Disrupting Verticals: Enterprise Resource Planning

Enterprise resource planning integrates distributed teams, verticals, and workstreams in an effort to improve efficiencies, strengthen business model integration, and scale the frameworks and capacities that result. Instead of emphasizing the specialization of a single vertical, and the subsequent barriers this creates, enterprise resource planning (ERP) strengthens the linkages and interdependencies between ‘units’.

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Enterprise Resource Planning

As a significant solution to enterprise barriers and its resulting inefficiencies, an ERP solution should not be adopted without due consideration of the demands it will place on the company (and its network). ERP implementations are often costly and often require company’s to conduct significant reorganization, process engineering, and workflow redesign. Existing silos and non-integrated industry verticals will resist the disruption represented by an ERP implementation.

Industry Verticals: an Invisible Barrier to Growth

Industry verticals focus on a specific niche, market, or solution. These solutions require specific business models, tools, processes, and educational tracks in order to maintain and improve.

The result is an insulated vertical that continues to depend on specialized staff, training, and technologies in order to deliver ongoing value for customers. This insulation can protect itself from other industry verticals and their solutions, but only until someone envisions how to ‘bridge the chasm’.

These insulated verticals are typically reinforced. Iterative innovations continue to add value to existing solutions but within the space limits of the existing vertical. Parochial inputs (training, educations, skills & competencies, etc.) continue to rule the landscape of ‘creativity’ until the solution no longer adds value (and customers switch to the company’s competitors). Disrupting the ‘solutions space’ becomes necessary if the company is to survive.

Disruption & Crossing the Chasm

Disruptive innovations may seek to ‘cross the chasm’, and introduce values in new industries. Unfortunately, most verticals focus on non-dynamic specializations that can limit their ability to embrace disruptive technologies or solutions.

Enterprise resource planning (ERP) represents a technology, software, and process solution for strengthening efforts to integrate previously disconnected business networks or nodes. This solution can be deployed within an integrated vertical (where the network is owned by the company) or across a non- integrated network (where the members are either owned by the parent company or owned &/ managed separately).

Strengthening the Business Model

Enterprise integration across the business model typically considers the following opportunities:

The resulting integration can strengthen business alignment, improves efficiencies, decreases costs, strengthen the supply chain (inventory, invoicing, distribution, etc), improve insights (in real-time), and enhances the ability to scale & take on growth opportunities (new business, etc.).

Knowledge Integration as Disruption

The core value proposition for implementing an enterprise resource planning solution is its shared database. Information on this shared database is accessible to each module supporting data driven insights, in real time, regarding inventory, financial, and human resources key performance indicators (to name a few).

Integration and sharing of this data from the same (or a reduced number of) database(s) increases accuracy, efficiency, and strategic alignment across the business network. Errors, redundant records, and duplication of data collection & management efforts is eradicated as a result.

ERP modules are also updated and based on dominant practices for supply chain management, financial management, resource management, planning & control, etc. As a result, integration an ERP module with outdated legacy systems, processes, and procedures is very difficult.

Company’s dedicated to legacy systems are thus left with the choice to either update their systems with the timing of the new module’s implementation or forgo the option of installing a module in a given ‘strategic space’ in order to avoid conflicts.

The Enterprise Solution: A Modular Approach

Enterprise resource planning (ERP) software solutions are ‘built to suit,’ which means that each solution will not only vary by industry but also includes a variety of ‘modules’ that can be selected (or deselected) depending on your company’s budget, requirements, and goals. Although not an exhaustive list, ERP modules often capture process, information, and technology standards for a specific value stream (department, etc.) within the company.

Historically, traditional enterprise resource planning (ERP) solutions marketing the ‘entire enterprise’ of modular solutions.

In an effort to respond to growing concerns regarding cost, newer packages allow company’s to pick & choose which modules to implement.

This is not only more cost effective but also allows each company to select only the solutions they require.

Implementing an Enterprise Resource Planning (ERP) SolutionImplementing a complex technology implementation or upgrade carries quite a few risks.

Significant investigation and planning is needed to identify the ERP’s positive and negative impacts on the business architecture model. Organizational restructuring, training, and process reengineering may be needed to insure effective, efficient, and sustainable adoption of the new enterprise resource planning solution is achieved. ERP implementations can require significant changes to the following (short listed) components.

Selecting Your Enterprise Resource Planning Solution

Selecting your ERP solution will depend on your company’s business model, industry, and goals. Other considerations include budget, scope & complexity of the solution desired, and experience implementing (and maintaining) similar solutions.

The ERP solution can be installed onsite (server) or deployed ‘in the cloud.’ Hybrid solutions are also available that allow network partners to access the solution virtually or on mobile. In some circles, cloud deployment is considered easier to launch and maintain (updates, etc.) whereas the onsite model may more readily address information regulations and security concerns (particularly when informed needs to be managed locally). One example using an ERP solution to build an Enterprise Command Centre is provided in the infographic below.

The ERP Team

Team considerations include installation, implementation, and ongoing maintenance. Some enterprise resource planning solutions are guided & installed directly by the vendor. Templates are often available for developing the project charter, schedule, and plan. Promise for ‘fast and simple’ deployments should be evaluated cautiously as ERP’s are notorious for running late and failing to achieve intended KPI’s/ goals.

There are no ‘one size fits’ all ERP solutions or deployment models but standards and recommendations are available. Making sure you have adequate executive support and buy-in (sponsor, owner) and project support (project manager, developers, users, business analysts, etc.) are crucial.

Further considerations for team composition will also need to consider what type of project and maintenance model will be used (waterfall, agile, DevOps, etc.).

A Project Management Implementation Plan

Due diligence and a formal approach to ERP implementation are necessary. Risks need to be identified early. Stakeholders need to be engaged at the time the business case is developed. And a formal project implementation plan is needed. Click on the timeline below, and the arrows>>> on your keyboard to scroll through the timeline.

The business case for implementing an enterprise resource planning solution is needed throughout the initiation, implementation, and maintenance phases of the project. Policies & procedures, training models, and onboarding protocols similarly need to be updated to ensure that each user is familiar with how to navigate & use the ERP solution. Without an appropriate foundation the implementation and financial ROI’s are unlikely to be met.

Drafting your ERP Business Case

Implementing and realizing the intended goals of an enterprise resource planning solution is risky but the rewards can be significant. Distributed and virtual business models do not have to be limited by outdated, and often fragmented processes, tools, and technologies.