How Enterprise Resource Planning improves the efficiency of business

During times of change, efficiency is key to the bottom line, but flexibility has a major seat at the table. So how does Enterprise Resource Planning improve the efficiency of a business, and where does flexibility play a role?

Three key factors to consider in implementation include:

  1. efficiency comes from integrating data and processes from across the business onto a single platform.
  2. flexibility can unintentionally be lost because of system rigidity.
  3. set goals, understand trade-offs, engage, and plan before implementation.

What is Enterprise Resource Planning (ERP)?

Enterprise Resource Planning software applications allow companies to manage and integrate key daily activities such as sales, finance, supply chain, human resources, and marketing. Using the right ERP can result in substantial business efficiencies as:

  1. most key organisational functions can operate on a single system using industry tested processes, and
  2. the ability to integrate data from across the business facilitates efficient decision making.

What makes an Enterprise Resource Planning a winner?

Generally, an Enterprise Resource Planning platform is implemented with minimal customisation. This allows a business to reduce implementation risks and accelerate the time to operate, therefore delivering value.  

In addition, the software applications have usually been implemented hundreds of times across different types of businesses so there has been continuous improvement and upgrades made to not only meet but drive industry best practice standards.

By leveraging an “off-the shelf” version of software and adapting internal processes and ways of working to the Enterprise Resource Planning platform organisations can quickly realise process efficiencies.

Trade-offs must be considered

Implementing an Enterprise Resource Planning platform with common work practices and processes might mean your organisation has to trade-off against other value drivers and consider what is most important to the short- and long-term operations, and what can provide points of differentiation or advantage.

For example, individual team’s ‘best of breed’ solution might drive improved results within their area however could be at odds with the overall integration requirements. Getting each team to classify their requirements from ‘nice to haves’ to ‘highly necessary’ and discussing alternate solutions through the implementation can help with the decision making as well as ensuring that your teams don’t implement their own work arounds.   

Flexibility can unintentionally be lost as a consequence of implementing a standardised organisational platform. Enterprise Resource Planning platforms are generally expensive to upgrade and customise, so responding to the ever-changing market through the platform may not be a viable option.

It is important to remember that Enterprise Resource Planning platforms are built for the ‘average’ industry ‘participant’ and may not accommodate a specific organisation’s market leading approach. This can result in ‘shadow’ IT solutions being built around the platform detracting from the originally calculated efficiencies and savings.

Efficiency and flexibility: how to manage both?

To achieve the benefits from an Enterprise Resource Planning platform, while maintaining flexibility to accommodate your business’s needs takes careful consideration and planning.  

As a first step, agree how the integration and interconnectivity will work so that the organisation understands what additional elements are required to make the software platform perform against the organisational needs. For example, organisations within health insurance or utilities may require a specific customer facing digital capability to deliver their services over and above competitors.

In setting up the data infrastructure, engage all parts of the business to understand their information needs – what do they need to know to ensure they can make decisions and operate the business.

The cultural change when introducing an IT platform is key. Organisations must instil an agile and flexible mindset with employees. A comprehensive and engaging change campaign and training is key to help employees respond the new platform, and work collaboratively with IT teams to maximise both efficiency and flexibility from their investment.

A strong cultural change campaign will also help to reduce shadow IT functions popping up. Collaborating closely with all functions will also ensure that the solution delivered is usable and fit for purpose.

The balancing act of efficiency and flexibility

Today’s Enterprise Resource Planning platforms have made it easier for organisations to achieve the inherent efficiencies while allowing the platform to be adapted to facilitate the flexibility. 

Prior to implementing or upgrading an Enterprise Resource Planning platform careful, detailed, and proactive planning is required to ensure your organisation builds a system that allows it to drive both efficient and flexible outcomes.

Solving complex business problems is what we do best at Three Chairs Consulting. For an independent perspective in understanding how to create and deliver operational efficiencies while maintaining flexibility please get in touch at:


team@threechairsconsulting.com.au 

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