When does digital transformation require updating a current ERP system or acquiring an ERP system for the first time? What critical needs should drive investment decisions?

When does digital transformation require updating a current ERP system or acquiring an ERP system for the first time? What critical needs should drive investment decisions?

 

The fundamental needs of a business change as a company grows, but this is not always obvious to the company. For small businesses, managing via spreadsheet and basic accounting becomes inadequate and harder to sustain as the organization expands and becomes more complex. Midsize to large companies with a traditional ERP system will face similar challenges. As businesses expand operations and locations, a growing number of employees will need transparency, visibility, and real-time information on a range of performance dimensions.

Approaches that may have worked in the past are no longer adequate as more enterprisewide management tools are needed. There is a need for one “truth point” and supervision beyond spreadsheets and multiple disparate functional systems. A key indicator of a firm having outgrown current technology is when it becomes difficult to connect data between functions, making it a challenge to assemble a comprehensive view of business operations. This inability and the related frustration are clear signals to management that processes lack effective coordination. Islands of line-of-business functionality need to be connected (HR, finance, procurement, supply chain, etc.). Companies outgrow simple solutions as problem-solving becomes more complex, and as a result, they are more reactive

to internal performance or external customer support issues rather than being proactive in anticipating and addressing potential problems. This is a clear indication that effective resources are needed. Unfortunately, throwing additional staff at a problem may only complicate things. But moving to an ERP system will help a business identify the issues and manage the changes across the entire business, enabling the company to shift from a reactive to a proactive business cadence that manages outcomes rather than problems.

Business transactions are critical to a company’s success, of course, and firms actively participating in the digital economy can appreciate that an ERP system is more than a system of record. Today’s organizations need frictionless transactions, instantaneous ordering capabilities, and higher levels of engagement while focusing externally on meeting the customer’s requirements in real time, anywhere and anytime. Utilizing a modern ERP system moves a business beyond internal-facing processes to a view that includes suppliers and customers.

The goal, in keeping with digital transformation, is to become a proactive, insightful business that makes decisions in real time, positively impacting profitability and future revenue. ERP software provides comprehensive capabilities that support that goal. It allows a growing company to integrate and manage key performance metrics for maximum effectiveness. Businesses of all sizes need an ERP system that grows with them, and the right ERP system will do that, independent of entry point and company life-cycle position.

 

Source : IDC ANALYST CONNECTION
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