CIO: What is ERP (Enterprise Resource Planning?)
If your organization is using a plethora of spreadsheets to make strategic or even day-to-day operational decisions, you know your company’s financial flow is fragmented. That may be just fine for start-ups and small businesses, but what if your organization is on track to expand into the mid-size category, or larger?
It is time to have “The Talk” with the C-Suite. Businesses that do not simplify and streamline their core processes into a scalable Enterprise Resource Planning system, or ERP, will unwittingly find their ability to compete for customers reduced and their growth frustratingly stunted in the mobile digital age.
John Chambers, Cisco Systems’ CEO, told The Wall Street Journal’s CIO Network’s 2015 Annual Meeting, “Almost every company coming out of Davos said, ‘I’m not moving fast enough. I have to become a digital company first, a physical company second.’”
CIOs and IT directors and managers that make value, and therefore profit, practice creative thinking that doesn’t limit themselves to IT solutions, but will fixate on IT propelling their company to the next level and beyond. The first step will be migrating the company away from paper and disparate applications and onto an ERP system.
Many, perhaps even most, heads of IT prefer staying within the familiarity of the server room, leaving the strategic decisions to the CEO and CFO. A 2012 Ernst and Young study reported, “About 6 in 10 CIOs felt they strongly added value to the company by enabling fact-based decision-making, while just over one in three of their C-suite peers agreed.”
The report goes on to say, “In fact, across a list of areas where CIOs are typically expected to add value, the one relating to innovation was ranked lowest of all by respondents.”
Here are some ideas to use an ERP system to crack open the boardroom door and lay the foundation for innovation and data-based results:
The relationship with the CFO is critical
According to Ernst and Young, 44% of CFOs say their lack of understanding of IT issues prevents them from having a close relationship with their heads of IT. Translated, that also means many do not understand how a costly ERP system will benefit the bottom line. First listening to where the CFO, and if possible the CEO, believes there are inefficiencies, followed up by gentle education on ERP, is your starting point. Make their aspirations for the company your IT priority.
Gentle ERP Evangelism
ERP systems are less about benefitting the IT department and more about data integration that advances your broader organization’s financial objectives such as profit, resource allocation, investment, and growth. The C-suite will need to learn how a well-designed and implemented ERP system will at first automate processes and seamlessly enable various departments using different applications to amend and update related information simultaneously. An ERP system will put the company on the same page across the core functions and departments.
ERP’s value is time
At a minimum, an ERP system slashes the time it takes to provide the C-Suite with the right crosscutting data and detailed analysis to answer key questions and make and implement decisions to compete and grow. More importantly, and beyond providing visibility, if properly configured and optimized an ERP system should enable the company to become a nimble and responsive competitor for the rapidly growing customer base using mobile technology.
Getting an ROI on the Innovative CIO
An ERP system is not going to cut down your workload and responsibility. If used correctly ERP should transform the CIO role into being a business-oriented digital change agent that drives process optimization and innovation and for market conditions, cyber security, scaling the software, and customer experience. Ask yourself: Am I up for it?
The C-suite bought the ERP pitch
Before you send your first email to an ERP vendor, analyze your company’s core processes. When Casey McMullen, who is now the co-founder and CTO at Klowd.com, was the IT director for Agri Beef he told CFO Magazine, a “key factor in our success was having decision-makers on our project implementation team. Everyone on the team was able to make decisions not only about software configuration and setup issues but also regarding business-process changes and best practices.”
Finding a vendor
Submit a request for proposal, or RFP, to local ERP vendors near enough to be more than just consultants, but partners. When selecting a vendor, use the analysis described above, but be careful about cost. Less expensive does not always translate into value for money. References with a focus on keeping within budget and delivering on time are vital [Link here to checklist on blog]
Training and follow-up
Change is disruptive and ERP system implementation doubly so. As the technology educator and evangelist, identify super-users and get them trained first, so they in turn become the trainers in their departments. Re-engage again and again the departmental stakeholders on the ERP system’s performance and make adjustments.
Click here to learn how Conexus SG can help you optimize your business processes with efficient, effective, and scalable ERP solutions from Microsoft Dynamics.
Ernst and Young Report “The DNA of the CIO,” Highlights “The innovation opportunity: how does your CIO measure up?” : http://performance.ey.com/wp-content/uploads/downloads/2012/11/Innovation-opportunityCIO.pdf
Ernst and Young “The DNA of the CIO,” Full Report: http://www.ey.com/GL/en/Services/Advisory/The-DNA-of-the-CIO
Ernst and Young “Partnering for performance Part 3: the CFO and the CIO”:http://www.ey.com/Publication/vwLUAssets/EY-partnering-for-performance-part-3-the-cfo-and-the-cio/$FILE/EY-partnering-for-performance-part-3-the-cfo-and-the-cio.pdf
McMullen quote: http://ww2.cfo.com/technology/2004/10/the-abcs-of-erp/
McMullen LinkedIn: https://www.linkedin.com/in/crmcmullen
Extra Case Study in Entrepreneur Magazine: http://www.entrepreneur.com/article/227265