By: Pradeep Agarwal
The last one year has pointed out some glaring shortcomings in how we were operating our businesses. According to one of the researches, more than three quarters of business leaders feel that their current ERP system does not meet their present requirements, let alone future plans. These systems lack modern best proactive capabilities to enable today’s data driven organizations.
The rapid evolution of the cloud has dramatically altered the ERP landscape for companies of all sizes. Coupled with mobile platforms, modern remote working environments require modern cloud based ERP systems. The next generation of ERP – ERP 2.0 – build on the formidable history of ERP 1.0, but eliminated the need for multi-layer projects and heavy customization.
ERP2.0 delivers solutions rapidly through the cloud so organizations can respond quickly to volatile markets and industry disruptions while supporting employees with security, insight and agility. Business critical and decision making depends on both enterprise data access and analysis, and on modern ERP systems that deliver the infrastructure and tools required to get done what businesses need. The world is far more complex and competitive than when ERP 1.0 first arrived on in-house mainframes. Finance and technology are inexorably linked, as growing volumes of data drive not just operations and reporting but also critical business decisions. Aligning ERP2.0 with a company’s people and products delivers digitally enabled business agility , which translates into greater operational and sales success.
What does ERP2.0 look like?
No matter which inflection point represents you, there are key components of a modern ERP or ERP2.0 that should address the top concerns most companies have when considering a move to the cloud. There are seven components that fall into the two categories – modern platform parameter and modern business application design. Together, these seven components define the standards of ERP2.0:
Security – Your business data is your business. A multi layer approach to securing data at every layer of the stack is paramount for maximum protection. Using secure data isolation architecture in the cloud reduces risk and enables faster data access and processing.
Integration – ERP Cloud solutions must seamlessly connect your business, people, and processes. Your solution must also connect to other clouds, to your on-premise systems, and to third party solutions. To ensure compatibility and scalability, you should choose a solution that uses a common framework based on industry standards.
Personalization (not customization) – With ERP 1.0, non standard or customer specific business practices resulted in customization that increased downstream maintenance and upgrade challenges. Cloud based solutions built on a standard based platform offer personalization and configuration within the application, resulting in “upgrade-safe” enhancements.
Completeness – Built-in best practices permit standardization, which lowers costs and increases productivity. Even if your cloud transition is incremental, access to a complete suite of integrated best processes delivers enterprise standardization. Consider whether a cloud ERP provider supports a full suite of applications.
Globalization – Entering emerging markets and new geographies creates complexity by requiring any ERP cloud solution to support multiple subsidiaries and country localization. Often, local data centers must comply with data residency requirements. The right cloud ERP must enable sharing of enterprise information seamlessly across operations, business units and headquarters.
Insight-driven analysis – A cloud ERP solution must have secure, real time data access at its financials core to provide a single source of truth across roles, reports and analysis. This ensures timely delivery of accurate KPIs to front line managers and dramatically simplifies a process once dependent on a period close or a separate data warehouse extract.
Digital Capabilities – For the modern back office, digital technologies must be integrated into business processes and transactions to create a seamless productive and intuitive experience. The User experience needs to be engaging and include mobile accessibility, for on-the-go employees, native social integration for secure in-context collaboration, and out of the box optical character recognition for invoice imaging.
When crafting strategy is finished with carefully crafted KPIs, the businesses will have the baseline for accessing results – the businesses need to look back in order to look ahead. KPIs should be realistic, the status quo metrics should be documented before kicking off the implementation and set reasonable intervals at which to assess the results.
These assessments can provide the basis of any new configurations to adjust to business goals and needs, if required. In addition, it is important to establish baselines for priorities using a maturity model mapped to your organization by assessing and quantifying project goals. For example, a goal to reduce accounts receivables through rapid, automated invoicing with faster close and reporting processes as well as reduced IT costs. However, one thing that needs to be kept in mind is that the comprehensive assessment is not just about technology. People, governance, processes and strategy are also key factors for success.
(The author is Senior Director- ERP Cloud, Oracle India and the views expressed in the article are by him)