Contact Us

Understand Which ERP Modules Your Business Needs – And When

Eva on September 12, 2022

  • NetSuite

Understand Which ERP Modules Your Business Needs – And When

What Are ERP Modules?

An Enterprise Resource Planning (ERP) system is like the central nervous system for a business, collecting and organizing key information to support lean, efficient operations, even as it expands. The ERP platform automates business processes and provides insights and internal

controls, drawing on a central database that collects inputs from various departments.

Once information is compiled in that central database, leaders gain cross-departmental visibility that empowers them to analyze various scenarios, discover process improvements and generate major efficiency gains. That translates to cost savings and better productivity as people spend less time digging for needed data or completing mundane tasks.

ERP systems typically come with several modules that are like building blocks for the software used to run the world’s businesses, whether they make hundreds of thousands or hundreds of billions of dollars in revenue every year. Each module brings a bundle of functionality that helps complete

a particular process, or a part of that process. These building blocks help various departments, from finance to supply chain to human resources to sales, perform their individual functions. The modules connect to the ERP’s common database and should easily integrate with one another to ensure every department has accurate, consistent

data and support interconnected business processes. The end game is that employees can access the information they need to answer questions about their department’s current performance, target areas for improvement, assist with future planning and collaborate with other teams.

Again, all of these modules interact with each other in a way that often augments their capabilities. For example, an ecommerce manager can find the original purchase order for a particular product

to ensure an upcoming promotion will still leave room for an acceptable profit margin. The finance department may review data that originates in the CRM about salespeople’s commission earnings to make sure they’re compensated appropriately.

Years ago, an on-premises ERP was the sole option, and privy only to the largest, most deep-pocketed companies. ERP implementations were extensive and extremely time-consuming projects, so many companies implemented everything at once, maybe never even “turning on” or under-using certain modules. They may not have needed that functionality right away but took a just-in-case approach to ensure they could leverage it,

if necessary, without enduring another lengthy project.

Then came the cloud, which revolutionized ERP by vastly simplifying the process of implementing a system and scaling its functionality.

For the first time, the promise of modular ERP was truly fulfilled—the company didn’t have to build out the hosting infrastructure and implement a bulky system, but rather could start with only the functionality it needed and add more as it evolved.

The cloud put the benefits of ERP within reach of the smallest businesses since it removed the long, painful implementations and high upfront costs of legacy systems. The subscription-based pricing of a cloud system played a part here, too. ERP could be taken off the balance sheet as a capital project, and put onto the books as an operating expense, meaning functionality could be implemented and paid for as the business actually needed it.

So what can these ERP modules do and how can your business start to put them together to build a competitive advantage?

12 Key ERP Modules and How to Use Them

A finance ERP module, which handles accounting, cash management, financial reporting and basic budgeting, is typically the first one a business implements, because getting accurate “numbers” is the basis for driving and measuring efficiency across the organization. More than half of small- to-midsize companies said they use some or only cloud-based software for finance and accounting in a recent survey by Robert Half. At the same time, the number of smaller businesses that report relying on Excel for budgeting and planning has dropped significantly over the last few years.

Modules that manage processes related to Human Capital Management (HCM), including workforce management, are often implemented alongside

or within quick succession of the finance module. This is software that manages everything related to your employees—from benefits, to personnel information for each member of your staff, to benefits—and payroll, a feature most businesses need early on.

As the business grows and needs to improve how it manages inventory, customer orders or purchase orders, it will bolt on new functionality, all of which draws information from and feeds information

into the same database to maintain a single source of accurate information. The data in one module drives information or outcomes in another—the true value of an ERP system.

Companies typically build their ERP landscape by adopting these modules first:

  • Finance. This module includes standard bookkeeping functionality, automatically updating the general ledger and tracking accounts receivable and accounts payable. It can handle account reconciliations to help the accounting department close the books in a timely manner. The finance module often has billing capabilities, as well as functionality to generate key financial statements like balance sheets, profit and loss statements and cash flow statements. Tools that automate complex calculations such as revenue recognition, consolidation of data from various subsidiaries or business units for reporting purposes and planning and budgeting may be grouped in here, as well. Companies typically adopt an ERP module to handle finance when their needs outgrow the limited functionality of accounting software designed for small organizations. For instance, a company may need this application when its transaction volume gets too high, and it can’t easily produce the financial statements required for statutory and regulatory compliance. Or perhaps it requires support for multiple currencies.The finance application enables a company to gain real-time visibility into its cash position and makes for a faster, easier month-end close.
  • Human Capital Management (HCM). Establishing strong control over data and processes related to people, such as payroll and employee records, is a must-have for any business with more than a few An HCM module stores employee data in a central location and tracks the basic information—like salary or hourly rate, reporting structure and paid time off—that’s needed to accurately calculate payroll. Organizations implement HCM functionality not only to track personnel information, but to afford employees basic self-service functionality to request time off or input time, track their accruals and maintain compliance with tax and labor laws. Payroll functionality is incredibly important in ensuring the latter, automating what can be a complex process of calculating tax withholdings, benefit contributions, overtime and more. As organizations seek to leverage more data to recruit, reward and engage employees, a broader category of HCM software now offers more support for talent management. This type of application can assist with recruiting, onboarding, performance management and succession management. In some cases, an HCM module may provide talent analytics to help track against key performance indicators (KPIs) for turnover, retention, training and more.

Once solid finance and HCM processes are in place, organizations often look to improve the efficiency and performance of their operations. This may involve adding all or some combination of the following modules:

  • Procurement. The procurement module, also known as the purchasing module, allows the organization to improve the processes involved in a company getting the goods, services and materials it needs to build or sell its own products or services. Companies can keep a list of approved vendors in this module and tie those suppliers to certain items. It can also automate requests for a quote, then track and analyze all those quotes in one place. By centralizing the purchase order process, the procurement application enables the company to better rationalize invoices, track purchase orders and prepare payments to suppliers. Functionality in the system often allows companies to categorize and analyze spend to identify areas for potential cost savings.
  • Inventory Mangement. For companies that sell products, automated inventory management is a must. You can’t sell what you don’t have—or don’t know you have. Inventory management software moves the tracking of individual SKUs from spreadsheets to a database that updates in real time to enable accurate and real-time tracking of quantities and location, including goods in transit. Implementing inventory management software is an essential first step in gaining a complete view of inventory, which is particularly valuable if items are stored across multiple locations, and helps companies find the right inventory balance. Reporting tools within the application can weigh sales trends against available product on a daily or weekly basis to help companies keep the right amount of inventory on hand. Better inventory management helps companies improve cash flow and increase inventory turn (a measure of how often inventory is sold over a certain period). They can also allocate inventory across online and physical channels and deliver new fulfillment options, such as buy online, pick up in store. An inventory management module, for instance, allows a company to set preferred stocking levels and lead times to determine reorder points and alert staff when it’s time to place replenishment orders.
  • Order Management. Tracking orders in spreadsheets can also quickly become a fool’s errand in a growing The order management module helps track orders from when they are first received, to when they are matched with available inventory in one of your facilities (whether a warehouse or retail store), to shipping and delivery. An order management solution integrated with your inventory management tool ensures that items ordered are actually in stock to prevent backorders and deliver a positive customer experience. This connection can also help improve demand forecasting. More innovative order management applications can help a company determine the most cost-effective option for fulfilling an order—a store vs. a distribution center vs. a third-party fulfillment partner, for example—based on available inventory and the buyer’s location. They can also prioritize orders on parameters like date received, shipping speed and more.
  • Warehouse Management. For any business that operates a warehouse—whether a distributor, manufacturer or retailer—a warehouse management module can lead to major efficiency gains by digitizing and automating put-away, fulfillment and shipping processes. A warehouse management module complements the features of inventory and order management modules. This application can support different picking strategies like batch picking, wave picking and zone picking depending on which is most efficient for a given business, to increase order fulfillment rates and the accuracy of orders. A warehouse management module can also boost customer satisfaction because more buyers receive the correct goods on-time and in the condition they expect.
  • Manufacturing. Manufacturers are typically looking for a tool that helps them build and execute against a bill of materials (BOM), which is like a recipe for the creation of a product. The BOM helps the company plan for production of its goods by ensuring that it has the correct parts or materials in the right amount to execute all work orders. In that way, the manufacturing module is tied directly to demand and supply planning, which the SCM module usually manages. There’s also functionality that ensures product quality, as well as operational efficiency on the plant floor. For instance, are all the workers and required machinery available to execute a production run next week? How does planned production for the next few months stack up to available materials, as well as what’s on order? How can the company adjust production if there are disruptions in supply, or spikes in demand? A manufacturing module can assist with all of these situations. Manufacturing ERP is one of the most exciting spaces to watch, as it’s a testing ground for the intersection of operational technology and information technology like the Internet of Things (IoT).
  • Supply Chain Management (SCM). Another module with a bucket-load of features that can help optimize operations is supply chain management (SCM). Some of the SCM module’s functionality overlaps with that of inventory, order and warehouse management, but its basic aim is to lend end-to-end visibility into the company’s supply chain and its partners, from sub-suppliers to distributors, in order to ensure business continuity and compliance and reduce supply chain risk. This application can look at purchase orders, inventory, current and planned production and expected demand to enhance supply chain planning. The SCM module also manages returns—when customers return products, an associate scans each item, records its condition and, if necessary, initiates an exchange. More advanced capabilities include demand forecasting and measuring supply chain sustainability. The latter category is becoming important not only to ensure and report on sustainability measures and targets for the company itself, but to provide customers with greater visibility into what’s in a product they purchase and how it was sustainably and safely sourced and made.

From there, businesses may add more specialized modules designed to meet the needs and challenges of certain industries and business models. Some of these support the customer- facing side of a business, rather than the back end.

  • Customer Relationship Management (CRM). A treasure trove of customer and prospect data is stored in the company’s CRM Leading CRM applications have three core capabilities: sales force automation, customer service management and marketing automation. The first helps sales reps manage leads and opportunities and put together quotes. More robust CRM modules can also forecast sales by leveraging historical data about transactions and buying behavior. The customer service piece tracks the company’s communication history with customers and prospects—the date and time of calls and emails, for example—and their purchase history. Finally, marketing automation capabilities help businesses manage campaigns and segment their audience to determine who should be targeted for certain promotions or cross-sell opportunities. When a customer or prospect fills out a form on a business’s website, that information flows into the CRM, which generates a notification so a sales rep can follow up promptly. Sales and marketing teams can also see where that customer is in the sales cycle to decide what to do next. When customers have questions about or issues with a product or service, a customer service agent can resolve the situation more quickly because he can see all previous interactions with the buyer.
  • Professional Service Automation (PSA). Also called a service resource management module, this application allows an organization to plan and manage The PSA module tracks the status of projects, managing human and capital resources throughout, and allows managers to approve expenses and timesheets. It facilitates collaboration between teams by keeping all related documents in a shared place. Additionally, the PSA module integrates with the finance module to automatically prepare and send bills to clients based on the agreed- upon billing schedule. Companies adopt PSA when tracking hours and billing individual clients becomes too time-consuming and difficult to track or when late and erroneous bills become common. The software shows project status, tracks consultants assigned, hours logged, travel expenses and communications with the client, and can use all of that information to automate billing.
  • Ecommerce. For businesses that want to sell products online, whether to consumers (B2C) or other businesses (B2B), an ecommerce module is vital. There’s a reason for the urgency to start selling online—the National Retail Federation reports that online sales grew nearly 24% year-over-year during the 2020 holiday shopping season. This module typically comes with user-friendly tools that empower non- technical employees to easily add new items, update product content (item descriptions, titles, specs, images, etc.) and change the look and feel of the website. Many ERP vendors offer an ecommerce application, with the primary benefit being native integrations with modules for inventory, order and warehouse management, so all order, customer and payment information seamlessly flows into the ERP.
  • Marketing Automation. Marketing While the CRM can often handle basic marketing automation, a module dedicated to this can offer more extensive capabilities. Data from the CRM system can feed into the marketing automation tool to drive targeted marketing campaigns across various channels, including social, email, video and more. A marketing automation module can also maintain various contact lists. It can measure the performance of various campaigns in detail, as well, to shape future marketing plans and spend. Ultimately, a marketing automation module should help a business grow revenue across all sales channels and increase the loyalty of existing customers.

 

Popular Modules By Industry

Every company, regardless of the industry in which it operates, will need to manage its revenue, its people and its customers. For this reason, many companies share a need for the basic functionality offered by finance, human resources and CRM modules once they reach a certain size. But a professional services company will not need inventory management, just as a wholesale distributor will probably not require a PSA module. There are many modules that provide capabilities more specific to certain industries, but here are what companies in several major sectors typically need:

Retail

The coronavirus pandemic accelerated a shift already in motion for retailers already grappling with changing business models and an increasing need to support customer-centric buying experiences. At the very least, retailers must be able to sell online and should be prepared to deliver on new channels customers now seek, such as buy online, pick up in store. For that reason, retailers need ecommerce functionality. On the back-end, most retailers will also require robust procurement, inventory management and order management modules to lay the foundation for multi-channel order management and fulfillment that meets customers’ soaring expectations. Retailers that operate their own warehouses may need a warehouse management module to ensure orders are shipped and delivered quickly while keeping costs down. Finally, as customers seek increasingly personalized experiences, retailers should invest in marketing automation applications that can tailor messages to specific shoppers.

Manufacturing and Wholesale Distribution Companies that run their own manufacturing processes need strong SCM functionality in order to efficiently and effectively manage work orders, make and/or build items, track inventory at various stages and ensure strong quality assurance processes. ERP modules for procurement, manufacturing and inventory management can bring all of this data together and make it consumable in the form of a dashboard. That makes it easier to proactively alert the general manager of issues in production, allow them to identify new opportunities and become a stronger partner in business strategy.

For wholesale distributors, it’s also crucial to have similar SCM capabilities, including warehouse management and order management modules, to streamline manual, error-prone and time- consuming pick, pack and ship processes. Ideally, warehouse workers use handheld barcode scanners connected to the warehouse management module to maximize the speed and accuracy of fulfillment. A CRM could be especially valuable for distributors by helping them provide customers with a higher level of service in an industry that’s become intensely competitive.

Food and Beverage

Many food and beverage companies function like manufacturers—their processes necessitate rich manufacturing and supply chain functionality.

Assembling a food or drink recipe has a lot in common with a BOM, and there are the same needs for quality management and visibility into their supply chain to ensure the right ingredients for the product will be there in the right quantities, at the right time. Other food and beverage companies take on the characteristics of retailers— sometimes in addition to manufacturing—requiring ecommerce and marketing automation systems that integrate with back-end finance, manufacturing and inventory management systems. Together, these systems enable the organization to consistently measure profitability and learn what’s selling and what isn’t so it can adjust its strategy accordingly.

Software and Technology

Most companies in the software and technology space are adopting the cloud in some way, and may be using the subscription pricing model that has grown in popularity over the last decade. This business model requires companies adopt some specific practices for recognizing revenue that

are made much easier with a feature-rich finance module—or in some cases, a separate billing module—that can automate forecasting, allocation, recognition, reclassification and auditing through a rule-based event-handling framework. Functionality specific to these requirements will make it much easier to schedule, calculate and present revenue on financial statements for financial reporting.

Technology businesses often need a PSA module, as well, to handle the implementation and consulting work they offer for their products.

Professional Services

As you would expect, companies in the professional services space will benefit from a PSA module that facilitates project collaboration, resource allocation and accurate costing and billing. Software that automates the complete bid-to-bill process and integrates project activities with the company’s financials will help services businesses strike the right balance between project resources and profitability. A services company in rapid-growth mode may decide a marketing automation tool is a worthwhile investment to acquire new clients and earn more work from existing ones, as well.

Which ERP Modules Does My Business Need?

Your business’s ERP strategy and which modules you invest in will depend on not only your industry, but your business strategy and goals.

Are you looking to add new customers or drive additional value from existing ones? Launch a new line of services or products? Cut costs or drive inefficiencies out of a certain process?

Technology can also be deployed to solve specific business problems. Is too much cash tied up in stock sitting in your warehouse? Are suppliers or contract manufacturers unable to keep up with customer demand? Above all: Are customers able to solve their problems when they turn to you?

As you try to determine the ERP modules your company needs right away, and ones it might add in the future, keep this framework in mind:

Look at the books. If the business is struggling with inefficient accounting processes, has little visibility into cash flow and its current financial position or is constantly receiving late payments from customers, it’s time to look at automating accounting and financial processes. A finance module will streamline the processes associated with accounts payable and accounts receivable and make sure that everything in the general ledger is accurate to simplify the complexities of financial reporting and compliance.

Look to the people. If the business isn’t accurately keeping track of data on and finding new ways to engage with its employees, it’s not going to have the talent it needs to accomplish key business objectives or be able to tell when and where it needs to hire new people that will help it make progress toward new goals. Taking care of the people that work for you will pay dividends in how they do their jobs and ultimately translate to happier customers and growth. Strong payroll and HR tools will build the foundation for business- differentiating talent management.

Find out what’s bugging customers. Focus on what’s causing friction for the customer and let that guide you to the issues with the underlying processes. Can customers get the items they want in the manner they expect? Are there too many items on backorder? How can the business better predict and meet demand? Look to inventory management and the planning tools within. Are shipping costs leading customers to look to competitors? Look to warehouse management and other supply chain modules. Are certain projects and customers becoming too costly and time- consuming to manage because of the number of people involved? Look to the capabilities of a PSA tool.

Establish a clear plan for growth. For most companies, the growth strategy revolves around adding new customers and keeping existing ones happy to convince them to buy more items and services. Does the business have the information it needs to create targeted marketing campaigns that resonate with customers? How is your company generating sales leads, and do reps spend most of their time on the most valuable ones? And how are you measuring everything, including the effectiveness of different sales and marketing strategies? Strong CRM and marketing automation solutions enable these capabilities for all companies, whether B2C or B2B.

NetSuite offers each of the ERP modules covered here, and connects them all on a unified platform that provides invaluable visibility across your business. NetSuite offers dedicated modules for finance, inventory management, order management, procurement, warehouse management, manufacturing, CRM, HCM, PSA, ecommerce and email marketing.

Additionally, NetSuite has other modules designed to handle industry-specific processes or challenges.

Customers who choose NetSuite can realize the benefits of a modular approach with a vendor that can support all of their current and future needs. That often starts with the basics like financials, CRM and tax management. As businesses grow and expand into other countries, they might add procurement, planning and budgeting and HCM modules. That growth leads to increasing complexity, and companies often add functionality for upgraded billing and revenue, analytics and multi-book accounting. From there, organization can add whatever else they need to expand their reach and fuel their success.

In helping more than 24,000 customers across more than a dozen industries improve their back- end operations and build exceptional customer experiences, NetSuite has gathered industry- leading practices over more than two decades. That experience forms the foundation of its SuiteSuccess methodology. SuiteSuccess offers a tailored approach to implementation and beyond based on industry and business size (with four different market segments). That leads to not only faster deployments, but an ERP that comes pre-configured with KPIs, reports, dashboards and reminders that allow your company to hit the ground running. SuiteSuccess drives faster time- to-value, greater user adoption and sets up your business to establish itself as an industry leader.

Value of ERP

The true value of ERP is in the integrated organization that it enables, unifying siloed functions and ensuring that accurate, consistent data is driving processes and decision-making. Some businesses will adopt functionality piecemeal, and others will need a number of different modules from the start. The best ERP systems will allow the organization to scale functionality as needed, adding capabilities to meet their business needs and future initiatives. Leading ERP software providers allow business strategy to dictate technology strategy—not the other way around.

While every organization will need certain ERP modules, how it configures each module will be unique to its specific business processes. It’s important to partner with a vendor capable not just of delivering out-of-the-box functionality, but that can tailor the software to the particular needs of your business in a way that won’t disrupt operations or require extensive retraining. Cloud-based ERP software gives companies that flexibility, and top vendors have modules that can support each business’s journey every step of the way.

Want to know more?

Our experts are more than happy to listen to your enquires and provide you with the information you need.
Book a consultation

Related Post

What to Look for in Your Next ERP

Eva on September 12, 2022

  • NetSuite

What to Look for in Your Next ERP

Looking for a new Enterprise Resource Planning (ERP) solution is not something you do every day. According to the Mint Jutras 2019 Enterprise Solution Study, the average age of ERP implementations today is approximately 7.75 years. If you’ve implemented a new solution within the last five years, hopefully you are not looking again quite so soon.

Therefore, it is safe to say that (unless you’ve recently changed jobs), anyone looking today hasn’t done so in the past eight to ten years, or even longer. And a lot has changed.

Whereas fit and functionality once drove most decisions, basic and even not so basic features and functions are table stakes today. While an 80% fit used to be acceptable, today’s flexible and technology-enabled solutions should get you much closer to 100% than ever before, without the need for invasive customization. Of course, you still need to perform due diligence and confirm robust functionality, including industry-specific features and functions, but if you haven’t looked around for awhile, expect to be pleasantly surprised.

Also equally important today is the whole user experience, including easy navigation, visual appearance and personalization. And don’t forget integration capabilities and the quality of built in reporting and analytics. Any evaluation today requires you to raise the bar in terms of your search. Read on for some inspiration and tips on what to look for.

WHERE TO START

In the early days of ERP, in searching for solutions, companies would start by creating a long list of vendors, sometimes on their own, but more often with the aid of an independent consultant. They might also create a feature check list and send that out as a request for proposal (RFP) to those vendors. That would start the long and arduous process of whittling that long list down to a short list of two to three (maybe up to five) vendors, usually after a first round of presentations and demonstrations. Of course, if you look back far enough, before the Internet and web-enabled solutions, this often meant traveling to the vendors’ offices or hosting them at your own office and dialing in over a phone line on a (very) slow connection. No wonder it took so long and thank goodness for the Internet and virtual meetings today!

Fast forward to 2019 and chances are your search starts online and you have your short list before you ever reach out and contact a single vendor. We asked our 2019 Enterprise Solution Study participants…

The different sources shown in Table 1 are sequenced (top-down) from most valuable to least valuable, although even those at the very bottom of the list are perceived to be very valuable. Industry analyst reports, inquiries and rankings are most often cited as the place where participants look first and foremost. Note that different industry analyst firms offer a wide range of different “products” ranging from educational reports (like this one you are reading now), to consulting and advisory services, to reports that stack rank and rate vendors and their products. When looking at these rating reports, bear in mind there is always a degree of subjectivity to these rankings. And often times viable vendors and solutions are excluded because of the size of their installed bases or the vendor’s willingness to participate. Some (not all) of these research/analyst firms require a vendor to pay a fee to be included. The larger, more reputable analyst firms do not, but they may have quite stringent requirements for inclusion.

All of these sources of information can be quite useful both in terms of providing a place to start, as well as narrowing down your search. But ultimately you will need to engage directly with the vendors on your short list.

TRADITIONAL CRITERIA IS STILL IMPORTANT

One of the reasons (perhaps the biggest reason) why so much has changed in terms of searching for a new ERP is the underlying technology. Today’s component-based architectures and development platforms make solutions more extensible, providing you with the ability to add or change functionality with less disruption to the core. They provide the ability to configure, personalize and tailor your solution with little or no invasive code changes.

The best platforms today allow you to add features with low code or even no code.

While early ERP solutions were rigid, monolithic structures, today’s modern solutions are more component-based. Every technologist in our audience knows a microservice architecture is defined as an architectural style that structures an application as a collection of loosely coupled services. For those nontechnical readers, think of it as constructing a solution from a set of Lego building blocks. In other words, agile ERP is no longer an oxymoron.

Yet, while it is very important to look under the covers of any new enterprise solution, we can’t forget some of the more traditional criteria for evaluation. We asked our study participants to stack rank six of those more traditional evaluation criteria from most important to least important. Since number one was most important, the lower the number, the more important the factor.

The first thing we notice is that we don’t have a very wide spread from the top of the list to the bottom – less than a single ranking point separates the most important from the least important. This means there is quite a bit of variability in perspective even in our sample of 464 study participants. And we can conclude all of these are very important. That comes as no surprise because we selected what we had found over the years to be the most important to the most survey respondents.

But we do see the widest gap separating the top-ranked criteria from the rest. We’ve been observing the selection process for years, asking this or similar questions, just in slightly different ways. For many years fit and functionality was clearly at the top of the list, but the user experience has been steadily rising in importance and this year it rose to claim the definitive top spot.

USER EXPERIENCE IS MOST IMPORTANT

This didn’t surprise us either. We are all spoiled by easy-to-use, intuitive consumer technology. Some of our millennial workers today have never used software that came with a user manual.

But there is another reason for this jump. In the early days of ERP very few of your employees ever put their hands directly on ERP. That privilege was reserved for data entry staff and select super users, who became a conduit (bottleneck?) to answers. Of course, the information technology (IT) staff also ran and distributed paper-based reports. Back then the look and feel had a more limited impact on your success.

Luckily those days are long gone. Today expect at least 40% of your employees to be regular ERP users and even more will have some access through self- service functions such as purchase requisitions, paid time off or expense reimbursement requests. And make no mistake, these self-service functions can be a significant source of productivity leakage if not well-supported with intuitive and easy-to-use software.

THE USER INTERFACE (UI)

Over the past decade, solution providers have applied significant resources to improving the whole user experience. New software is developed with an entirely different paradigm than in the days of “green screens.” And many vendors have completely redesigned and rewritten user interfaces. You might hear them talk about “beautiful software,” but tastes vary, and “beauty” is in the eye of the beholder. Look for a user interface that looks familiar, one that mimics your interaction with your favorite consumer app. You should be able to tailor it to your needs and personalize it to your preferences and your particular role in your organization.

THE DIGITAL ASSISTANT

Not only have user interfaces become more intuitive, making systems easier to use, some have even learned to “listen” and “speak.” Several different solution providers have introduced digital assistants to the market, changing the way users interact with solutions. While they vary in function, these virtual assistants tend to have one common element. You can speak to them and they understand what you are saying – for the most part. And they can even answer you. These solutions make use of natural language processing (NLP), a form of artificial intelligence (AI). While not long ago these were considered pretty far-fetched, they are no longer the stuff of science fiction. They have become quite pervasive in consumer technology. We regularly “speak” to our smart phones and even our televisions. It’s time to start talking to your ERP.

ROBOTIC PROCESS AUTOMATION (RPA)

Also look for automation. Sometimes the best user interface is no user interface at all. Can you automate your bank reconciliation process? Can you capture an RFID tag with a reader, and have it initiate an inventory transaction? Can you take a picture of a receipt and have it automatically attached to your expense report? And can the software tell the difference between a receipt for parking and one for lunch? Can you readily import customer purchase orders transmitted electronically directly into your ERP?

This last question is indicative of the impact of the digital economy on business applications like ERP. We asked our Enterprise Solution Study participants how they captured orders today and also whether that was changing. Thirty-seven percent (37%) said, yes, it would change over the next two years and another 45% said it might. Only 18% expect no change. As you can see from Figure 2, the percentage that will be manually entered is expected to drop while the percentages created electronically are rising. This all impacts the overall ERP customer experience and your solution must be able to accept these transmissions.

EXPECT A BETTER FIT AND MORE FUNCTIONALITY

While fit and functionality dropped to second place this year, make no mistake, it is even more crucial than ever. In fact, it is time to start breaking the 80/20 rule.

Where did this 80/20 rule of software come from? With many of the early versions of ERP, software vendors tried hard to be all things to all businesses. With few exceptions, most early solution providers cast a wide net. Unwilling to turn any potential business away without a try, they came to market with very broad solutions. By trying to please everyone, they never had a complete solution for anyone. The 80/20 rule prevailed. Nobody expected a solution to satisfy all their needs (an 80% fit was often the goal), resulting in invasive (and sometimes expensive) customizations that built barriers to further innovation. It also resulted in a proliferation of disparate systems that may or may not (still) be integrated today.

But a “one size fits all” solution is not the most effective approach to meeting the needs of a wide range of businesses. No software vendor can be successful in trying to be all things to all businesses. But it is still possible to get “last mile” functionality today with a strong platform and microservices to make ERP more “extensible.” In the context of ERP: to make it easier for the vendor (and possibly its partners with deep domain expertise) to add specialized features and functions to a solid code base, with minimal disruption.

This is really the (not so) secret sauce behind any solution provider’s ability to deliver “last mile” functionality, not just for major industries like manufacturing, or even verticals like food and beverage, but also micro- verticals like dairy, beverage, bakeries, prepared/chilled foods and meat/poultry/fish. While some features and functions might be the same across all manufacturing, food and beverage manufacturers and distributors also must deal with lot and sub-lot traceability and recall. Many within food and beverage must also deal with catch weights.

AN EXAMPLE: CATCH WEIGHT IN MICRO-VERTICALS

Catch Weight is a food industry term that means “approximate weight” because unprocessed food products (particularly meats) naturally vary in size. A retailer might order a case of 12 turkeys. The manufacturer (food processor) will estimate the price of the order by the approximate weight (e.g. 15 pounds per turkey) but will then invoice for the exact weight shipped. This can wreak havoc in an ERP solution not well-prepared to handle it.

But catch weight doesn’t affect all food industries in the same way in. It is also used in the cheese industry to manage shrinkage as the cheese ages. So, handling catch weight varies for different types of food. By handling all the different types of catch weights in a single line of programming code, you add a level of complexity that adds little or no value to the customer beyond the single problem it is facing. A cheese processor doesn’t care if you can satisfy the needs of a butcher. A butcher doesn’t care about shrinkage of cheese.

This is just one example of specialized features that represent “last mile” functionality – different components of code to insert depending on the needs of the specific micro-vertical, preserving simplicity without sacrificing very specific functionality. This is what produces a more “complete” solution, which was stack-ranked third in priority for our traditional criteria.

AFFORDABILITY

Affordability has always been a key consideration in selecting a new ERP, but the better question today would be: Can you afford not to be running a modern, technology-enabled ERP? Of course, there will be some up-front costs associated with a new implementation, but savings in efficiency and productivity, in addition to hard cash savings, can help defray those short-term costs. More than half (54%) of our survey respondents achieved 100% of their return on investment (ROI) within two years with an overall average time of just under 20 months.

New ERP solutions used to always require capital investment, putting a hard stop on buying something out of your price range. But cloud options,

subscription-based pricing and solutions that are delivered as Software as a Service (SaaS) provide more options today. Capital investments (CapEx) in hardware and software can often now be replaced with operating expense (OpEx). In a SaaS environment you are removing the hardware costs, including maintenance and repair, along with the cost of obsolescence. And you need to look beyond the up-front costs and look at the recurring costs in order to determine total cost of ownership. A purchase of a license up-front does not mean you won’t have recurring maintenance costs.

INTEGRATION CAPABILITIES

Regardless of how complete your solution is, you still need to consider integration capabilities. Even with a suite that is intended to be a complete end-to-end solution, running a single application throughout your enterprise is very rare. And even if you could, how well can you inter-operate with your trading partners (customers and suppliers)? If any applications other than your ERP create transactions or touch any of the assets managed by your ERP, data must be synchronized, and connections must be made. As mentioned earlier, component-based architectures and standardized data models can simplify integration between applications, making the platform on which any new ERP is built of paramount importance.

BUILT IN REPORTING AND ANALYTICS

Reports are quite basic to enterprise applications, but they provide a historical and quite static perspective. While you should expect any enterprise application to provide some minimal reporting, you should also recognize that no matter how extensive the reporting is, it probably won’t provide exactly what you want. There are simply too many variables to consider. Therefore, a good report-writer or the ability to easily tailor reports and inquiries, without invasive code changes, is a pre-requisite for any application. Look for one that does not require a lot of technical (programming) skills or expert knowledge of how the data is stored. Otherwise your business users will likely be placed in the queue, waiting for IT to deliver what you need. And they will grow impatient and turn to spreadsheets instead.

Also, nobody can anticipate everything you will actually need to see in your inquiries and reports. Reports are intended to answer questions you already have. But once you have those answers, you are likely to have more questions. You don’t really know the next question to ask until you start digging into the data. That’s why it is called “analysis.”

For this you need good analytics. Basic analytical tools make use of data cubes, which are multidimensional arrays of data. An example of a three-dimensional array might be sales by product, region and time. Any array that requires more than three dimensions is called a hypercube. Most analytical tools today have some sort of “visualization” capabilities, which allow you to present the data,

not just in tabular format, but also with more visually intuitive charts and graphs. Of course, visualizing more than two dimensions becomes harder.

The use of analytical tools generally requires special skills, especially in the creation of cubes. Therefore, they remain in the hands of a few power users or information technology (IT) staff. Some vendors will seek to put the power of these tools in the hands of the business users. They will ship products with preconfigured cubes and construct purpose-built apps that exploit the tools.

While this empowers the business users, it also imposes limitations similar to those associated with reporting. Yes, a vendor can deliver them “out of the box” but must make some assumptions in terms of which dimensions are most likely to meet the needs of their users and what questions they might ask. So, there are some trade-offs between empowering the business users and constraining the power of the tool itself.

In building these analytical applications, either as embedded modules or extensions to the enterprise applications where the business data is housed, some solution providers are adding powerful new features, like the ability to connect from different data sources, in addition to the data in the application itself. Others are adding “data discovery” mechanisms that will point you in the direction of looking at the data from different angles, including some you have not thought of yourself. They are also adding predictive elements.

Predictive analytics is all about detecting patterns and scoring probability, most typically in terms of measuring risk or opportunity (think predicting equipment failures or forecasting demand). Algorithms are created that can make suggestions and/or automate decision-making processes. In this regard, it is artificial intelligence (AI) because it does not require human interaction.

The earliest AI to which most consumers were exposed was Amazon’s suggested reading list. It was in fact pretty rudimentary. If you read that, then surely you would enjoy this. The fewer purchases made, the lower the probability Amazon would discover your real interests and preferences; the more historical data available, the better the accuracy. The same is true for pattern recognition and predictive modeling in an enterprise setting. If you are using predictive models to forecast demand for a product, the more historical data available, the higher the scored probability.

This is really what machine learning (ML) is all about – getting smarter over time without a human directing the learning process. Indeed, machine learning is computing capability that learns without being explicitly programmed. A travel and expense application that can detect a previous destination and imply a pattern in your travel is a very simplistic application of machine learning. But there is a huge potential for far more complex uses.

Consider for example how you might forecast demand for a product you have never sold. In this case, the predictive analytics might seek and detect similarities with other products for which you do have data, similarities that might not be immediately obvious to a human.

These types of predictive and cognitive analytics, powered by technologies like machine learning, image recognition and natural language processing are finding their way into digital assistants, forecasting applications, and more. As automation frees us up from simple, repetitive tasks… as we shore up productivity leakage, now is the time to empower knowledge workers with analytic tools.

KEY TAKEAWAYS AND CONCLUSION

If you are currently shopping for a new ERP, chances are it has been a long time since your last evaluation. A lot has changed in recent years. Or perhaps this is your first experience in being on the selection committee. Fit and functionality are (still) important, and an 80% fit should no longer be the goal. Look for that last mile of functionality to be delivered without costly and invasive customizations that build barriers to innovation and lead to stagnation.

But there is also danger in making a decision based solely on what you need today. We live in disruptive times and the pace of change is truly accelerating beyond anyone’s expectations. Change and disruption can have a cascading effect on your business applications requirements, making agility – the ability to innovate, evolve and change – equally, if not more important. For that you need the right approach to innovation and the right architecture and platform to support it.

But even as you look carefully under the covers, don’t forget some of the traditional basics. Do your due diligence on fit and functionality, but also closely examine the user experience. Will it feel comfortable to all your employees, from the millennials that grew up using technology, to the baby boomers that might not be quite as tech-savvy? The interface should be intuitive and easily personalized. But don’t make the mistake of thinking your employees won’t need training. This is the software that is running your business.

Also look carefully at integration capabilities. Even with a suite that is intended to be a complete end-to-end solution, running a single application throughout your enterprise is very rare. And even if you could, how well can you inter- operate with your trading partners (customers and suppliers)?

Early ERP solutions were rigid and inflexible, hard to install and implement and even harder to use. Functionality was limited (and limiting) and implementations were not for the faint of heart. Horror stories of failed implementations costing millions of dollars were fairly common. For many, those perceptions live on, in spite of the fact that solutions today are far more technology-enabled, provide many more features and functions, and are easier to install, easier to implement and easier to use.

Yes, ERP implementation is difficult and potentially disruptive to your business during the project. You really must expect this. After all, it is the software you use to run your business. And implementing ERP requires a different skill set than running your business. So secure top management commitment and create a plan. Don’t be afraid to seek guidance and assistance from those that do this for a living. ERP experts can help you identify goals, set a realistic schedule and budget and keep you on track. These experts will not be distracted by the day-to-day firefighting intrinsic to any business.

Selecting a new ERP is an adventure. Set the bar high in terms of expectations and prepare yourself well.

Want to know more?

Our experts are more than happy to listen to your enquires and provide you with the information you need.
Book a consultation

Related Post

Instagram Linkedin

Navigation

Services

Contact Info

Designed and built by Simply Works Agency.
Simply iCard Consulting Inc. © Copyright 2024

Request a consultation with Us!