ERP success

Why defining business processes contributes to your ERP success

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ERP implementations often serve as a catalyst for a business process improvement effort. However, such business process improvement efforts can be approached from two angles.

Define or get defined

One approach is where the ERP system dictates how your company works, how your business processes flow. Most frequently, this situation is the result of an ERP implementation where the company has implemented an “off-the-shelf” ERP system. The company did not define its optimized business processes, nor its desired ERP functionalities. Resultantly, the ERP system forces the company to change their business processes to match best practices inherent in the ERP system. 

On the other hand, a company can initiate the business process improvement effort from a clean sheet. Companies following this approach will ask themselves: “if we had no limitations, how would this process be ideally set-up?”. The benefit of this approach is that companies think ERP-independently. Companies will often construct creative and/or unique business processes that are enabled by innovative technologies. However, there is a risk in this approach. Approaching all business processes like this can be costly, substantial time and resource consuming and may result in “reinventing the wheel”.

A combination of two

Although the latter approach is preferred, it is not yet ideal. When embarking on a business process improvement effort, companies should separate core competencies and business processes from supportive and “common” business processes.

The core and essential business processes should be designed and set-up following the “if we had no limitations-approach”. As such, companies should take full advantage of innovative technologies and design the ERP system in a way that fully supports their ideal business process.

In general, the remaining business processes are common and non-differentiating among different companies or industries. For these business processes, companies should rely on “best practices” and standardization. Nevertheless, the set-up of these business processes and their respective modules needs to be validated in advance. This to avoid that the standard ERP system set-up is either too rigid or too broad.

What is the ideal approach?

Companies should always define and visualize their business processes before initiating an ERP implementation project. This will help the company to articulate their needs clearly to the ERP implementation team and results in an ERP system tailored to the company.

The company’s core business processes should be designed as an answer to the question “how would the business process be set-up if we had no limitations”. In general, these business processes require configuration or customization of the ERP system. The remaining and common business processes should be designed following the industry best practices.

Why defining business processes contributes to your ERP success

  1. Firstly, having a clear view of optimized (future) business processes will support a company to:
    • Choose the right ERP system and ERP supplier;
    • Avoid unexpected costs because requirements are clear upfront;
    • Set-up the ERP system according the company’s desires.
  2. Secondly, the business process visualizations can be used as a discussion tool for further business process optimization. Moreover, the company’s agility increases because issues in business processes can now be faster pinpointed and addressed.
  3. Thirdly, involving employees in visualizing the optimized business processes is part of the required change management. Giving employees the opportunity to redesign their business processes contributes to their acceptance of the new ERP system.
  4. Fourthly, happier customers. If done right, the core processes are designed in a way to optimally serve your customers. All the remaining supporting processes are set-up according best practices that are expected by customers.

Support

Do you also want to define the ERP system requirements based on your company's business processes? We are happy to come and visit you. E-mail us at info@horsum.be or call us on +32 9 378 38 28.

Cédric Verfaillie - April 17th, 2017

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