In part one of this post, we discussed the technologies driving development in today’s digital business landscape, the major forces driving dramatic change, and the challenges businesses face in a time of transformational innovation. To adapt to transformational change, enterprise resource planning (ERP) needs to be agile; otherwise, companies will look up from their systems and wonder what happened.
Many people think of ERP systems as dinosaur relics of the information age. They deserve a little of that reputation—they are large and complex applications that are often tied to business practices of the past. But the fact is that ERP becomes more important than ever in the digital age.
In the beginning, ERP was about cost controls and efficiency. But today’s leading companies use ERP for revenue expansion. Growth in today’s marketplace requires adopting the new business practices emerging as result of technical progress. The velocity and complexity of these developments mean people need ERP more than ever, although ERP itself needs to evolve to avoid becoming an impediment to progress.
Here is the challenge in a nutshell:
- The pace of change is fast and accelerating.
- Digital disruption is well underway.
- To succeed, companies must respond to new business models.
All this requires a shift in ERP. Here is what today’s users need from their ERP systems:
- Deployment choice
- Easy analytics and reporting
- Channel integration
- Low cost of ownership
- Easy configuration
- Rich user experiences
- Ability to scale
ERP systems historically revolved around institutional thinking. ERP codifies business processes that are defined and measured based on top-down objectives and governance. Business process automation is tricky because something that was perfectly automated a year ago can quickly turn into an obstacle when needs change; so executives’ attitudes towards ERP can change overnight when the business is changing faster than ERP can be updated to optimize processes.
On the other hand, agile ERP shifts its focus toward individual contributions and a system that helps people react and resolve on-the-ground situations never foreseen by their management or software vendors. With agile ERP, people create their own ERP experiences, then share insight with other employees or other companies. Agile ERP frees individual users from the preconceptions long held by their IT departments.
This kind of ERP is all about outcomes, and at its heart, upholds five key principles:
- Collaboration. In today’s extended value chains, collaboration is essential to drive innovation, uncover opportunity, and respond to change in often-volatile markets. To do this successfully, ERP must be accessible to everyone involved in a company’s value chain, and business processes must be linked directly to that chain. Knowledge retention, traceability, deep domain expertise—these objectives must be supported by enabling communication without latency, and providing easy access and leverage via means that users want to use.
- Choice. Agile ERP gives organizations the ability to adapt to their unique circumstances, easily configure, stay current with technological advances, and scale up or out as demands dictate. All without taxing IT demands or frustrating delays.
- Responsiveness. In a world where events on one side of the world can immediately impact business on the other, the ability to respond is paramount. Business analysis must be in context and business response must be agile; customer expectations allow for nothing less. Agile ERP is designed to deliver in this taxing milieu, providing rich global functionality that organizations can use, in an instant, for strategic response and competitive advantage.
- Simplicity. As value chains become increasingly extended, nuanced, and complex, you can’t have your core systems adding to the complexity. By simplifying deployment, management, and usage—and by providing accurate, up-to-date information that enables a single version of the truth across multi-faceted supply and demand networks—agile ERP reduces complexity and makes it simpler to make the decisions for sustained success.
- Mobility. Today’s workers aren’t chained to their desks or their computers; they want 24/7 access to the information they need, wherever they are, on whatever device they use. Agile ERP is designed to deliver this flexibility.
By adhering to these principles, ERP can provide the agility companies need to cope with transformational change. In doing so, it will support their growth and success in an increasingly competitive business landscape.
Posted by Epicor ERP Insights Team
Five pillars of change are dominating discussions about today’s technology:
- Big data
- Video/unified communications
“Mobile” is about the interface—how quickly we can access computing power. Today we have more computing power in our smartphones that what was used to send the first man to the moon. “Social” is the network and who is engaged. Social transcends personal and work, and today genuine value resides in this network. The “cloud” is the information store and innovation platform. “Big data” is the brains and intelligence resident in the information, be it structured or unstructured. Finally, “video and unified communications” are how we share, interact, and collaborate with each other across all senses.
While these five forces are interesting on their own, digital business disruption is happening at their convergence: social and big data, mobile and cloud, video and mobile. It’s this convergence that is creating tremendous market disruption.
In the midst of this technological advance, market change is accelerating.
In light of these forces, where is your company today? Where will it be in five years? Consider this: in 2010, Blackberry had a 45 percent market share, Apple 25 percent, Microsoft 15 percent, Android 7 percent, and Palm 5.7 percent. Today, Blackberry has a 1.5 percent share. The pace of change has never been so intense. Since 2000, 52 percent of the Fortune 500 has been merged, acquired, or gone bankrupt.
Four massive trends are driving this change:
- Macro trends
- An increasingly dynamic work force
- Disruptive technology adoption
- New digital business models
The first of these trends cannot be controlled by organizations: natural disasters, political unrest, and economic recessions are effectively beyond their scope of influence. But the other three can be planned for, and need to be accommodated by today’s agile enterprise resource planning (ERP).
Dynamic Work Force
In addition to where we work, when we work, what we work on, and how we work, even the notion of why we work has changed. All this is impacting ERP development. While most analysts discuss the changing work force in generational terms (e.g., millennials, generation X, generation Y, baby boomers, post war), Constellation Research
segmented the workforce in terms of digital proficiency, a more useful structure in light of the fact that the environment everyone is competing in is digitally driven:
- Digital natives: those who grew up with the Internet and are comfortable in engaging in all digital channels.
- Digital immigrants: those who have crossed over into the digital world, forced into engagement in digital channels.
- Digital voyeurs: those who recognize the shift to digital, but observe it from a distance.
- Digital holdouts: those who resist the shift to digital, and ignore or deny its impact.
- Digital disengaged: those who give up on digital participation.
The disruptive technologies that impact the enterprise have come from the consumerization of IT, and ERP must be agile enough to accommodate—and take advantage of—their impact in the workplace. The cloud is the innovation platform for these technologies, and ERP must leverage it to user benefit. Social and mobile technologies are driving huge amounts of data to mine for context, something that must be leveraged to discover opportunities, minimize risk, and provide more precise information in real time. What is needed is information that can be used to empower better decision-making at all levels of the enterprise. Information has moved beyond the stuff of records to a vital force that senses, responds to, and communicates with people and machines.
Digital Business Models
Consider how business models have evolved in the digital age:
- Product companies give away product for service revenues.
- Service-based businesses sell experiences at varying price points and service levels.
- Experience-based businesses sell business models.
- Business model companies sell peace of mind.
With the emergence of digital business models, the pace of innovation has accelerated dramatically. Take Sony, for example. In 1983, they introduced the Walkman—a transformational product. It changed the game in music, and Sony hasn’t had a transformational product since. In 2001, Apple introduced the iPod. It wasn’t the best music player, but it was transformational because it changed the music industry at the height of piracy. They convinced people to spend 99¢ on a song instead of pirating it. It saved the music industry in the age of Napster.
The iPhone is also innovative, but not because it’s a smartphone. This one device has destroyed 27 business models. These are jobs, companies, and capital never to be replaced. Do you need a flashlight? Do you need a digital camera? Do you develop your pictures at a one-hour photo store? Do you need a GPS device? Do you carry a portable video unit? Do you buy music? Where do you buy books? This is transformational innovation.
Sony wanted to be Apple. Apple became Sony. Now Samsung wants to be Apple. Apple puts out one new phone a year. Samsung puts out a new phone every 40 days. The pace of change is accelerating and transformational.
Can your ERP adapt to this type of transformational change? It will have to be agile to do so.
Part Two of this post will detail what users want, and what agile ERP needs to be. Stay tuned.
Posted by the Epicor ERP Insights Team
For food manufacturers, food safety is among the most important issues they face; additionally, the demands for documentation relating to food sourcing, material flow, traceability, and regulatory compliance present an increasing and ongoing challenge to their operations. Particularly as retailers and regulatory agencies make greater demands on manufacturers for detailed documentation, it can represent a significant cost to manufacturers, one that directly impacts their bottom lines. Among the requirements food manufacturers face:
- Forward and backward traceability of processed goods, batches, and lots—requiring detailed tracking from the source to the shelf
- Strict ingredient and environmental control throughout the manufacturing process
- The need for fast response to recall events or customer questions—in minutes, not days or weeks
Enterprise Resource Planning (ERP) systems provide food manufacturers a means to meet these challenges while improving their internal business processes. Here’s what they do:
- Provide a framework to meet regulatory compliance demands, ensure product safety, and control costs.
- Automate traceability of ingredients from field to final customer.
- Speed and simplify the audit process.
- Enable a closed-loop approach to quality management by integrating quality workflows from an initial sales order all the way through shipment, which maintains quality specifications, sampling and testing procedures, and reporting of test results.
- Can dynamically link to material lot and product release controls to both support quality and ensure complete traceability.
An article in Food Manufacturing notes a number of key elements food manufacturers should keep in mind when considering implementation of ERP, including:
- Design fit for their unique business requirements and a history of success in the segment
- Process manufacturing functionality, including a built-in process model and recipe and materials management support to drive efficiencies and improve margins
- The ability to monitor and manage the variability of yields, product quality, and shelf life
- The ability to accurately forecast, to optimize schedules, and to manage all elements necessary to fulfill order to promise quickly
- Industry-specific functionality that minimizes the need for customization and supports date code management, rebates and commissions, consignment costing, day one for day one order and delivery, multiple product attributes and grades, and retailer-specific packaging
Posted By Stewart Baillie, Vice President, Products, Manufacturing
There are a number of ways to help ensure a timely, on-budget enterprise resource planning (ERP) system implementation. One key area revolves around properly planning and documenting business processes that will be used with the new solution.
Graphical modeling is often perceived as a narrowly focused tool for documenting the flow of isolated processes. However, by using a more flexible tool to expand that view to create a hierarchical, top-down map of the entire system, organizations get the full picture of how the processes can be made most effective.
Starting from the high-level perspective, it is necessary to drill down further to get to heart of detailing what really should occur for each business process. This “stage” level consists of the major steps taken to complete the process. This is also where responsibility should be assigned to particular roles within the organization that are affected by each particular stage.
The goal is to utilize these models throughout the implementation and beyond. The ERP implementation team can use the completed models to assist during the implementation with role-based activities and training, and to serve as a repository for important implementation documentation. After go-live, the models should be updated as the business grows and changes to help ensure the organization is getting the best return on its ERP investment.
To learn more about the benefits of conducting a process review, and the use of a graphical model as the repository of project documentation and “guiding light” of project continuity, download the white paper Effectively Documenting Business Processes for a Successful ERP Implementation here
Posted by Beth Karlin and John Steele, Senior/Principal Consultants, Epicor Professional Services
From their inception, Enterprise Resource Planning (ERP) systems have been deployed with an overarching purpose: reduce costs by managing processes and materials. Until the middle 1980s, enterprise systems were built for narrowly defined business needs such as order management, account payables, and inventory control. The first real ERP systems integrated the data and processes once handled by individual programs into a single system capable of managing almost every aspect of running a sizable business. They transformed how modern businesses work.
The principal benefit of a consolidated ERP strategy was ensuring that data wasn’t duplicated across departments, eliminating “islands of information.” Processes once separated could now be linked, enabling enterprise-wide planning and optimization. For years, the focus of ERP was top-down implementation of this strategy: the imposition of processes and measurements from an executive perspective. As the marketplace has evolved into a global competition, where facilities, suppliers, and partners are dispersed geographically and supply and demand signals occur over increasingly complex and nuanced value networks, the top-down orientation of traditional ERP is proving to be less than adequate on its own.
In this new business environment, change and innovation are accelerating; risk and opportunity are dynamic elements across networks, and business practices and processes are evolving at a pace heretofore unimagined. Response to this changed competitive landscape demands that ERP not only support the executive agenda but also the needs of individuals, regardless of where they are in an organization’s value network. Only then can companies mobilize quickly and respond effectively to events as they occur at breakneck speed, whether in Singapore, Stuttgart, or the Silicon Valley. So ERP has had to evolve into adaptive ERP.
Why Adaptive ERP Is Important
In a global marketplace where speed, change, and the demand for innovation are accelerating challenges, the expectations of ERP have changed. ERP is no longer simply about cutting costs, but rather about enabling businesses to grow and take advantage of new opportunities (and avoid unexpected risks) as they emerge. Competition may come from anywhere, often from unfamiliar players; disruptive technologies (e.g., additive manufacturing, social networks) may also change the game radically in a short time. Companies now need ERP systems that can adapt to unique and dynamic business environments, drive growth, and control costs.
A large part of business innovation is trying new things with less risk, modeling ideas and outcomes, or simply changing how people work with information. Today, ERP systems have to be approachable by all employees, changeable to waste less time, and readily integrated with other systems. To put it bluntly, ERP needs to adapt at the same speed as business—or get out of the way.
Epicor ERP version 10: Designed to Support Adaptive ERP
A principal way Epicor ERP version 10 helps meet these challenges is through flexibility. Processes can be defined and changed easily, and the system can be deployed as a single instance or in loosely coupled peer instances, on-premises or in the cloud. The solution has been designed with the knowledge that a company’s ability to innovate is at least partly coupled to business process strategy; specifically, agility is realized when processes are easily and inexpensively changed.
A recently issued white paper details the new functionality in ERP 10 that enables genuinely adaptive ERP. You can access it here
Posted by Epicor Social Media Team
“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” — Bill Gates
Because Enterprise Resource Planning (ERP) systems are central to today’s business operations, let’s consider the words of the Microsoft founder and how they apply to ERP. Today’s global business environment has transformed what enterprises need from their ERP systems. Global competition has led to the development of extended value networks, with facilities, suppliers, and partners in every part of the globe; moreover, it is much more nuanced than was ever imagined. Change is constant. Innovation is accelerating. Competitive pressures and customer expectations are higher. In this dynamic and challenging environment, technology must support the goals of better collaboration, increased agility, real-time responsiveness, and higher performance while reducing complexity in what is inherently a complex structure. Failing to do so may hinder what technology is meant to drive: growth and opportunity.
Epicor ERP 10 has been built from the ground up to comprehensively respond to these needs and provide the support organizations require to thrive in today’s competitive global business landscape. Guided by the needs of 21st century organizations, Epicor ERP 10 streamlines the use of ERP across multiple devices while providing greater deployment choices, reduced complexity, and remarkable ease-of-use. Built on agile technology to provide rich, global functionality, we believe it is a truly inspired ERP solution, one that not only unleashes the full potential of ERP, but also changes its role from necessary infrastructure to active and efficient facilitator of business growth and sustainability.
A recently published white paper details how Epicor ERP 10 has been architected for efficiency. You can download it here
Posted by Epicor Social Media Team
A post on TechAdvisory.org points to the advantages of enterprise resource planning (ERP) for small and mid-sized businesses considering the technology for the first time; however, its list of how ERP supports today’s business requirements in terms or productivity and profitability extends to enterprises of all sizes. They cite 10 top requirements for today’s businesses and how ERP helps meet them:
- The need to make decisions fast. ERP delivers reports and dashboards that combine data from every department to managers no matter where they are.
- The need for highly productive employees. ERP automates most of the manual processes that takes workers away from more valuable labor.
- The need for great customer service. It’s never been easier for customers to find a new supplier. ERP connects information across the organization so that you can answer your customer’s questions quickly and accurately, every time.
- The need to support multiple distribution channels. To expand market reach, Internet, channel, and direct distribution need to be supported. ERP connects all systems across supply networks to improve market performance in all market channels.
- The need to accurately match costs with income sources. When you execute work, you need to know whether you are really making a profit on it. ERP tracks all costs related to projects or jobs to ensure profitable engagements.
- The need to support remote employees. Employees need to be productive wherever their work is. ERP systems allow remote workers to access and enter information where they are, when they want to—increasingly on the mobile devices they choose to use.
- The need to manage industry-speciﬁc requirements. Every business is unique; business systems generally aren’t. With ERP, you can build workflows and reports that specifically address the specialized requirements of your industry.
- The need to simplify compliance. Meeting the reporting requirements of increasingly stringent regulations can take a huge manual effort. Instead of spending weeks and months on manual documentation, ERP’s automated functionality speeds and simplifies compliance while allowing your human capital to focus on more productive and value-added tasks.
- The need to support global commerce. Increasingly, business crosses international markets. ERP eases complicated currency translation and supports staffing overseas by providing accurate information without undue latency (essential for efficient operation of dispersed business networks).
- The need to attract young workers. The aging workforce places a premium on attracting young talent. A generation that has only known the digital age has little patience for tasks they know can be simplified with technology; to this group, the technological prowess of ERP not only makes intuitive sense, it reinforces their belief in the company’s commitment to stay current with technology—something they see as highly important.
When ERP matches your business, the best practices that are part of the system can be used to automate the flow of information in the business. The key is finding an ERP that is a good fit—the general flow of the system needs to match your business practices. When this happens, many good things follow, including greater productivity and higher profitability.
Posted by By Christine Hansen, Manager, Product Marketing
In a recent post, we addressed how manufacturers are seeking greater vertical functionality from their ERP providers. A perfect example of how this is succeeding can be seen at Illinois-based Chirch Global Manufacturing LLC (Chirch Global). Consistent with its mission of creating an optimal customer experience, the leading Chicago-area manufacturer of metal stampings and sheet metal fabrications strategically chose Epicor Software Corporation as its enterprise resource planning (ERP) software provider.
“The core reason why we selected Epicor was that its roots were in manufacturing,” says Anthony L. Chirchirillo, CEO of Chirch Global. “With their robust service available in the cloud, we’re able to focus on our end goal: fulfilling customer needs in the best way possible. This adoption comes at a key time for us, and has already helped us further improve our responsiveness to customers.”
Operations manager Michael A. Chirchirillo adds that using the Epicor ERP solution has improved communications across the Chirch Global enterprise, enabling better, faster reactions to market demand changes and customer needs.
The partnership with Epicor reflects Chirch Global’s continual commitment to innovation, to staying abreast of technological advancements, and to serve as an all-encompassing resource for the manufacturing community. With the inception of the Chirch Global Manufacturing Network that currently consists of 15 best-in-class businesses, the company is poised to become the single-source provider for nearly any type of manufacturing need in the year ahead.
For an up-close interview with the Chirchirillo’s regarding their selection and use of Epicor ERP, you can watch here.
Posted by Epicor Social Media Team
An article in CIO points to the strategic conundrum that is giving rise to increasing vertical functionality in ERP, for manufacturing as well as other business sectors:
If your enterprise has customized your mission-critical ERP systems over the years, your future upgrades will likely be more troublesome and terrifying because the changes can conflict with the patches. On the other hand, if you are running out-of-the-box ERP with little customization, maybe you're not getting all the important features your business needs. So what's a CIO to do? And how do you figure out what to do next if upgrades or replacement are looming in your future?
According to Rebecca Wettemann, VP of Research at Nucleus Research, an increasing number of CIOs are choosing the less customization path. A major driver of this development is that ERP vendors are building applications with greater industry-specific vertical functionality. “Part of the reason for this recent trend is that ERP vendors are now recognizing that if they build applications that include verticalization, they will be easier for more companies to adopt with fewer problems and far less customization,” says Wettemann.
CIO defines verticalized applications as those “built with specific industries in mind, so they are essentially designed to fit different kinds of businesses out of the box.” Typically, to help the applications better conform to a specific industry vertical, they include role-based views and components that users can easily configure so they more closely suit business and process needs, without requiring code writing and deep code customization.
Wettemann says that this approach—which she describes as install vanilla—is good for many companies using ERP. "I think it depends to a certain extent on the application that is chosen. If the application has vertical functionality with role-based sourcing and other possible configuring, then, yes, you're better off going vanilla," she says. "Clients see this as a less risky move, a more predictable way to deploy ERP and a way that is more likely to minimize disruptions and costs over time, which is even more important."
In fact, a survey cited in Industry Week showed that 96 percent of manufacturers “need or want” more specialized ERP. The single greatest need for more industry-specific functionality was cited among manufacturers who say managing return on assets is a core part of their business. The rationale is straightforward:
Manufacturing in North America has become more complex as long-run repetitive manufacturing has become less common. More and more manufacturing in the Western Hemisphere centers around demanding processes like engineer-to-order (ETO), product lifecycles are becoming shorter and manufacturers are focusing more on the specific needs of the vertical industries they serve.
As manufacturers themselves have become more sensitive to the vertical segments they serve, manufacturing companies are increasingly valuing ERP solutions that have been developed and maintain vertical functionality with their industry in mind. This trend gained traction at the outset of the decade, and has been building momentum ever since.
Posted by Tom Muth, Senior Manager, Product Marketing at Epicor
Many companies do not realize successful economies of scale and resource synergies from a merger or acquisition because they are unable to rapidly consolidate disparate organizations and business systems. Organizations currently on or considering a Merger and Acquisition (M&A) path will be tasked with bringing those companies together. One of the most critical projects in this endeavor will be implementing the selected go-forward ERP (Enterprise Resource Planning) system. A properly executed onboarding strategy will enable you to recognize ROI by leveraging the scale of the new organization, and capitalize on the synergies of the merger or acquisition.
“RAPID” in the title of this article represents an acronym and a framework for executing a fast-tracked ERP implementation. RAPID actually includes an acronym within an acronym.
Reports include any business intelligence output, such as: dashboards, printed reports, transactional information, external data sources, etc.
Interfaces: Interfaces are any systems that may push or pull information from the ERP.
Conversions: All activities related to data conversion or data transfer.
Enhancements: Any functional gaps between your current ERP and the acquired company’s ERP should be fully documented, focusing on the impacts to your value stream.
Actions: The near-term action items resulting from each meeting should be tracked to completion.
Policies: All policies—especially customer-facing ones—of the acquired company should be documented, and policy changes should be communicated to the appropriate stakeholders.
Issues/Decisions: As operational, personnel, or technical issues are uncovered, it is important to track those issues to completion with ownership and due dates. The resolved issues should have the decisions or solutions documented and filtered off your list.
Decreasing the amount of time to assimilate all entities onto one system will improve your timeline to return on investment of the merger or acquisition. Another tactic to rapidly implement acquired companies includes an effective project kickoff session, i.e., a Change Acceleration Process (CAP) workshop, to minimize employee resistance, attrition, and general dissatisfaction.
Communication is a key part of change management, and having an expert onsite that is skilled in this area is helpful. After all, if you fail to clearly describe the reasons for the acquisition and its expected impacts to your customers, your competitors will certainly do it for you.
Along with the technical migration, equally important projects to pursue during the
M&A process should include:
- Human Resources Plans, Systems and Policies, such as: payroll, benefits, etc.
- Marketing: A co-branding program is typical, with the acquired company’s logo being phased out over time
- Sales territory alignment
- E-commerce Web site shopping permissions
Approaching each aspect systematically, via the Actions, Policies, and Issues/Decisions execution steps of the framework above, will allow you to properly scope the project, manage the strategic deliverables, and work towards a RAPID implementation.
Posted by Jon Snow, Director, Business Consulting Services at Epicor