How the Right ERP Strategy Can Improve Your Business

It’s a common scenario: A company invests big bucks in a massive ERP implementation only to watch the effort stall. Or worse, fail altogether.

Maybe the problem is the lack of planning or ERP software curation. Maybe it’s not thinking ahead for future needs. Or maybe it’s not having an experienced ERP implementation executive who can make that integration sing.

For all that goes into ERP implementation — ERP, or Enterprise Resource Planning, is, after all, managing, streamlining, and tying together all essential business processes — strategizing every step should be a non-negotiable.

“ERP systems usually get replaced every seven to 10 years. I’ve been with some companies where they hadn’t replaced them for 25 years,” says Bruce Howard, an InterimExecs RED Team member and Interim CIO who has spent much of his career implementing ERP solutions.

“There’s a planning phase to bring all of the pieces together and make sure you’ve got a clear approach and clear people assigned. And then you need a methodology for the way you select systems and implement,” he says.

To better understand the components of a successful ERP implementation process and a clear look at how an ERP strategy can support business operations and better decision-making, we asked Howard and interim executives Tony DeLima and Alonso Vargas to walk us through the essential elements.

Choosing the Right ERP System to Meet Your Strategic Goals

DeLima, architect of technology strategies at a range of companies such as CITCO, a large hedge fund administrator, says the days of viewing the large, monolithic options from established ERP vendors such as SAP, Oracle, and JD Edwards, are over.

“Historically ERP systems were so tightly coupled with other systems that taking them apart became impossible,” he says.

“The companies doing it successfully now typically implement integration services that marry the backend with a number of other platforms that have other business capabilities, like conversational AI that drives interaction with their customers and more advanced e-commerce platforms. And those don’t necessarily need to be part of this big ERP implementation project,” DeLima says.

While there are many factors to consider when choosing a new ERP system, DeLima says organizations should define the transactional nature of the ERP. Then, he says, you can leave the customer-facing initiatives, such as e-commerce, to the rest of the systems.

Rigorous Selection

He suggests viewing an ERP system as a core transaction handler. A supply chain company, for example, would choose a system based on how they approach manufacturing execution, warehouse management, sales and inventory, and transportation management.

The common mistake companies make with ERPs, Howard says, is not being rigorous enough in that selection process.

Too many companies get stuck relying on a consultant who only knows one system, so they take that route even if it’s not exactly what is needed to run the business.

The result is a system that may not meet business needs for growth and expansion.

Especially if you’re getting into global implementation “you have many diverse cultures and often have unique requirements by location,” Howard says. “Those things play a part in the decision-making process.”

Doing the work upfront to outline an approach, clearly define a why, and set clear, measurable business goals is critical.

Businesswide Input = Better Results

To choose the right ERP system and increase the chances of a successful ERP deployment, it’s critical to create a project team that includes stakeholders from all of the key business units.

“Data is often seen in light of the IT organization,” DeLima says. “But it’s really also a business conversation.”

He emphasizes the need for business strategy discussions around your company’s data, governance, and ownership of that data, because the ERP platform will become a big component of an organization’s ecosystem.

The ERP System Doesn’t Stand Alone

The ERP implementation plan should focus on integrating ERP with legacy systems to ensure better decisions about how the business is run. DeLima says organizations should have an analytics component that provides unified customer relationship management.

“I want to know what customers buy, when, and which SKUs,” he says. “I want to understand the return of my customers and be able to react to that as quickly as possible. And this is a critical one: I want to do proactive, demand-sensing, which drives things like sales and operations planning.”

That insight can have impacts across business units. A good ERP strategy can improve business workflows from real-time management of raw materials and outbound logistics to lower operating costs, faster revenue capture, and higher profitability.

“You really need to invest in that infrastructure to gather information that you’re able to turn into KPIs and metrics that should be used for decision-making,” Vargas says. “Those who utilize data in analytics are those that continue to catapult forward and grow exponentially.”

Prepare for Now and the Future

Proper ERP implementation doesn’t come cheap, but it’s important to remember this is a long-term investment. Ensuring a strong return on investment requires an ERP strategy that meets your business objectives today and gives you a competitive advantage going forward.

Both on-premise and cloud-based EPR implementation carry business performance indicators that might sway you one way or the other. Vargas, however, is a champion of the latter.

“You really need to spend the money, resources, and time to truly understand, given your type of organization, the best cloud ERP for your business,” he says.

“And how can you utilize that to give yourself transparency not only from a financial perspective but in operations and from a CRM perspective? You’re going to see a trend in people who were resistant and trying to limp along with their old-school software that they called an ERP,” he says.

“Now they’re going to realize that that’s not sustainable for this virtual work environment and they’re going to need to invest to ensure they can run their business from afar.”

ERP Project Success: Get Help from an Experienced ERP Implementation Executive

The potential for ERP project management success grows exponentially with the right leader and the right team.

“No client I’ve ever worked with — even the biggest companies out there — has enough staff to support a project like this on their own because it requires a significant number of resources,” Howard says. “They’ve got the people doing the day job and participating in the project, but not all can participate in both full time.”

ERP-level change management requires a dedicated team led by someone experienced in ERP implementation. That’s where an on-demand interim CIO or CFO — or a team of experienced, on-demand executives — can have real impact.

Drawing on years of experience and best practices, an interim executive will help the team clearly think through the business requirements, automation implications, and scalability of an ERP software solution. Unlike a consultant who will sell you an ERP system and walk away counting their commission, interim executives are loyal to your company.

They provide the clear-eyed analysis of an outsider coupled with the can-do attitude of someone who will implement the plan.

“Being able to put a group together and think through how you’re going to move things beginning to end through the distribution process, the manufacturing process, the sales process is really important,” Howard says.

“They need the hands of people who’ve done this multiple times and have war stories to explain to them what would work.”

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Are you thinking about a new ERP system? Call or text us at +1-847-849-2800 or fill out this form for a confidential chat about how a RED Team interim executive can help you succeed.

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