Every organization has a different reason to implement a new ERP system. But the most successful ERP implementations are those that coincide with the desire to improve their tangible business benefits.
Unfortunately, most organizations have trouble realizing the potential of their new ERP systems and most organizations fail to realize at least half of the business benefits that they expect.
The good news? In general, most successful implementations deliver some common benefits. Below are five tangible business benefits that you can achieve with the right focus and expertise:
Increased revenues. Top-line revenue growth is the name of the game in today’s relatively weak global economy. Unfortunately, too many organizations leverage ERP software to minimize costs and neglect to capitalize on the opportunities to increase revenue growth. Modules such as CRM and advanced demand planning can help ensure that your sales team can sell more and that your operations are able to deliver on that customer demand. The key is to look at the inefficiencies in both your customer and revenue-related business processes to identify opportunities to improve your top-line revenue growth, which can be accomplished via your business process reengineering efforts.
Increased inventory cycle times. Most organizations hold too much inventory or build too much capacity to compensate for not being able to accurately predict demand for particular products or services. With modern ERP systems, organizations should be able to better predict customer demand and manage inventory accordingly – minimizing the need to unnecessarily stockpile excess inventory and capacity. We’ve found that this business benefit alone can be enough to pay for a new ERP system multiple times over within a few years of making the investment.
More efficient business processes. Most organizations have a hodgepodge of inefficient business processes, manual processes and legacy systems that are a bad combination of both grossly inefficient and expensive. New ERP software can often fix this problem, but only if those processes are carefully defined and reengineered. Don’t fall into the trap of ignoring your current business processes or assuming that your new ERP system will define your new business processes for you – both steps are required to ensure that you close the gap between your more inefficient “as-is” processes and your desired “to-be” processes. Defining your new business processes – along with performance metrics and transition plans to get there – will ensure that you leverage this commonly underutilized business benefit of ERP systems
Integrated business processes. Similarly, integrated business processes can deliver a great deal of ROI to organizations implementing new ERP systems. Better integration between customer service, production, accounting, sales and other key functions in your organization will help drive top and bottom-line financial growth. The key here – much like a few of the other business benefits identified above – is contingent on carefully mapping your business processes and defining a plan to transition to those new business processes. By carefully mapping your business processes and developing a transition plan, it is imperative to incorporate an effective business process reengineering and organizational change management plan to ensure success.
Higher employee morale. Although it may be a bit tougher to measure than some of the other business benefits mentioned above, employee morale typically increases over time as a result of a new ERP system. Transactions are easier to execute, there are less manual process workarounds and new systems are typically more intuitive and easier to learn. It may be more painful at first as employees are learning the new system, but those pains are typically short-lived and outweighed by the long-term advantages. A comprehensive and effective organizational change management plan can help ensure that you maximize employee morale as a result of your new ERP system.
The key to realizing any of these benefits is to define them up front and to establish key performance measures and targets. Once this is complete, then those benefits and metrics should be assigned to key business process owners to hold your team accountable for realizing those benefits. Only then can your organization do what most fail to do, which is to realize the full benefits potential of your new ERP system.
September 23, 2015 Eric Kimberling