If you are looking into implementing or upgrading your current enterprise resource planning (ERP) system, you may have heard the terms “best practice” and “best practice model” tossed around. But what exactly does that mean?
The concept of best practices is not new. By definition a best practice is an activity, method or process that is believed to be more effective at delivering a particular outcome than any other manner when applied to a particular circumstance. For ERP, best practices have long been incorporated into implementation and upgrade projects, specifically in regards to how the projects are structured and managed. More recently, vendors have introduced best practice models or templates.
Because implementing an ERP system can be a costly, complex, and time-consuming endeavor, vendors began creating templates to streamline and speed up implementations (ultimately reducing costs as well). The challenge is that best practice templates vary significantly. Some vendors look at them as a checklist of functionality, others develop templates based on the limited experience of working with a few customers.
A concern with best practice templates is that they ignore the processes that differentiate an organization. ERP software is supposed to help organizations create competitive advantages, not generalize it. How can companies maintain or gain a competitive edge if competitors have access to the same practices?
A best practice model should be used as a starting point to illustrate how an ERP solution can accommodate a company’s specific needs. Nobody should be forced to follow best practice templates as is. The templates provide the foundation from which a company’s unique processes can be identified and mapped from.
If it’s to be used as a starting point, what are the advantages? One of the biggest advantages is that it encourages you to take a step back and look at how you are doing business. By mapping your processes against best practices you can identify non-value added processes that may have grown in complexity over time and use the opportunity to streamline and standardize them. They also help identify areas that are unique and important to your business and provide the greatest opportunity for ERP software to add value.
About 80% of the processes are similar in every implementation. For example, a lot of financial procedures are typically the same in most companies. But the other 20% is what differentiates a company and provides it a competitive edge. This is where the vendor can really make an impact by configuring the software to specifically support these areas.
In the end, implementing an ERP system utilizing a best practice model and templates translates into a shorter project timeline, lower costs, and increased project success.