WHY ERP NO LONGER BELONGS IN THE BACK OFFICE IT S COMING OUT AND IT MEANS BUSINESS

Transcription

1 WHY ERP NO LONGER BELONGS IN THE BACK OFFICE IT S COMING OUT AND IT MEANS BUSINESS

2 CONTENTS I. HAVING DOUBLE VISION WITH ERP P1 II. THE TRADITIONAL ROLE OF ERP P2 III. A LACK OF CUSTOMER VISION P3 IV. A BROADER ERP EXPERIENCE P4 V. TOWARDS A BETTER CUSTOMER EXPERIENCE P7

3 I. HAVING DOUBLE VISION WITH ERP Enterprise resource planning (ERP) systems are multifaceted solutions that enable versatility and scalability. Nevertheless, they are often approached with a singular vision. Traditionally, ERP tools have been implemented to drive internal improvements, from efficiency and cost cutting to inter-departmental/ multiple-site collaboration and improved reporting. Yet ERP systems have another function too - they can be used in a customer-facing capacity to enhance consumer experiences. By broadening the boundaries of ERP and switching to a double-vision, in which the solution is viewed as both an internal and external support system, it is possible to move the software into a more strategic and value-adding position. This has already been done to great success in service portals, e-commerce, central procurement and supplier management. Mobility, data integration and credit card processing have also been supported by ERP, while alert and monitoring, and reporting on data not owned by a business, such as social media, now falls under the scope of the system. Utilising ERP systems in this way turns the software into a customer, employee, supplier and partner experience, as opposed to an in-house facing, old for new tool. 1

4 II. THE TRADITIONAL ROLE OF ERP Ninety-five per cent of organisations currently use an ERP system, according to K3 FDS Brands2Life Data Summary. Of these, 59 per cent consider the solution key for business success, while 93 per cent think ERP is important to their company to some degree. However, over time the role of ERP has evolved. Writing in the CIO Journal, Bill Allison, principal, Deloitte Consulting LLP and Richard Kupcunas, director, Deloitte Consulting LLP, explained that while the technology was once strictly used for process automation based around scale and repetition, it is now an agile, customisable tool, capable of responding to changing events in real time. Historically, the focus of ERP within companies is to ensure business processes are running as they should. This encompasses regulatory compliance, track and trace, quality control and information sharing. ERP has traditionally been viewed as a core business system for running a business s fundamental processes, Luke Richardson from K3 FDS explained. These could be associated with manufacturing systems but are more often to do with the procurement and sale of goods and services, and the management of income and expenditure. However, in a service business, ERP has to be customer facing, even if not directly. Think of buying tickets for flights, or booking home visits from your utility provider or grocer, Mr Richardson stated. The end user at home or in their office may not be interacting directly with a service provider s ERP system but their customer data, the goods they re selecting, the billing and so on will all be processed through that core business system. Even in more traditional manufacturing businesses, it is still important to consider how manufacturers have developed the applications that allow customers to configure cars, PCs, clothing and so on. This enables companies to present their offer to the customer more directly, Mr Richardson maintains. 2

5 III. A LACK OF CUSTOMER VISION ERP systems are identified as critical by many businesses but their use as part of the customer experience is still very limited. Indeed, according to Epicor, 26 per cent state that the single most critical factor driving new purchases of the solution is how value-added services are delivered and supported, including custom repackaging and labelling, logistics, repair and overhaul and environmentally compliant recycling. It seems that the main barrier to placing ERP in a more customer-facing role is a lack of back-office/front-office integration. Consequently, the extent to which the solution is able to drive successful consumer experiences is lowered. In the modern business environment, it is important that sales and customer support teams are linked with backoffice and finance departments to ensure cohesion, productivity and an aligned business strategy. This in turn improves profitability and helps retain customers. While front-office applications have historically been developed around the idea of cross-organisational collaboration, back-office applications, by contrast, have been insular in nature, with the finance department slow to open up its data and applications to other parts of the organisation, Sage explained. This has led to isolated departments, unnecessary administration and inefficiencies, verbal sign-off requirements and process duplication. So why has there historically been a very weak link between front and back office? According to Sage, it s all down to the use of different application types to manage customer information. Front-office workers generally use customer relationship management systems (CRM) to support activities like sales, marketing and customer service. Conversely, back-office departments rely on ERP to deal with transactional, reporting and compliance activities. 3

6 IV. A BROADER ERP EXPERIENCE To get the most out of an ERP solution - and indeed a business - it s important to take a broad approach. Using ERP data about historic purchases or associated products helps customers makes quicker choices, or more relevant choices. They also help the business itself generate far greater upsell and cross-sell opportunity, Mr Richards explained. By taking a holistic view, a more seamless transition can be created between front and back-office processes. However, this will rely on data consistency between departments, complete customer visibility and straight-through processes - three elements supported by ERP. Businesses are beginning to recognise the need for more customer-facing solutions. Epicor claims 35.9 per cent of companies will prioritise investments focused on adapting IT systems to react to consumers and improve their level of service. Thirty-five per cent also acknowledge that ERP is a vital platform for customer experience and is capable of making the connection between front and back-offices. Indeed, ERP is already been used is a customer facing way throughout the business environment. MANAGING CUSTOMER SERVICE PORTALS While customer service has traditionally used CRM systems, when it comes to managing customer service portals, ERP can play a vital role. Integrating the software with this front-office service, businesses can support customers when placing orders, viewing stock, managing accounts, tracking orders, raising issues and updating information online. This means consumers can have round-theclock access to the services they need and greater control over their purchases. Customer service portals can also be deployed successfully in B2B. A specific example is of deploying customer portals so businesses can interact directly with other ERP systems to more efficiently replenish stock or source well priced goods at short notice, Mr Richardson said. B2B trading networks like this are critical to businesses like Walmart, being able to respond to near instant changes in their customers circumstances, as evidenced by the data they collect at their tills. SUPPORTING E-COMMERCE Linked to the above function, ERP can also help to streamline the e-commerce experience. By integrating the software with online storefronts, enterprises can simplify inventory management, order fulfillment, customer relations, accounting, item information and product pricing. Panama Consulting explained that by deploying and integrating e-commerce and ERP systems, businesses can enjoy familiarity with a single system for managing all data, while simply reporting on information across systems. Integration costs and problems can be reduced and/or eliminated too. SUPPLIER MANAGEMENT Visibility is the buzzword for supply chains at the moment and is crucial throughout the entire process. ERP systems can give the level of oversight needed to ensure processes are running smoothly. Panorama Consulting, a consulting firm specialising in ERP, explained that with ERP, end-users are able to have permission-based visibility over material need and usage, allowing them to optimise inventory levels, purchasing and production. Automated purchasing, the ability to track vendor 4

7 performance, and insight into what is being spent and where is also crucial. CENTRAL PROCUREMENT Procurement is also made easier with ERP. In particular, it supports group buying (collaborative procurement) for localised businesses. This is when, for example, head office owns an ERP system, but regional offices can procure via the central software. Collaborative procurement is known to create significant cost savings, while the visibility of ERP makes it easier for businesses to track incomings and outgoings at regional sites. Businesses like PSA Peugeot Citroen are already looking to capitalise on the benefits of joint purchasing vehicles. Indeed, the car manufacturer believed that by entering into a collaborative procurement deal with competitor General Motors it would be able to secure 60 million ( 52.3 million) in savings by the end of MOBILITY ERP s front-office benefits don t just start and end with the customer. In fact, the IT system is capable of supporting mobile working, enabling field-based employees access to information at their fingertips. This is becoming increasingly important in the global business environment. Research from Deloitte showed that businesses now need to reconsider how they view mobility and what it means for employees to be mobile. However,. Part of the problem is access to technology and the threat to confidential information. Sixty-three per cent of respondents to Deloitte s study said organisational security policies currently restrict their choice and use of mobile technology. Of the large organisations that do support mobile working, 82 per cent of have not invested in corporate apps. With Generation Y now in the workforce, this could cause problems further down the line. Indeed, 61 per cent want to work in an organisation where they can use the latest technology. To improve productivity and growth, it will be important to give field-workers easy access to management data and dashboards through ERP in the future. DATA INTEGRATION AND CREDIT CARD PROCESSING ERP systems can improve commercial card payments, integrating vital back-office and front-office data and setting up alerts to ensure money is taken on time. By properly optimising the automation capabilities of ERP payments, it is possible to improve front-office payment information and employee convenience. According to Deloitte, taking advantage of new payment systems can also drive bottom line savings of up to seven per cent, by improving compliance and maverick spend capture, increasing working capital, capturing rebates and increasing process efficiency by up to 4.4 per cent. Mr Richardson added: ERP can be used to improve data integration by being well managed so it is a trusted and proven repository of a customer s master data. This will include customer details, the product list, historic sales and purchase data and so on. Many businesses will still use a data warehouse or master data repository to match this data with our sources, so a single view of the business and its performance can be presented at any point. 5

8 ALERT AND MONITORING An ERP system will also ensure a business can receive and understand inbound customer communications. Using the software, this can then be routed through the business effectively, ensuring the consumer gets the outcome desired. What s more, an ERP system is capable of generating and distributing reports, including forecasts and activity information. Delivery of these documents can be scheduled or realtime trigger-based and will be sent via , fax, FTP or web browser. This improves information distribution throughout a business, ensuring employees have the data they need to take action and enhance processes. REPORTING ON DATA YOU DON T OWN Thanks to social media, there is now a mass of data in the public arena about businesses and products that is not owned by the company in question. This means firms have no control over what information is being read about them - a fact that can significantly impact upon business performance and customer perception. Firms need to have some way of managing, monitoring and responding to this data. It can be tempting to think this responsibility should fall to marketing. However, ERP can be used to father customer insight gained via social media and use it strategically. There are opportunities for two-way dialogues too and 53 per cent of b2b buyers following social discussions about vendors they are considering. What s more 67 per cent of the typical b2b buyer s journey is now done digitally, meaning managing the data they come into contact with is crucial. V. TOWARDS A BETTER CUSTOMER EXPERIENCE By strategically broadening the boundaries of ERP and viewing the solution as more than just an internal tool it is possible to extract more value from the software, while improving customer relationships and strengthening bottom lines. While there may be an historical tendency to consider the solution as a back-office tool, failure to place ERP in a customer-facing position could significantly damage customer experiences, causing a disconnect between front and back office functions. This results in information silos and inefficiencies. Consequently, without a double vision of ERP, businesses are in danger of not retaining or acquiring customers, Mr Richardson explained. However, viewing ERP from a customer perspective will require a culture change for many businesses. Increasing collaboration between departments and streamlining IT systems must be the priority, which requires process changes across an organisation. Nevertheless, firms are beginning to explore the scope of ERP and customer service portals and e-commerce are just a few areas where progress can clearly be seen. However, there is more that can be done to ensure firms can harness the customer benefits of ERP. With the software constantly evolving, it is likely current applications are just the tip of the iceberg. Deloitte explained: The underlying drivetrain of ERP had remained constant throughout its past evolution [but] this time, though, that drivetrain is being changed, with torque-rich updates at the infrastructure, data, and application layers. Consequently, firms can t brush off customer-facing ERP demands as a passing trend. Pressure will only intensify for a synced front and back office as technology advances. Failing to seize the opportunities made possible through ERP could leave some businesses unable to deliver the experience expected by modern consumers. ALERT AND MONITORING An ERP system will also ensure a business can receive and understand inbound customer communications. Using the software, this can then be routed through the business effectively, ensuring the consumer gets the outcome desired. What s more, an ERP system is capable of generating and distributing reports, including forecasts and activity information. Delivery of these documents can be scheduled or realtime trigger-based and will be sent via , fax, FTP or web browser. This improves information distribution throughout a business, ensuring employees have the data they need to take action and enhance processes. REPORTING ON DATA YOU DON T OWN Thanks to social media, there is now a mass of data in the public arena about businesses and products that is not owned by the company in question. This means firms have no control over what information is being read about them - a fact that can significantly impact upon business performance and customer perception. Firms need to have some way of managing, monitoring and responding to this data. It can be tempting to think this responsibility should fall to marketing. However, ERP can be used to father customer insight gained via social media and use it strategically. There are opportunities for two-way dialogues too and 53 per cent of b2b buyers following social discussions about vendors they are considering. What s more 67 per cent of the typical b2b buyer s journey is now done digitally, meaning managing the data they come into contact with is crucial. 6

9 V. TOWARDS A BETTER CUSTOMER EXPERIENCE By strategically broadening the boundaries of ERP and viewing the solution as more than just an internal tool it is possible to extract more value from the software, while improving customer relationships and strengthening bottom lines. While there may be an historical tendency to consider the solution as a back-office tool, failure to place ERP in a customer-facing position could significantly damage customer experiences, causing a disconnect between front and back office functions. This results in information silos and inefficiencies. Consequently, without a double vision of ERP, businesses are in danger of not retaining or acquiring customers, Mr Richardson explained. However, viewing ERP from a customer perspective will require a culture change for many businesses. Increasing collaboration between departments and streamlining IT systems must be the priority, which requires process changes across an organisation. the infrastructure, data, and application layers. Consequently, firms can t brush off customer-facing ERP demands as a passing trend. Pressure will only intensify for a synced front and back office as technology advances. Failing to seize the opportunities made possible through ERP could leave some businesses unable to deliver the experience expected by modern consumers. Nevertheless, firms are beginning to explore the scope of ERP and customer service portals and e-commerce are just a few areas where progress can clearly be seen. However, there is more that can be done to ensure firms can harness the customer benefits of ERP. With the software constantly evolving, it is likely current applications are just the tip of the iceberg. Deloitte explained: The underlying drivetrain of ERP had remained constant throughout its past evolution [but] this time, though, that drivetrain is being changed, with torque-rich updates at 7

10 ABOUT K3 FDS K3 FDS is a leading supplier of integrated business systems encompassing Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), Business Intelligence, hosted, Cloud and managed services. Part of the K3 Group, we support more than 3,000 customers in over 20 countries. We have UK offices in Hook, Cardiff, Manchester and Dublin. Web: k3fds.com Phone: info@k3fds.com