Enterprise resource planning integrates distributed teams, verticals, and workstreams. It aims to improve efficiencies and strengthen business model integration. Additionally, it scales the frameworks and capacities that result. Enterprise resource planning (ERP) connects different ‘units’ instead of focusing on one vertical. It avoids creating barriers and enhances the dependencies among them.
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Enterprise Resource Planning
An ERP solution is a significant response to enterprise barriers and inefficiencies. However, one should not adopt it without considering the demands. These demands will place stress 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. It continues to rely on specialized staff, training, and technologies. This is necessary to deliver ongoing value for customers. This insulation can protect itself from other industry verticals and their solutions. However, this is only possible 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.
ERP is a technology, software, and process solution. It strengthens efforts to integrate previously disconnected business networks or nodes. This solution can be deployed within an integrated vertical. In an integrated vertical, the network is owned by the company. Alternatively, it can be deployed across a non-integrated network. In a non-integrated network, 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. It supports data driven insights in real time. These insights include inventory, financial, and human resources key performance indicators, to name a few.
Integrating and sharing this data from the same or fewer databases increases accuracy. It also enhances 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 updated. They are 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.
Companies dedicated to legacy systems face a crucial decision. They can either update their systems with the timing of the new module’s implementation. Alternatively, they may forgo the option of installing a module in a given ‘strategic space’ to avoid conflicts.
The Enterprise Solution: A Modular Approach
Enterprise resource planning (ERP) software solutions are ‘built to suit.’ This means that each solution will vary by industry. It also includes a variety of ‘modules.’ These 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.
Newer packages address the growing concerns regarding cost. They allow companies to pick and 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) Solution Implementing 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. These steps ensure the adoption of the new enterprise resource planning solution is effective, efficient, and sustainable. ERP implementations can require significant changes to the following (short listed) components.
- Business Model
- Corporate Structure
- Cost Structure
- Workflow & Value Chain
- Reporting Relationships
- Technologies & Software Used
- Data Collected, Reported, & Analyzed
- Policies & Procedures
- Contracts & Memorandum of Agreement
- Training Models
- Key Performance Indicators
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.
For more complex solutions, decisions will need to be made regarding:
| What module (supply chain, HR/payroll, planning, etc.) is leveraged |
| Where (department, center, region, etc.), |
| What user access controls will be installed (customer, vs. financial, vs. operations, etc.), and |
| Why the solution is needed (KPI’s to include financial, efficiencies, productivity, quality/specifications, inventory, etc.) |
| How the solution will fit within the existing business model (will it be implemented as a stand-alone module, be integrated with existing/legacy applications, and will code need to be tailored to support any integrations, etc.) |
| Subscription or purchased solution? |
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. Promises for ‘fast and simple’ deployments should be evaluated cautiously. ERP’s are notorious for running late. They often fail 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 essential during all project phases. This includes initiation, implementation, and maintenance. Policies and procedures need updates to ensure user familiarity. Training models and onboarding protocols also need updates. Without an appropriate foundation the implementation and financial ROI’s are unlikely to be met.
ERP software is often not a stand alone solution. It is used with other applications and tools. In many instances, the ERP will integrate with other applications, systems, and infrastructure components. The Architecture Development Method (TOGAF) is a useful framework for guiding the analysis and planning of that ERP integration.
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.
Travis Barker, MPA GCPM
Innovate Vancouver
Innovate Vancouver is a Technology and Business Innovation Consulting Service located in Vancouver, BC. Contact Innovate Vancouver to help with your next project!
