Why Reengineer Your Business Processes?

Every company wants its business software (or ERP system) to support the way their underlying business works.  It only makes sense, and with today’s business systems, that capability is actually within reach.

We remember 20 or 30 years ago when merely implementing the “accounting” portion of a client’s business was a long and tedious undertaking, and usually subject to some pretty rigid software rules dependent on how your particular accounting software was written.  Then again, that wasn’t that big of a problem since by definition accounting systems should conform to generally accepted accounting principles – and those were generally incorporated, at least in basic form, in most systems.

But today, we’ve gone way, way beyond mere accounting.  Today’s ERP applications are comprised (or can be) of a broad range of applications affecting nearly all areas of the business.  These include human resources (beyond just payroll), most phases of production and process control, all the accounting of course, as well as webstore interaction, electronic data interchange with trading partners, bar-coded freight systems and complete warehouse management for picking, packing, license-plating, receiving, putaway and shipping.

In today’s world, the only way to ensure that your software is going to match your processes is to reengineer them before you do your software selection.  Job one is to optimize those processes – enlisting the aid of what is usually an outside process expert or lean consultant – to ensure that everything you’re doing in the business has been optimized for efficiency, removal of obstacles and redundancies, and shared internally to ensure that all parties can eventually have access to the same process ‘picture’ – and the same data silos — where required.

To do all that, you need to order your processes first, and then think about the software you’ll use to bake those into your company’s mode of operation.  As the folks at Panorama Consulting note in a recent article:

Business process reengineering also ensures your chosen ERP software aligns with your long-term organizational goals. ERP systems are a big investment, so they should support your processes for at least the next five to ten years.

Most importantly, business process reengineering helps you beat the competition by ensuring your ERP system enables differentiated, efficient business processes.

In our following post, we’ll share what they had to say about 7 process reengineering tips that are designed to give your company a competitive advantage.  Stay tuned…

 

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What Does ERP Success Really Mean?

As we move officially into the second half of this year (wow… how’d that happen?!), we return today to some timely comments about ERP…

Panorama Consulting Solutions in Denver, through their blog and articles, often convey opinions and survey results about Enterprise Resource Planning (ERP) software solutions.  As often as not, we find ourselves concurring with many of their conclusions – after all, we’re pretty much in the same business, and after over 25 years of doing this, we’ve seen many of the same types of successes and failures.

Recently, President Eric Kimberling parsed his thoughts about just what constitutes ERP success.

On the one hand, he noted, too often “success” mean that, well, basically, ‘we survived the project.’  Or, some executive considered their ERP project a success because no one lost their job – or at least he didn’t. Or maybe they didn’t screw up the company’s operations.  It may simply be a preservation tactic since, as Kimberling put it, “no one wants to admit to overseeing a failure.”

Admittedly, ERP implementations are fraught with complexity, and the bar may be set low to acknowledge these facts.  Kimberling cites the fact, apparently the result of his firm’s frequent surveys, that the average $100 million company recoups about $1 million in tangible business benefits per year from its implementation.  Unfortunately, that’s about $2 million less than they anticipated, or about $20 million over the useful life of their system.

How can a company avoid a similar fate?  According to Kimberling, it should…

“Start with  a measurable business case that is used to manage business benefits – not just thrown on the shelf after justifying the project. The business case should be very tangible, specific, realistic and actionable to ensure that various stakeholders in the organization can be held accountable for achieving those results.”

Their second key piece of advice…

“Engage in business process re-engineering, rather than the “paving the cowpaths” approach that most organizations take. This means ensuring that you have adequate time built into your project plan to identify and implement significant operational improvements.”

Here we could not agree more.  With our own clients and prospective clients, we also go to great lengths to emphasize the importance of an initial Business Process Analysis.  We use these to match a client’s processes and workflows to the software and technology solution being considered.  We believe it’s the only way to begin an ERP project – and the single most critical phase at the onset.

Finally, Kimberling counsels…

“Ensure that you have a solid organizational change management strategy in place… Without employee acceptance and adoption of new business processes and software, the new ERP system is exactly that: just an unused system.”

There are a lot of fruitful benefits to be harvested from a successful ERP implementation.  Make sure yours extend beyond only the low-hanging fruit.

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