Whether a business has already invested in ERP software or is planning to, the key consideration for such a purchase is, as with any major investment, how can you maximise the return on your spend? Some businesses are not utilising their ERP software fully or will buy software without getting the best results.
The turn of the new year, after the dramas of 2020, may be a good opportunity to refine business processes and re-evaluate technologies to understand how they will help reduce costs and support greater profits in 2021.
There will still be a focus on digital transformation but using technology throughout your business isn’t just about putting old processes into new systems. Simply handing over a new software or ERP tool to your IT department or employees is unlikely to realise the returns promised in the business case. Simply automating a few procedures or storing some of your data digitally isn’t going to give you the maximum efficiencies that are possible from an ERP solution.
To see a true ROI, you must use technology to advance and change the way you do business, and this involves some groundwork. Before implementing ERP software, for example, current processes should be reviewed and new processes mapped out for both the management team and employees, data should be cleansed and updated, and employees fully trained on the software’s best use. In essence, implementing new processes via ERP software will need training, review, and adaptation.
Be data driven
As data is the key to maximising ROI for ERP software, what goes in determines what comes out. Data should be cleansed before it’s entered, and processes put in place to ensure it is constantly refreshed and updated. That way, businesses reap some key benefits from real-time accurate dashboards, quality forecasts, efficient demand planning, and excellent customer service. Not only does a business need to invest in ERP software, but there needs to be a complementary investment in employees to ensure they are using the ERP system effectively and buy-in to its benefits.
It is very common, and very tempting, to take existing business processes as is and automate them with an ERP system. While this is understandable, businesses must take the time and effort to critically analyse those processes as part of ERP requirements gathering. Implementing a new ERP system is an opportunity to identify, improve and redesign business processes. Automating a bad process only makes a bad process run faster.
Creating an effective data-driven business strategy and building this into an ERP deployment involves three key stages. The first, to identify data sources. The second, to measure, predict and optimise the desired outcomes from the use of that data. The third stage is to act on any resulting data analysis or insights. Showing stakeholders insights and results rewards their initial commitment and ensures a data-driven culture and that ERP systems are fully utilised throughout a business life cycle.
Another aspect of implementing a new system is managing the change that comes with it. If a business has refined, changed or created new processes, then time and effort must be invested into introducing those changes and making sure that they stick. The usual change management techniques apply: change must come from the top down and all stakeholders must have full buy in – you may need to sell the benefits.
Change management is an absolute requirement when implementing a new ERP solution. The ability to effectively manage change may very well be the most important skill that executives, managers and employees need to master. Business transformations through ERP will not take place without effectively managing change across three key organisational areas: people, process and technology.
Businesses often look to technology to simplify, automate and streamline but neglect to consider the people factors when implementing new software. A tool is only ever as good as whoever wields it.
Change is not always easily accepted, but when achieved can be incredibly rewarding for both the business and employees. Managers and IT departments must also remember that the end users of ERP software, those who have lived a business’ processes for many years, may have the greatest input for its best use. Listening and acting on this input can gain significant buy-in to the deployment of ERP, which can then extend across an entire firm’s corporate culture.
Reviewing processes and spending time with employees can cement valuable team partnerships and provide an opportunity to streamline many aspects of a business while creating motivation and positive vibes. IT teams can also employ a software partner to help assess and create the best practices for an ERP software implementation. It might not matter if an ERP software has been in place for a while – it’s key to reach out and ask for help. Effective training partnerships within organisations mean that users accept new systems far quicker and with much greater success, and thus ROI, for a business.
Find forgotten functionality
For those already using ERP software, questions should be asked around whether all the functionality the software provides is being used and if not, can new or forgotten aspects of the technology be deployed to maximise ROI. A strong relationship with a software partner ensures that users find out if new upgrades or functionality is available. When purchasing new ERP software, pay attention to all the features provided and ensure that all relevant functionality is used – they often save time and provide better visibility.
Defy an economic downtown
The threat of a downturn, economic pressure, and further impact from COVID-19, makes being lean and efficient more important than ever. Where COVID-19 took everyone by surprise in 2020, in 2021 it’s crucial that businesses are adaptable and flexible to meet future business challenges. 2021 calls for businesses to be proactive, and ensure that business continuity plans are incorporated into any ERP system implementation.
Glendower Cutting Tools is a perfect example of business survival. The company had to furlough all staff apart from three employees in lockdown one. They explained: “Our improved efficiencies were highlighted during the pandemic lockdown. Our ERP system takes away all the hard work and drives what we do allowing us to remain at 60% of our turnover with just three members of staff. That’s obviously down to the hard-working team but having a system that is intuitive and efficient helps massively.”
“Our turnover was less than £2 million before we implemented the system but now we’ve driven that up to £2.5 million with less staff. That’s been made possible because of a few factors but OGL Software is a big part of our business.”
The key for business continuity is to digitalise processes and data to ensure businesses aren’t reliant on physical files that are located at their premises. Management of product, customer and supplier data needs to be accessed digitally from a centralised solution to ensure accurate, real-time information that can be accessed by the team from any location.
Similarly, digitalising and automating key sales, order, purchasing and accounting processing with an ERP software also ensures that businesses can operate from an ERP system and do not rely on manually checking the warehouse, writing down sales orders, processing paper invoices or referring to physical price books.
For the most effective business continuity and disaster recovery plan, hosting an ERP solution in the cloud supports full remote access. This ensures that key information and processes can be accessed and managed from any location. To employ best practices, hosting an ERP solution on a platform like Azure will benefit from the infrastructure, services and investment that Microsoft offers. These include economies of scales; best-in-class cyber security, optimum up-time, while dual location data hosting supports a solid business continuity plan.
Almost all businesses have been challenged in 2020 like never before. Businesses have needed to adapt, diversify, and re-strategise. This time of year is perfect to take some time to reflect and plan how to move forward effectively in 2021. There is no doubt that technology can help to manage the new normal. Advances in cloud computing, connectivity and AI are helping ERP systems to grow and improve. Comprehensive ERP systems, which can be used remotely will help employees working from home stay engaged with processes and view dashboards to keep the bigger picture in mind. Mobile workforces can access ERP software and data on the go. ERP systems can empower employees with knowledge and process confidence helping to allay some of the business anxiety of 2020. Importantly, ERP systems enable business continuity keeping supply chains running no matter the constraints and market challenges.
The outlook for ERP software in 2021 and beyond relies entirely on the expertise and commitment of the teams that will be using it. Businesses who take time now, or as early in 2021 as they can, to streamline, deploy, train, and manage, will become experts in using ERP. These organisations will achieve the maximum return in business efficiency that a good, and well used, ERP software deployment can bring.