What’s your ERP system have to do with Digital Transformation

Three6 | 19 March 2020


One of the hot topics of the month is ERP systems! It seems like every organisation that we walk into is going through some sort of ERP replacement or transformation. So what is ERP, why is it important, and what role can they play in your digital transformation?

Here is our quick fact sheet to get you started. 

What is ERP? 

Enterprise Resource Planning (ERP) has been around since the 1960s starting in manufacturing for inventory and control by consolidating information about stock movements, monitoring usage and setting targets. It has since evolved (as most things have since the 60s) and through the 80s ERP was still heavily used in manufacturing but also began with software including process coordination, from product planning and parts distribution building on the existing capabilities.

10 years later and the value of ERP starts to grow and is adopted by new industries. It is being widely used to integrate across departments improving the overall performance and moving from traditional manufacturing and logistics to include finance, marketing and people data.

As we continue through time the internet has a large impact; it enables faster reporting and more insights, greater connection across borders and boundaries and higher productivity. 

Where is ERP moving today? 

Using your ERP system effectively can move it from being a back-office mechanism to providing strategic value for your customer and therefore your business. Your ERP systems are now able to determine what parts of your process are costing the most, how you can leverage your resources faster to meet customer demands and requirements, look for patterns in product, process and human behaviours. With the introduction of AI into these systems, insights are far more accurate and can build your strategic advantage more than ever before. 

What should you consider when it comes to ERP systems?

  • If you think about it as just another system or technical tool, when it comes to designing the flow and capabilities you will more than likely design the same (or very similar) flow and functions to what you have always had. Instead, you need to think differently, you need to really identify and understand the outcomes that you want to be able to achieve. What are the insights you want to be able to drive and how will your people then respond and work? A human-centred design approach is a great way to do this because it’ll help you consider all perspectives. But it’s important to really challenge yourself and your operating model throughout this process, this technology can do more for your business than your employees may realise so look at what other industries are doing and how they’re using it before changing the way you work.
  • When going through this discovery process make sure that you include representatives from all users of your business. Who are your best advocates that can represent, communicate and promote the change to their teams and the potential benefits of those changes? You need to have the internal buy-in from the beginning or else your teams will end up using the systems in the same way they always have.
  • Don’t bite off more than you can chew – ERP systems touch so many parts of your business so tackling it all at once can increase the complexity and significantly impact your productivity. Instead, split it into parts, but have your key stakeholders across the implementation so that everyone understands where it is heading and can design it to be redesigned relatively easily.
  • It’s always a good idea to design it within a common business architecture, framework or model. This will help with consistency across unique teams and provide a friendlier user experience from your people perspective.

The other side of digital transformation

When we think about digital transformation we think about fancy new apps and customer engagement but in fact, there’s another view. A view from how the organisation runs and functions, how all the parts of your puzzle come together to deliver those customer outcomes.

To provide that true end to end service and ensure it is a great experience, your back office needs to be humming too. Having a great ERP system that can provide you with insights that turn your data from being an operational asset to a strategic asset. Using the systems to their potential you can transform how you use your assets with data-driven decisions on new products, services and logistical lines to meet customer demands and therefore transform your business.