However, arguably one of the most important factors in effective decision making is having timely access to accurate data.
When decisions are made from intuition and 'gut-instinct' alone, the risk of negative impacts increase, which is why good decision makers equip themselves with the right resources to methodically make choices that can guide their business forward.
For manufacturers and distributors alike, having the right ERP software is a critical component in this resource mix.
The importance of data
Business today moves at a frenetic pace, with a regular need for leaders to make quick decisions. Without the right access to information, making the right call can be challenging, but not making a decision is a decision in itself, which places decision makers in a tough position.
2015 research, commissioned by Epicor Software and conducted by Redshift Research Ltd. found that 46 percent of CFOs are making important decisions through relying on instinct alone. There is no doubt that instinct and intuition are important traits of great leaders as it can be the basis for truly brilliant innovation. However, it is important to recognise that it can be risky for intuition to be the sole basis for important decision making.
Nearly half of the same survey respondents said they were relying on their instinct and experience in making decisions due to a lack of hard facts. The research, based on interviews conducted with more than 1,500 finance business professionals in 11 countries, also found that one in three companies identify a key cause of decision-making mistakes is the result of not having access to internal data quickly enough.
Being able to respond quickly and appropriately to market demands is a cornerstone of truly great companies. To take advantage of opportunities and gain a competitive advantage, businesses need ERP software that can deliver the right data, to the right people, when they need it.
Unlocking the true value of ERP software
While every business has different requirements and different objectives, the simple premise that technology should serve to make our lives easier should ring true for every company. Therefore, when we consider how ERP software can help decision makers, I would suggest that the underlying factor should be how well it allows your business to operate at its full potential.
Here are some ERP software functionality elements that can serve to make decision making more effective.
Collaboration
As we discussed in last week's blog on collaboration, an Aberdeen Group report identifies that businesses with social ERP functionality are 2.5 times as likely to have real-time visibility into the status of all processes and are 145% more likely to have real-time collaboration across departments and divisions.
When users are actively sharing information through a social ERP platform, it opens the door for streamlined communications and the collection of valuable insights, which ultimately aids greater decision making.
One source of information
An effective ERP software system should provide your company with a consolidated data set from which accurate intelligence can be extracted in real time. When the right users can access this information, when and where they need it, your business will be in a better position to take the right action in a timely manner.
User friendliness
When users are expected to work with cumbersome, complicated ERP software, they are more likely to only use the system when they absolutely have to. This generates a scenario where users may create their own workarounds outside the prescribed system. If this happens you will have less data to work with.
Additionally, as the decision maker, if you cannot easily access the information you need because the system is complicated, then you are likely to steer clear of using the system in a way that should assist in your decision making.
If you come across an ERP system that can provide you with the right data, on face value it could appear to alleviate some of the challenges we discussed above. However, it is important to consider how this data is presented.
For example, an ill-fitting ERP system could serve up spreadsheets of valuable data all day long, but unless you have the time and capability to analyse and interpret the data, it will likely go unutilised. However, if your ERP software provided you with data in a contextual, easy-to-understand format, you are much more likely to gather the insights you need and then take the appropriate action.