Over the last few months we’ve come across a number of instances where legacy ERP is holding a company back. Whilst many organizations require a single monolithic platform for core processes such as manufacturing and financials, ERP can hinder growth and negatively impact on margins.
Due to the importance placed by some senior executives on their ERP and their ERP provider, many large businesses are simply not nimble enough to take advantage of innovative technology, they prioritize corporate strategy at the expense of user adoption and often incumbent ERPs are not built to interface with more modern, cloud based platforms.
We have come across many organizations where the answer seems to be to spend more with the ERP vendor, rather than implement quicker, better and lower cost alternative solutions.
At Claritum, we speak with many business users across different sectors and markets. These senior executives are driven to achieve specific goals for their organizations, and yet are often hampered by existing enterprise wide technology platforms.
And as we operate in the procurement technology space, its often business users within finance, procurement and operations who are trying to drive innovation, process efficiencies and savings within their business.
Consider the following real life examples.
Example 1: No single view of customers
A large international marketing service manufacturing group has grown rapidly through acquisition. Each factory operates a different ERP or, at best, different versions of the same ERP. Historically, each site has operated in isolation and local management maintains the requirement for each site to own the customer. There is no single master customer record across the group, so customers have to deal with multiple and competing sales teams, complex ordering requirements and numerous invoices from the same organization. Hence, the group fails to leverage its scale or ability to service the customer effectively.
Example 2: No single view of suppliers
A $10bn global packaging supplies business operates across North America, EMEA and Asia Pac. They have in excess of 80 different ERPs, each operating independently of each other. Suppliers, who trade with multiple sites, are likely to be registered with each location separately. The group has no easy way of aligning supplier data across the organization – or to verify that the supplier information is up to date and accurate. The result is the group is unaware of its reliance on specific suppliers and has limited leverage when it comes to negotiating volume based deals.
Example 3: Too cumbersome, too expensive
A mid sized procurement outsourcing business operates a single module of a leading ERP. The module has run their warehouse for years, but is simply too cumbersome to operate, too ugly to use, too difficult to integrate and too expensive to customize. The net result is, management are considering switching to a cloud based provider, which is lower cost to implement and operate, has the flexibility needed by the business, provides ready made integrations into the rest of the business and a user experience that drives adoption.
Example 4: Square peg, round hole
A large US based service provider operates a legacy ERP. The ERP was implemented over 25 years ago and since then, the needs of the business have evolved rapidly from manufacturing to service focused. The ERP has not progressed to support the need for clients, account managers and sales people to interface with the platform to get prices, track orders, monitor stock and view reports. Processing an order through the business involves multiple re-keys, resulting in frustrated employees, errors, time delays and ultimately lower margins. As the business has grown, additional technology platforms have been deployed, each reliant on interfacing with the increasingly outdated ERP. So the cost and complexity of maintaining the ERP is negatively impacting on the potential benefits of the newer technologies.
Sound familiar? So, what’s the answer?
Clearly the answer depends on the needs of the business. For some, ERP is the backbone of their organization – it is critical to manufacturing, operations and finance. For others it’s a barrier to growth.
Incumbent ERP providers, especially those pedaling legacy technologies, may see more nimble cloud based vendors as a threat to their cosy relationship with the C Suite (and their significant ongoing maintenance contracts).
With the increasing range of cloud-based platforms available for most business operations – business leaders need to view ERP as just part of the solution. Cloud based technology fills the gaps in process.
Cloud based technology provides more automation, more joined up thinking, more real time data, higher levels of user adoption, increased collaboration across supply chains and a more globalized view of the world.
Most cloud based platforms integrate seamlessly with ERP, financials, HR systems, logistics, BI and other tools – so business leaders can focus on growth and profitability rather than software and process bottlenecks. User experience is paramount to driving adoption and usage – and cloud based platforms put user experience at their core.
Cloud based platforms provide business leaders with a single unified view of their business data locally, nationally and globally. With cloud based spend management, for example, executives can centrally control local spending any where in the world and in real time.
Often cloud-based technologies can revolutionize businesses, if they are allowed to do so. Cloud based providers can innovate faster, can scale bigger and deliver more value quicker. And as most cloud based provider incomes are aligned to success, your cloud technology provider will continually innovate to deliver more value over the lifetime of the contract.
So if your ERP is driving you nuts, speak to a cloud based platform provider.
They can revolutionize your business.