Business processes are an integral part of any organisation and should ensure that particular functions or tasks are carried out efficiently. Enterprise Resource Planning (ERP) systems help support these business processes to become the lifeblood of a company.
ERP integrates both back and front office activities to provide the business with vital up-to-date information that will enable the company to increase customer satisfaction levels and drive revenue. However, ERP can also constrain business process improvements and actually hold companies back by not providing the correct information and adding unnecessary costs.
In a recent survey undertaken by YouGov, 58% of respondents reported that ERP projects did not match business processes. 18% couldn’t extract the information needed and 79% reported that what information they could extract was inaccurate. Unsurprisingly then, 37% concluded that their ERP software was not fit for purpose.
With the New Year now upon us and possible new budgets on the horizon, organisations will start to review current business processes. However, by assessing the processes that add value and improve effectiveness against the ones that are unnecessary and hinder efficiency, the need for ERP is often brought into the picture.
I believe that if businesses adhere to the following four guidelines, they will stay true to their organisational goals rather than being constrained by the systems they have in place.
1. Understand each process
The first task of any company is to examine each business process against the objective that it has been designed to achieve. After all, a process is a way in which people record information in order to carry out a task and achieve a specific goal. Each process has specific inputs performed in some order, which will lead to specific outputs, while using resources. The goal of a process is to create value for both the customer and above all the company, usually a monetary value.
2. How efficient are your processes?
Slow and inefficient business processes do not add any value to a company. Successful business processes equate to a higher level of efficiency and require an ERP system offering increased flexibility to support unplanned changes within the organisation.
As an organisation grows, its business processes will also change, and far too often the ERP systems in place are unable to adapt to meet the fresh requirements without costly upgrades. In fact, the YouGov survey revealed that one fifth of the IT and finance managers interviewed reported that their ERP system was too inflexible to adapt to changing business needs.
Organisations should push ERP vendors to offer the support needed to create a system that is not only flexible enough to grow with the business, but one that can be easily customised to its specific requirements.
3. Can you apply business rules?
A ‘business rule’ applies to the input of information within a process. They guide employees to correctly input the information on a specific process and make available precise information to ensure that they can carry out that process.
When a process is recorded by an employee sometimes the correct information may not be available to them or some vital information may not be entered. Organisations should ensure that they can apply business rules to ensure the information specific to an employee is available to them, empowering them to carry out their tasks e.g. on entering a sales order, the system requires the customer reference name which is compulsory and must be entered in capital letters.
4. Ensure information flows
One of the biggest headachesfor many organisations is the lack of information. While one department enters information it undoubtedly affects another. Quite often you hear “but we didn’t know” and the reply is usually “but you didn’t look” etc. A solution to this problem is very simple; ensure information is pushed directly to the people involved.
To do this you need “workflows”. A“workflow” is just another name for a rule, but there is a difference. Workflows control the output i.e. the information you deem necessary for another person within your company to continue the process. An example of this would be when a department enters a sales order; the warehouse manager needs to be made aware that a stock item is low in quantity.
Business processes are the lifeblood of any organisation. The more complicated a process becomes, the more important it is to the success of a business. So many organisations put up with ERP systems that are archaic, inflexible, costly to maintain and most importantly, don’t fit the needs of the business. Organisations should not have to change trusted business processes to fit a new software package, especially when there is a cost effective and flexible solution available.