Developing an ERP Strategy for Long term Success


During my tenure as an ERP analyst at Gartner, a substantial portion of our efforts was dedicated to assisting clients in formulating and refining their ERP strategies. These strategies are inherently tailored to your organization, taking into consideration your starting point, risk tolerance, and various other determinants. The most effective ERP strategies are those that harmonize seamlessly with organizational objectives, featuring both quantifiable and actionable elements. The introduction of Composable ERP introduces several novel considerations. Let’s explore more about how to develop ERP Strategy for long term success.

A composable ERP strategy requires accommodating democratized development and integration. This shift goes beyond the traditional IT-centric and standard business process paradigms. Periodic evaluations have long been considered a best practice. However, they now become imperative due to the constant emergence of new technologies and capabilities in the market.

Given the constraints of time and space, a comprehensive analysis of all the intricacies underpinning a successful composable ERP strategy isn’t feasible here. As such, I will direct my focus toward key constituents and a select number of illustrative examples.

What’s the Significance of Developing an ERP Strategy for Your Business?

Creating an ERP strategy is of utmost importance for businesses, as it empowers them to streamline their operational workflows, enhance overall efficiency, and elevate the quality of decision-making processes.

An ERP system serves as a unifying force, seamlessly integrating various business functions. These functions encompass accounting, procurement, inventory management, manufacturing, and customer relationship management. This holistic integration grants a comprehensive perspective into the entirety of the organization’s operations.

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Through the establishment of an ERP strategy for long-term success, businesses gain the ability to align their technological solutions with their overarching business objectives. This approach furnishes a well-structured pathway for the successful execution of these strategies.

An ERP strategy assists organizations in systematically identifying and prioritizing their business requirements. This aids in selecting the most suitable ERP solution and ensures meticulous planning and execution of the implementation process. Thus, with a well-defined ERP strategy in place, businesses are poised to optimize their operational processes, curtail costs, and gain a competitive edge within the marketplace.

Constructing an ERP strategy for long term success

At first, to ensure enduring success, a comprehensive ERP strategy must encompass, at a minimum:

Steps for building ERP Strategy for long term success

Alignment with Business or Organizational Objectives:

The foundation of an effective ERP strategy for long term success lies in its seamless alignment with the unique goals of your business or organization. These objectives are intrinsically molded by the industry you operate within. For instance, a for-profit enterprise might set its sights on augmenting profit margins or bolstering revenue and market presence. Conversely, a nonprofit entity could seek heightened operational efficiency, amplified service delivery within budget constraints, and enhanced stakeholder contentment. Regardless of your organizational context or sector, start by defining your objectives within a broad context. Then, refine these goals to encompass specific, tangible outcomes.

Broad aspirations such as “achieving digital transformation” might lack practical utility. Instead, a statement such as “leveraging a composable ERP suite and its associated enterprise application platform (EAP) technology” provides a more specific foundation. This approach aims to enhance efficiency across all operational facets.

One intangible yet pivotal objective frequently encountered among diverse organizations revolves around leveraging cutting-edge technology to distinguish the organization and attract top-tier talent. In the contemporary landscape of fierce talent competition, this facet wields substantial significance.

While all these objectives hold merit, true success materializes when organizations translate their aspirations into quantifiable outcomes.

Establishing Value Through Tangible Outcomes

Secondly, the establishment of specific business outcomes can be exemplified through the context of talent onboarding. A tangible instance would be: “We aim to decrease the onboarding duration from four weeks to three days.” In the past, organizations typically quantified the value of such an outcome in terms of financial impact, derived by multiplying the hours saved by an average hourly rate. However, this approach is suboptimal when defining value, particularly within the framework of an ERP strategy. An improved approach would involve:

The utilization of talent science is projected to elevate retention rates and curtail turnover rates among new hires.

These outcomes align harmoniously with the broader objective of enhanced efficiency. They are quantifiable and bear the tangible advantage of enhancing the onboarding and retention processes. Additionally, they carry a substantial yet intangible benefit of fostering a favorable applicant experience.

Emphasize Flexibility and Enhance User Experiences

A substantial portion of the value derived from a contemporary composable ERP suite stems from elevated user experiences. Fresh capabilities, applications, and processes will invariably surface both within your organization and in the broader external landscape. Your ERP strategy must aptly acknowledge this reality and encompass processes and governance structures that facilitate this paradigm shift.

Incorporating a composable ERP strategy for long term success necessitates leveraging the ERP vendor’s enterprise application platform (EAP). This allows organizations to quickly capitalize on emerging capabilities as they become available in the market. Establishing governance protocols is essential for the smooth assimilation of new functionalities as they emerge.

Cultivating an agile and composable mindset is paramount. Avoid confining your approach within the confines of historical practices.

Prioritizing the adoption of enhanced user experiences is crucial, but it must be done in balance. This approach should take into account the unique risk-reward threshold of your organization.

Therefore, harnessing the potential of AI and process automation can mechanize or eliminate routine tasks, freeing up resources for more value-added activities. This simultaneously boost in employee job satisfaction and enhances productivity.

Improve the abilities of the workforce to make the most of emerging technology.

ERP strategies often highlight applications and technology as key components. However, it is equally vital for organizations to allocate resources toward enhancing the skills of their workforce. This is essential for achieving value and success. Several instances of this include:

  • Assessing and managing alterations in business processes. Given the dynamic nature of modular ERP systems, enterprise applications undergo continuous transformations.
  • Offering training and obtaining certifications in technological proficiencies. Cultivate the expertise required to effectively assess and implement AI and data analysis solutions.
  • Fostering the development of interpersonal skills like change management, training, and mentoring.
  • Moreover, transitioning the skills within your IT organization from predominantly developmental roles to those of advisors and curators.

What are the consequences of the absence of an ERP strategy?

When a business lacks a well-defined, long-term ERP strategy, it can encounter a range of challenges. The following major challenges emerge in the absence of a proper implementation strategy:

Inefficient business processes

The absence of a comprehensive ERP system may force businesses to rely on manual procedures or disconnected systems, which are prone to errors and inefficiencies. As a result, there will be higher costs, reduced productivity, and dissatisfied customers.

Limited visibility

Businesses operating without an ERP system may find it difficult to gain insight into their operations, making informed decision-making a challenge. This can also lead to missed opportunities, heightened risks, and decreased profitability.

Data inaccuracies: 

The utilization of multiple systems often leads to duplicated, incomplete, or inconsistent data, resulting in inaccuracies. Consequently, decision-making suffers, forecasting becomes less effective, and confidence in the reliability of business data wanes.

Managing growth becomes challenging: 

As businesses expand, the management of manual processes and disconnected systems becomes increasingly complicated. This further leads to reduced flexibility, increased expenses, and obstacles in scaling operations.

Competitive disadvantage: 

Enterprises lacking an ERP system may encounter difficulties competing with rivals that boast streamlined operations, reduced costs, and optimized processes.

Synopsis of ERP Strategy for long term success

To sum up, a composable ERP strategy represents a dynamic plan, not a one-time documentation procedure. It necessitates a clear destination in mind – define business goals and correlate them with ERP investments. Specify the desired outcomes, outlining the novel capabilities and process enhancements to be achieved through the implementation of composable ERP.

Dispense with outdated perceptions, this is not reminiscent of the ’90s. Adjust your mindset and thought patterns. Composable ERP boasts superior flexibility, quicker adaptability, and the capacity to seamlessly integrate new functionalities as they emerge. Prepare for this evolution.

Never overlook the human factor. Invest in your personnel. The efficacy of your ERP investments hinges significantly on how adeptly your workforce comprehends and harnesses the potential of composable ERP capabilities.

Conduct an annual review of your strategy and underlying assumptions. The landscape of technology and capabilities is evolving rapidly.

By adhering to these steps, enterprises can attain substantial enhancements in efficiency, profitability, and competitive edge over the long term. In short, crafting a comprehensive ERP strategy is pivotal to ensuring alignment with business objectives and furnishing a roadmap for successful implementation. Ultimately, substantial time and resources can be conserved by discerning your company’s requisites prior to initiating ERP implementation. To facilitate your ERP implementation journey, engage in discussions with our experts to gain a precise understanding of your ERP deployment.

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