Successful Digital Transformation through ERP: Part 1

The arrival of a world-wide pandemic has forced major changes on companies through out the world, for a growing business finding new ways to transform their business is no longer a bullet point on a forgotten bucket list but a primary goal. In order to achieve this goal, and keep growing, it often means taking the first step towards Digital Transformation with an Enterprise Resource Planning (ERP) system at the forefront of operations, to boost productivity, efficiency and utilising your company data to gain real insights on the performance of your business.

What is digital transformation and The Impact of digital transformation

The term Digital Transformation is used quite often as a buzzword with no clarity on what it is or the steps you can take to implement it, as part of your overall digital strategy. In layman’s terms, Digital Transformation is the integration of digital technology into all areas of your company, to streamline and improve traditional business processes, a transformative step that changes how your company operates and delivers value to your customers.

Knowing where, when and how to start can be stressful and often confusing, not just for you but also the internal stakeholders who are the forefront of operations in your company.

Ensure, internal stakeholders understand why your business requires such a transformation, how it would help the future of your company and your customers needs.

Remember that planning a Digital Transformation with an ERP implementation requires you to look at not where the business will be in a year, but in a decade’s time. This requires you to pick an innovative ERP system that not only offers integration but is also scalable in the future as your business grows

What is an ERP

ERP also known as, Enterprise Resource Planning, refers to an all-in-one software that manages your day-to-day business operations, finances and accounting. It enables the proper management of your daily operations, streamlining procedures and coordinating activities which helps you focus on the big-picture.

The Major Competitive Advantage of an ERP system

The implementation of an ERP system, provides you and your stakeholders within your business the opportunity to innovate, by bridging the gap between existing technology and business challenges led by improved financial controls and operational efficiency to better understand your data to achieve a transformative outcome.

The saying goes that ‘time is money’ and nothing is more true

– Benjamin Franklin

The advantages of an ERP system doesn’t just stop at tracking transactional data it is also a method of increasing efficiency, productivity and simplifying the way your company does business.

One of the major competitive advantages that an ERP system offers is being a one stop shop for information you need on your clients, vendors, and partners, this leads to an improvement in employee and customer satisfaction, quick responses and increased information accuracy. As a result, costs tend to decrease as your company begins to operate more efficiently.

96% of Emerging businesses that excel in their industry rely on some form of an ERP Solution

– Aberdeen Group, 2015

If you are a growing small business and still wondering why you need to implement an ERP system as part of your digital strategy, data shows that 96% of emerging businesses that excel in their respective industry rely on some form of an ERP Solution, as it standardizes back office operations by 77%, minimises operations expenses by 11% and provides real time data and insights by 48% (Aberdeen Group, 2015)

Advantage of cloud-based ERP systems in today’s world

Cloud integration is a highly beneficial feature for an ERP system that is at the forefront of your company’s digital transformation journey.

41% of Australians work from home

– Australian Bureau of Statistics, 2020

Moreover, Cloud ERP systems are highly scalable with ease as your company can adjust its needs as it grows as it based on a pay as you go model, compared to having an ERP system on premise, as this can add another layer of complexity and maintenance costs for the long term. 

The Implementation of an ERP

OK, now that you know who an ERP system is for and why an ERP system is part of a successful digital transformation strategy, here is how you can deploy it successfully across your organisation and get the most out of your investment. 

1. Aligning your chosen ERP with your company’s digital strategy

digital transformation,successful digital transformation
Image by Charles Deluvio

Aligning your chosen ERP system as part of a digital strategy with your business processes and objectives is essential to serve as the foundational basis for your company’s digital transformation. It is important to note that an ERP system might be a foreign concept for many internal stakeholders, and also its functionality will vary across departments within your organisation. Providing education and establishing a cross departmental team to select the right vendor and ERP is necessary.

digital transformation,successful digital transformation

If your IT department favours one system and your HR department favours another for its features, it is essential to make sure there are assurances written within your contract that these features will be developed later, thus bridging the gap and pushing you forward across your journey towards digital transformation

With the right information you can get started immediately, and be on your way to a successful software upgrade with your chosen business management software.

2. Involving the right people

digital transformation,successful digital transformation
Image by Taylor Gote

If the implementation involves every area of your business, you need to get people from those areas involved in the evaluation process. Ask them what features they are looking for and consider everyone’s requirements. That way everyone affected by the change can feel they were a part of the decision-making process. This may also mean involving your external accountant.

You need to have an understanding of your system in order to assess and analyze whether the features of the business software you choose meet your specific needs. A good place to start is by analyzing what is lacking in your current system. Not all systems provide the same business functions, and each product will have different levels of functionality within different areas of the software. This means it is important to have a detailed list of what you need the software to do in order to assess which system can best meet those requirements.

Break your list in items that are mandatory and items that are nice to have. There is no such thing as the perfect match, however your system should meet 90% or more of your business’ needs.

This is where it is recommended to choose the right implementation partner who is accredited with the chosen ERP software. Who offers training and understands our software along with all its features, knowledge that internal stakeholders within your company usually wouldn’t possess when you first start implementing an ERP system.

3. Hiring a consultant

digital transformation,successful digital transformation
Image by Adeolu Eletu

Consultants can provide guidance, helping you look for new ways to expand your business while avoiding complications. When choosing your ERP consultant, their expertise in the field means they can evaluate your business and recommend the most suitable systems, and then help you evaluate these.

To ensure a smooth process during the implementation, your chosen consultant should be able to help you rewrite the right business processes, this can be for example automating manual processes across multiple functions to make quick and effective low-level decisions, moreover by redefining and streamlining your business processes you can streamline operations and automate tasks like processing invoices for accounts payable.

Now is the time to rethink, redefine and streamline your business processes by combining with the right digital tools such as an ERP system and really transform your organisation.
Rethink, Redefine and Streamline your business
Rethink, Redefine and Streamline your business

If there is a knowledge gap in terms of estimating costs for your chosen ERP software, this gap can be rectified by sending a RFI (Request For Information) to prospective ERP vendors. With an RFI you can also ask questions focused on your implementation strategy such as:

  • The time frame for implementation for a company of your size
  • How are you different compared to other ERP providers in the market?
  • The experience working with businesses within your specific industry

These responses will not only get you your RFI but also will help demonstrate your chosen vendors expertise and help you learn about the upcoming steps in this implementation process.

Once you have moved past these questions you can now submit an RFP (Request For Proposal)

Request for Proposal
Request For Proposal

RFP is much more specific and targeted that an RFI, an RFP should show your chosen vendor your specific needs in line with your digital strategy and a custom proposal to meet the needs you have expressed. Be specific about your requirements and the timeline for implementation asking questions such as:

  • Features and functions that need to be included
  • How will the system be deployed? (Cloud or On-Premise ERP)
  • As a business what Business Intelligence (BI) capabilities are you looking for
  • Ongoing maintenance support, costs, frequency of updates and training for users of the system

The primary purpose of submitting an RFP is for the vendor to show you exactly what they can do, how they can do it, value gained and how much this investment will cost you.

It doesn’t end here…

We’ve gotten this far with explaining the first 3 transformative steps you will take as business to implement an ERP solution that will define the future of not just your organization but also work. I understand this is a lot to read at first, but an ERP solution isn’t just a simple piece of technology or software, having a deeper understanding of an ERP solution means having a better understanding of your business.

An ERP solution offers not just visibility but also agility within your industry. 

Click here for Part 2 which will take you through the next vital implementation steps such as your budget, comparing different ERP solutions, and implementing a change management strategy.