One question I often face is that we implemented an ERP a decade ago and that time, we reviewed and redesigned our business processes. All our business processes are automated, operational and performing well. Do we really need to tinker with what is working fine? What benefits would we get by reviewing our business processes periodically? Based on my personal experience with my clients, I would list the following reasons,
- Work-arounds and beating the system – The ERPs are good for management controls, but that also makes ERP systems painful to work with as they demand discipline and rigour. So, most of the staff, over a period of time, develops short cuts and work-arounds. Some of the workarounds are
- Sharing of passwords – it is not uncommon to see people sharing their user-IDs and passwords and hence defeat controls. Supervisor is away, an urgent payment is to be approved in the electronic form, the supervisor shares the password.
- Working outside of system – Working with ERPs may need configuration or setups thus giving an incentive to employees to use tools or other softwares outside of ERP e.g. using excel to keep detailed information. I remember a case, where the organization was using SAP for more than a decade. In one of its joint ventures, there was only one accountant. The person maintained detailed books of different divisions in excel with only summary balances in SAP. This meant that he would go back to excel to draw up even basic (that could be easily retrieved from SAP) reports. Most of his time was spent on double checking his reports for errors. Unable to maintain work-life balance, he resigned within a year.
- Changing processes to bypass systems – an example was where the organization had developed a utility for vendors to feed in their details and attach relevant documents. Often it would be bypassed, by uploading the information directly in ERP without attached documentation by a company employee.
- Gaps in policies or violation of policy – Often, managers would work with each other in writing unauthorised transactions in the system. For example, in a company, where there is no provision for accrual of customer revenues, the finance and accounts team working in tandem with business manager would accrue income just to show a better performance. For example, where customer’s approval of invoice is delayed but the manager is certain of approval.
- Adoption of newer technologies – The technology scene is changing very fast especially with most countries promoting start-ups. These start-ups are creating new and disruptive technological solutions. In a scenario like this it becomes essential for companies to revisit technological solutions implemented by them including ERP and the utilities built around it. The companies may want to revisit it to ensure that they are not laggards in updating technology which would also necessitate a review of business processes. In fact, on an average 35-40% of the companies implementing ERPs do it to upgrade their ERP.
- Aligning systems with strategy – Increasing size, complexity and competition in business- The market places are becoming very competitive. Companies are experimenting and trying new structures and new approaches in market places, manufacturing, recruitment etc. It is important that the companies revisit both their policies and technological solutions to ensure that they stay ahead of their rivals or have a competitive edge over them. It is essential in a scenario like that the companies revisit their business processes to align them with business strategy and business goals.
- Sub-optimal use of ERP – Most companies plan for training on ERPs at the time of implementation. It is assumed that all the newcomers would be trained by the existing staff. However, most of the time it is not feasible and over a period of time, transitions are not smooth. The newcomers, swamped with work, do not find time to learn the system and hence work outside of system. This leads to suboptimal use of technology.
Today’s markets are very strong. Both the information dissemination and absorption are very fast. Most companies are forced to change their business models every 3-5 years to remain relevant in the market. The changed business goals, strategies and business structures necessitate Business Process Re-engineering every few years. The companies that succeed would be the ones that would be able to develop adaptive systems. Till the time, that happens, companies should get an external consultant to look at their systems and their alignment with strategy every 3-5 years.