Building the responsive business

Are ERP systems fit for purpose? It's a question thrown into sharp relief by a survey recently conducted by analyst group Redshift, says Martin Hill, Vice President Marketing, EMEA at ERP supplier Epicor Software. "80% of businesses say that ERP is vital to them and yet 60% aren't satisfied with what they've got," he points out. "There's a perception that ERP vendors keep talking about the latest technologies, whereas what their customers want are hard, bankable benefits." Take cloud deployment and mobility, for instance, both of which have been major themes with ERP vendors over the past five years. Yet just 53% of those surveyed could actually access their chosen ERP solution via a cloud deployment, and just 58% through a mobile device, hardly a ringing endorsement of either. Social collaboration? Analytics? Don't even ask, says Hill: a quarter of respondents rated their chosen ERP system as only 'basic', with around the same number describing its capabilities as only 'average'. Just a third reckoned that their ERP system was 'advanced', and fewer than one in five businesses regarded their ERP system as 'state of the art'. A damning indictment A fairly damning indictment, in short, and one from which no ERP vendor emerges with flying colours. Yet is it surprising? For if businesses can't clearly see and understand the benefits that a given technology offers, then adoption will inevitably suffer. So what's required, says Hill, is a firmer focus on solid business benefits and solid use cases, and not fanciful futuristic visions. Consequently, it turns out, Epicor has been re-thinking its own approach to ERP development. And in contrast to the technology-driven strategy adopted by some in the industry, it is instead pursuing a more customer-driven approach, aimed at helping customers to more clearly see how technologies can add value. "It's not the technology that is important, it's what it can deliver that matters. And right now, it's responsiveness that manufacturers are looking for as a deliverable," he asserts. "Manufacturers want their ERP vendors to be more agile and responsive, they want their ERP systems to be more agile and responsive because without that, they know that their own businesses won't become more agile and responsive." And yet, he adds, the barriers to that agility and responsiveness are undoubted, whether it's manufacturers trying to embrace servitisation and engineer-to-order business models, or manufacturers trying to adopt more collaborative and socially connected business processes, or manufacturers trying to build more flexible and responsive supply chains. "Manufacturers hear a lot about agility and responsiveness, and are constantly told that agile and responsive businesses will be more successful," sums up Hill. "Our job is to help them to see how technologies can deliver this agility and responsiveness because if it's too difficult, they won't want to do it." How best to do this? The first step, he explains, is to recognise that once responsiveness is accepted as an overarching business goal – the strategy, if you will – then that same responsiveness then becomes the yardstick against which those same business tools, technologies and processes must be measured. Which can, at times, be uncomfortable, and involve asking some tough questions about how and why decisions have been taken, and technology choices made. "From a strategic perspective, for instance, you're going to have to look at how well suited your enterprise applications are to your business, and how well they serve your particular competitive advantage," points out Hill. "So if you've wound up with a system that was seen as a 'safe' choice from a technology point of view, and yet which doesn't suit your business's competitive edge or go-to-market strategy, then you've got to accept that to some extent, the tail has been wagging the dog. There's no point being an uncompetitive business, even with an apparently working ERP system." Likewise, there's the question of operational responsiveness to consider defined by Hill as encompassing the speed and efficiency of a manufacturer's core business processes, especially with respect to change and innovation. "In our view, ERP has been so focused on the concept of 'best practice' that it's forgotten about the importance of change and evolution," he observes. "Yes, of course it's important to have efficient business processes that reflect industry best practice and which match your business, but it's also vital to have the responsiveness and flexibility to enable the innovation which will refresh those best practices and processes, and keep them up to date. But all too often, what you find is processes that haven't changed since the ERP system was put in and probably won't change until it is replaced." Then, too, there's the question of supply chain responsiveness to consider, both the downstream supply chain, and the upstream supply chain. Here, says Hill, the focus is on exploiting technologies to help supply chain relationships to evolve, adding a mobile dimension, for instance, or leveraging technology to permit the use of new business models. Opportunity to build revenue stream "There's a lot of talk about servitisation at the moment," he points out. "And for many manufacturers, servitisation is a significant opportunity to build another stream of revenues and, what's more, a stream of revenues that's less exposed to the economic cycle. When a manufacturer moves into the field service of the equipment that they sell, for instance, or when they move to hire out equipment, or charge for it on a 'per use' basis, it's arguably a source of revenue growth that they wouldn't have seen before. But what holds many manufacturers back? The fact that their ERP system doesn't support field service, or can't cope with a rental paradigm as opposed to a sales one because critical technologies, such as mobile, aren't in place, or working to best effect." Roll it all together, sums up Hill, and the impact on responsiveness should be the lens through which both ERP enhancements and new technologies are evaluated. But it doesn't seem to happen, or at least, not nearly as often as it should. "Which is why the Redshift findings were so significant," he emphasises. "On the one hand, businesses understand and accept that ERP is fundamental to what they do. And yet, on the other hand, they recognise that it's not doing it very well. Likewise with enhancements to a core ERP system such as analytics, or mobile: there are barriers to adoption, in the shape of integration difficulties, and an inability to see the use case, and how it will enhance responsiveness." "There's a reason why manufacturers are constantly told that agile and responsive businesses will be more successful which is because it's true," he concludes. "For those that recognise this early, and work to build the required agility and responsiveness, there are considerable advantages. And that, in short, is the lens through which new technologies should be viewed."