivers:
- The consumerization of IT gave users greater freedom to choose between various solutions or apps. Consumerization shifted the focus of design of products and services to the end user and away from the organization. Now, users were able to simply export data from a rigid ERP environment and manage it in applications, such as spreadsheets, that were far more amenable to their needs as users.
- New technologies including SaaS and mobile opened the way for enterprise software applications to be delivered on demand at lower costs. As a result, ERP had to adapt to the new reality of competing with other software vendors for business that, previously, was theirs alone. Software vendors, ISVs and VARs created add-ons and point solutions complementary with ERP.
- New generations of users have come to view technology as an extension of their own abilities, ready and available for immediate use in their work and personal lives. This new-found acceptance of technology in their lives comes with a corresponding expectation that ‘routine’ tasks no longer require much user intervention. The very basic task of data entry, which continues to be a very onerous reality of ERP, is a very real example of a task that users expect to be automated.
While ERP continues to successfully serve principal lines of business like financials, it has lost its monopoly on others, like HR or CRM. As more and more lines of business choose to bypass ERP, the need for ERP to adapt and respond to current business and IT requirements has become a very real business reality. This change represents a critical development for ERP vendors, as the opposite has traditionally been the case, that is, businesses and users had to adapt to ERP.
However, for this change to successfully occur, both vendors and end users need to reposition their focus away from technology and towards strategy. Well designed technology cannot yield great results without a sound strategy in place.
The following are examples of how strategy can bolster and improve ERP outcomes:
Effective communication as a tool of change
The successful selection, implementation, maintenance, and disposition of an ERP solution depends on effective communication. When considering how best to leverage ERP, regardless of whether you are selecting a new system or working with an existing one, change is inevitable and putting in place a strategy to mitigate potential disruptive effects caused by change is not only sound business practice but intelligent preventive action. In this instance, communication plays a very critical role in preparing all participants for change and, more importantly, in laying the groundwork for a process that will lead to a productive discussion of the impact of change.
Communication is a critical tool and agent of change, that, in some instances, has been underutilized by executives and managers within an organization. Change is often accompanied by stress, and when confronted by important decisions that will inevitably introduce change into the workforce, an enlightened leadership will base their decisions on a process that respects and reflects the voices of the entire organization. Encouraging positive communication at all levels of an organization facilitates the important process of achieving buy-in from all employees.
Collaboration as a tool of product development
The development of ERP features and functions is a collaborative process that requires the participation of multiple sources in the business environment and should not be solely or principally the responsibility of the vendor. The engagement of many different sources for input and information on ERP is not only important, but deals with the issue of giving too much weight to the voices of insider groups, like vendors and end users.
A wide-ranging collaboration between all interests within the business community fosters the growth and development of new opportunities as well as providing atypical solutions to existing ones. For example, the input from experts such as analysts and consultants or input from future prospective users, such as small businesses, can motivate ERP to develop alternative solutions that address different business priorities.
A new trend that’s gaining momentum in enterprise software is Platform as a Service (PaaS). PaaS offers the ability for third party entities to develop app extensions to ERP systems that can be sold in app stores, similar to AppStore and Google Play. This is an example of collaboration between vendors, partners, customers, and other experts. One of the benefits of such collaboration is the possibility for influencing joint ventures among vendors and clients facing similar challenges.
Today, business success is largely driven by customer experience. Customer experience is impacted at all stages of the customer journey from acquisition to loyalty. In this respect, ERP is a valuable source of information which can be used at all touchpoints in the customer journey. ERP provides data about product pricing and quantities in stock, transaction history, credit limits, payment history, etc. – all valuable data for customer facing interactions.
Given its importance to successful customer interaction, ERP data must be easily accessible, accurate and multi-functional. Combining ERP’s data with analytics, data visualization, benchmarking and dashboard tools can further optimize the customer experience by providing users with tools that are efficient, accurate, anonymous and confidential.
ERP’s fundamental structure – system rigidity and singular, unconnected task performance – has been responsive to the positive challenges provided by consumerization, new technologies, and new generation of users. Future challenges – whether economic, environmental and social – will continue to challenge all organizations. The degree to which they will be open to such challenges and embrace change in a positive, balanced and constructive manner will determine the level and proficiency of their continued success.
Contributed by Gabriel Gheorghiu – Experienced consultant and analyst focusing on business software and customer interactions