In this episode of the Business Excelleration® – What are some best practices for companies considering a “best-in-class” or “best-in-suite” approach as they implement or upgrade their Enterprise Resource Planning System. A discussion with Dan McCabe, a Director in The Hackett Group’s Technology Transformation practice and Robert Donahue, Associate Principal.
Welcome to The Hackett Group’s “Business Excelleration Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. This episode is hosted by Dan McCabe, director of the Technology Transformation practice at The Hackett Group. Today’s episode will discuss key considerations for organizations looking to modernize enterprise resource planning (ERP) or ERP systems. Dan is joined by Rob Donahue, associate principal at The Hackett Group.
To begin, Rob explains how organizations define ERP as a system that supports the majority of core back-office functions. These include account-to-report, cash and procure-to-pay – full functionality to support HR and industry-specific capabilities. ERP systems are not just financial but can include tool sets that help support the industry. The best in class or best in suite for ERP systems are those top organizations that view ERP as an ecosystem. They start by strategically analyzing what they want to achieve in their business goals. The best in class looks at the best breed or best solutions for those applications. The best in suite looks at a system from a single vendor that can support multiple functions. The best in class is advanced functionality, and the best in suite is not getting the most advanced but the most leverage from a single vendor with buying.
Next, Rob explains how companies should start their journey to transform with ERP systems. He first says the company needs to decide what are the drivers and the business cases for helping the organization move into a new platform. For example, there could be legacy systems that are working well today but no longer support the business need to go to a new platform. There could also be capability limitations, and some businesses create a new ERP system to improve their ability to scale and grow. There is also organizational buy-in and that’s the driver to do this.
Other reasons to improve the ERP system is a desire to move away from manual processes with a shared service model, better user experience and keeps organizations competitive. However, every business has to start with having the vision and being aligned on what are you trying to solve and achieve by changing the systems. The business goals and objectives need to be aligned to the ERP journey. This will also affect the company for the next decade. A shift of businesses to SaaS or cloud-based ERP systems has impacted how organizations should prepare and approach for deploying an ERP solution by changing organizations’ way of thinking with technology. This also changes the spend considerations since the cost is higher and cloud technology requires more regular updates, so there is less customization and flexibility.
Finally, some of the key considerations for an organization that wants to become best in suite or best in class for ERP systems is a shift in prioritizations. The first is technology governance needs to stay in place. Integration and maintenance needs to be understood, and there needs to be an understanding of how the system will react to that. Functionality will serve the organization, and you can’t assume the tool is fully integrated on the back end. You also can’t underestimate the investment of the vendor partnership and who you are working with. You need to look at the tool sets, requirements and how you will meet them. Beyond technology, companies need to focus on strong data strategy and governance to successfully deploy an ERP solution. Companies also need to own these applications and know what the goals are. They need to find a system integration with the right breadth and depth for the organization. Change management needs to occur not after the system, but as you’re planning and implementing the system. Organizations no longer want to manage by transactions but manage by exceptions. Businesses also need to have resource planning by finding the right people and marketplace for talent.
0:49 – Welcome to this episode hosted by Dan McCabe.
1:08 – How do organizations define ERP?
2:13 – What is best in class and best in suite as we define that for ERP systems?
4:51 – How should companies start their journey to transform?
10:13 – How has a shift of businesses to SaaS or cloud-based ERP systems impacted how organizations should prepare and approach for deploying an ERP solution?
13:29 – What are some key considerations for an organization that wants to become best in suite or best in class?
19:22 – Beyond technology, what else do companies need to focus on to successfully deploy an ERP solution?