We recently asked the CEO of a large multinational organization why they were changing their ERP system. â€œTo improve our business processes,â€ he replied, stating one of the most widespread drivers companies have to change their ERP systems. As you evaluate your ERP system with regard to business processes you should first assess the level to which any bad business processes are forced on you by your ERP system; and then identify the number of disparate and sidebar systems users have created to work around your ERP. If you find significant process issues in these areas, a change to a modern ERP system that can help you differentiate your business may be beneficial to your organization.
The functionality and capabilities inherent in your ERP software have a big impact on your business processes. As you assess the effectiveness of your current system, you must first review your core business processes to determine if they enable maximum efficiency and productivity. If they do not, investigate whether the software system imposes constraints on your processes. Are your users saying â€œI do this because thatâ€™s the way the system makes me do itâ€?
When ERP systems were introduced 20 years ago, they were rigid in their functionality. They forced companies to conform business processes to the dictates of the software, or required them to significantly customize the software to meet their specific requirements. However, business processes evolve over time while the software remains static. This causes a disparity between the way the software was originally implemented and the new requirements of the business. This evolution continues until you get to the point that the processes in the system actually constrict the ability of users to efficiently run your business. In common with the CEO mentioned above, this is a major reason why your company might end up implementing a newer, innovative, and proactive ERP system.
New enterprise ERP software applications like Microsoft Dynamics AX offer flexible business processes based on best practices and process tools such as workflow. Workflow is the ability to set up and change process flows within the system. It includes many capabilities such as electronic routing
of documents, event notification, and automated processes based on triggers. Many ERP vendors offer flexible rules-based workflows
that allow businesses to create custom processes based on their operations. These workflows can be changed as their preferences and requirements evolve. In some of the more sophisticated systems, power users are even able to diagram and implement new workflows with drag-and-drop technology. Such flexibility allows the ERP system to evolve with changes in business processes and practices in your company and industry.
As you assess the effect of your current ERP software on your business processes, you should consider the following questions:
- Do your current business processes decrease efficiency and productivity?
- Are they in place to make up for inefficiencies in the ERP system?
- Have they been dictated by the system because of lack of functionality?
- Have your business requirements changed over the years making the reasons you selected your current system no longer valid?
- Have users created many sidebar and workaround systems outside the ERP?
Implementation of a flexible ERP system like allows your company to take advantage of new capabilities, functionality, and fresh ideas. An implementation partner that understands business process optimization and is industry expert is an excellent resource for efficiently implementing the system and effectively setting up your business processes. Selection and implementation of a modern ERP system can reduce manual processes, eliminate redundancy, and reduce paper documentation giving your company the opportunity to:
- Review all business processes in place and determine which are required, which can be modified, and which can be eliminated.
- Identify and eliminate redundancy and manual data entry.
- Standardize business processes across all departments.
- Adopt the best practices available in new software to obtain greater efficiency over the current ways of doing business.
- Make use of flexible workflow functionality to take advantage of automated business processes, document routing, events, and alerts.
All businesses at one time or another have to weigh the costs and benefits of retaining an older ERP system against the costs and benefits of selecting and implementing a new one. Legacy systems, although on older technology, provide companies a level of comfortâ€”comfort that is likely at the sacrifice of increased relevant functionality and technology.