How to Maximize the Effectiveness of Your ERP

Enterprise resource planning (ERP) tools are the central nervous system of your business. Our expert explains how to make sure yours are functioning at their peak.

Written by Kristin Naragon
Published on Mar. 08, 2023
How to Maximize the Effectiveness of Your ERP
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Enterprise resource planning (ERP) tools are often colloquially referred to as the central nervous system of your tech stack, conjuring up images of product information pumping through a wide-reaching network of best-in-class tools all expertly connected through the nerves of the ERP solution. Organizations often turn towards implementing an ERP tool with the hopes of quickly and easily connecting all their existing technology through this nervous system and unlocking immediate growth benefits from this enhanced connectivity. 

Although this is true in theory, it is mostly just a faint mirage for many organizations. ERP implementations are notoriously strenuous and fickle, even for massive corporations. Take a look at the infamous Revlon incident: A class action lawsuit was filed against the American multi-million dollar cosmetics and skincare company in 2019, accusing Revlon of shipment fulfillment failure worth $64 million in lost sales due to a poorly planned ERP implementation. Within 24 hours of this news dropping, Revlon saw its stock price fall almost 7 percent and had to invest almost $54 million in customer service resources to mitigate the fallout from the failed fulfillments.

Nobody is safe from ERP implementation failure, which can have a ripple effect across an entire organization. The loss of sales, customers, and key stakeholders have financial consequences, plus a business faces increased costs from investing in additional training and expertise to fix the implementation issues, remedy supply chain disruptions, and repair brand reputation. 

Perhaps worse is the lost time; companies can spend years identifying and solving the causes of a failed ERP system in the hopes of getting it up to the level of functionality that they initially expected. 

A final but crucial problem is that a failed ERP implementation has a lasting effect on the experience you provide to your customers and severely limits your growth and scalability. If customers don’t receive the product they expected on time, or they don’t receive it at all, customers are likely to check out a competitor the next time they’re ready to buy. Internally, a failed ERP implementation not only means that your organization still doesn’t have the necessary technology in place for growth, but the problem could actively hinder your ability to enter new markets.

One more unfortunate truth is that, just like there is not one cure-all medicine for the body, no single completely foolproof way exists to ensure a successful ERP implementation. You can, however, look for certain characteristics in your ERP solution and follow some methodologies when preparing for an implementation that will set your organization up for your best shot at success.

3 Tips to Maximize Your ERP

  1. Employ a cloud-based ERP.
  2. Find a system that integrates with your ecosystem.
  3. Embrace personalization.

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1. Employ a Cloud-Based ERP

As the central nervous system, your entire tech stack can only be as modern and efficient as your ERP solution. An Accenture ERP Trends report found that 75 percent of U.K. businesses are using cloud ERP as a gateway to modernization. The reason is clear: Cloud-based technology offers the flexibility and scalability that most organizations need to create an ecosystem that relies less heavily on IT, allows employees to access only the resources they need, and easily accommodates new technology as the business grows. 

With ongoing shockwaves in the market spiraling from the pandemic, the cost of living crisis, and more, organizations are looking everywhere they can to get the most bang for their bucks. An ERP implementation is a significant expense no matter what, but cloud-based software is typically significantly cheaper than on-premises software and better supports remote and hybrid work options that have grown in popularity over the past few years. So, not only will a cloud-based ERP better future-proof your organization, but it’s also the most cost-efficient option.

 

2. Find a System That Integrates With Your Ecosystem

Arguably the most important features of an ERP solution are how well it integrates into your existing tech stack and how it can accommodate integrating new pieces of software after it’s been implemented. An ERP is an important aspect of your ecosystem, but it’s only one part of that ecosystem and needs to communicate seamlessly with other technology.

One of the most important technological relationships to consider is how an ERP will interact with your product information management (PIM) solution.  ERP solutions play an important role in product experience strategy for many companies because they have traditionally served as a point of origin for products and an initial collection point for basic product information.

Though generating SKUs within the ERP system remains the modus operandi for most companies, a recent shift has seen some businesses in industries like fast fashion and home furnishings challenge this approach. For these companies, time-to-market and customer and product experiences drive the product creation process. As such, brand managers and marketers originate products within their PIM system before passing it onto their back-office systems (ERP) instead of the other way around. 

Either way, the communication between your ERP and PIM needs to be seamless and updated in real time as they each house important product data and can play an equally important role in the ability to launch new products or enter new markets with agility and accuracy.

 

3. Embrace Personalization

With the rising popularity of composable commerce and best-in-class approaches, the days of one-size-fits-all software — especially ERPs — are in our rearview mirror. Why? A customizable ERP means you’ll be able to integrate it with any and all software that you already have with a less heavy reliance on your IT team. It also enables your organization to quickly and easily integrate the latest technological innovations, like artificial intelligence and virtual reality, into your ecosystem.

This type of customization is important not only in how your ERP interacts with your other technology but inside the tool itself as well. Advanced ERP solutions can create workflows, reduce errors, and automate hours’ worth of routine processes, freeing up your employees’ time to focus on more valuable work. Integrating advanced technologies like AI into ERP systems enables them to analyze your historical data and suggest personalized, effective ways of executing internal processes. 

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Make the Most of Your ERP

ERP implementation has the potential to revolutionize the way your organization functions and bring your technological ecosystem to life, but if executed poorly, it can have detrimental effects on every aspect of your business. Although there is no one perfect strategy to ensure a successful ERP implementation, you can increase your chances by prioritizing ERP systems that are highly customizable and cloud-based to give your organization the space to grow and scale over time, incorporating new software and innovative technology as you go. Now that’s a well-functioning central nervous system.

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