Identifying business value for innovation
By Song Ji-taek
When making decisions to adopt Enterprise Resource Planning (ERP) and planning for implementation and upgrade, you need to take into consideration your budget and the subsequent impact on operations. I suggest five tips for efficient implementation and utilization of ERP solutions based on my 18 years of experience of ERP consulting at Accenture’s Seoul office. These tips may not be suitable for all companies, but surely will give a guideline to put you in the right direction.
First, identify the business value. In general, the starting line of innovation is based on identifying values. The way to identify extra values differs from company to company. Some companies need to reflect well-known industry best practices, while others may analyze global leading companies’ best practices or completely create a new practice on their own. Creating a new practice requires the participants’ creative approach.
Second, inject innovation for positive outcomes. The purpose of ERP implementation and its expected outcome should be specific. It is hard to quantify the benefits of ERP with figures, such as return on investment (ROI), but the intended purposes of ERP implementation should be set up so as to determine the direction of process and system innovation.
For instance, a domestic automotive supplier undertook ERP implementation with the clear purpose of global supply planning and execution such as transparent monitoring of domestic and overseas stock. From this point of view, they substituted the existing advanced planning and scheduling system with an Excel-based scheduling tool to boost work efficiency for end-users.
Thirdly, use industrial standards for quality outcomes. In other words, don’t spend too much effort, time and money in reinventing the wheel. Proactive use of industrial references is essential for successful ERP implementation. Of course, higher-level companies have fewer references from the same type of business. However, there are various innovative initiatives leveraged by peer groups. Best of all, these approaches have less risk and better ROI.
Fourth, understand ERP and the evolution of the platform. It is important to know the product inside out to realize the full value of ERP solutions. It does not mean that you have to implement ERP with a solution vendor. New technology is not always suitable for every company. Therefore, it is not the vendor who is most knowledgeable on how to utilize the technology.
As mentioned before, a key success factor for ERP implementation is identifying business value. Therefore, it is important to understand the functions of ERP solutions and information technology, as well as “change management,” which make these functions applicable to the relevant company.
Finally, build an effective team with the right people. To ensure success in your project, it is crucial not only to select a good consulting firm but also to form an internal task force that leads ERP implementation and enhancement in the companies.
It is very important that all team members have a deep knowledge of the process and innovative minds. In addition, a project manager must have a clear vision of the project. If there is a lack of teamwork within the internal workforce, it is really difficult to achieve an intended outcome no matter how much help they get from external consultants.
Information technology can increase the performance of company through a wide variety channels. I am sure that companies can find the best solutions if they strive to find ways to innovate organizations and maximize business performance.
Song Ji-taek is is Accenture Korea Technology Growth Platform ERP Lead.