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Are ERP Best Practices Really Best for My Operation?

Are ERP Best Practices Really Best for My Operation?


May 24, 2017
Manufacturing and Distribution

ERP Best Practices 

When considering Enterprise Resource Planning (ERP) software, business decision makers are extolled with the virtues of ERP system “best practices” and how they are used to guide business processes to reap maximum benefit. It certainly sounds reassuring, but the reality is that the term “best practice” has never been definitively defined in relation to ERP.

If that gives you pause, it should. It should also raise a question about if the “best practices” your ERP software is built on are actually the best practices for the business processes within your operation.

Best or Common?
A recent study published by researchers in The Netherlands questioned a group of ERP developers, consultants, and users about their understanding of “best practices.” The conclusion pointed to “best practices” actually being “commonly used practices”—essentially, select customizations previously implemented generically or duplicated for similar industries are assumed to be optimal solutions.

ERP development choices driven by the commonality of the industry or generic approaches with no benchmarking don’t necessarily make them best practices for you.

Is Customization the Answer?
Even if a company upends its business processes to fit within the parameters of an ERP system built on presumed “best practices,” the reality is they won’t completely avoid customization. On average, only 80-90% of the software will actually accommodate its needs, so a company will typically need some customization or will need to create some process workarounds, or both.

Strategize, Don’t Compromise
If ERP best practices are incomplete and adjusting business processes to fit them is counterproductive, a company may feel challenged when trying to maximize the benefit of ERP system implementation.

Solving the quandary, however, isn’t a matter of choosing the lesser of two evils and  hoping for the best. A productive ERP strategy starts well before implementation, with a focused review of business processes and key requirements:

  • Define and refine current business processes. If you don’t understand what your current business practices are, or where room for improvement lies, you have no clear basis for evaluating and selecting an ERP system that will be of maximum benefit to your company.
  • Think short- and long-term. Implementing an ERP system is a significant undertaking, and it’s easy to get bogged down in the minutia of low-level processes or extraneous details. Instead, create buckets: short-term solutions to satisfy immediate business needs and processes, and long-term solutions to support larger strategic goals and initiatives. Remember, the goal of this focused thinking isn’t to produce a static set of requirements from which a company must never deviate. Rather, the buckets are meant to be a jumping-off point for ongoing refinement that keeps pace with the company’s evolving needs.
  • Prioritize key requirements. Once you’ve delineated your business processes, prioritize key requirements to determine if the ERP software’s technical capabilities match the majority of your business needs. System functionalities that won’t support your requirements or further your goals will simply drain implementation resources and cause significant frustration.

An ERP system can be a boon for your business provided the software “best practices” are defined by your needs, not the technical functions built into the software. Reach out to a Wipfli expert today to discuss how ERP software can meet your goals on your terms.

Author(s)

Suzanne Koss
Suzanne Koss, CPIM
Partner
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