Editions of this series: MarketTrends@ERP (1) Market trends and expectations from users - 2
Blog number (2) Market trends and optimization of processes would like to concentrate on the impact of business processes at companies and two main trends derived from there – end-to-end processes and shared services. Read what we have gathered looking around and feel free to provide your thoughts.
Business process impact
Business processes impact business performance, so far so clear. But how can companies differentiate through business processes from competition and by this create unique business value?
Consistently, leaders across all industry sectors are characterized by their continuous process innovation and an ability to remove inefficiencies from core business processes. It is much about winning enterprises know how to orchestrate business processes and achieving internal transparency - to meet customer needs and collaborate more effectively with all stakeholders, internally as well as externally.
In a fast-changing world where business process efficiency and effectiveness are tightly correlated to business success, companies need a core enterprise resource planning (ERP) foundation that goes beyond simple support for generic transactions. Companies are looking for robust functionality specific to the industry specific challenges, while supporting the flexibility and scalability required to respond to rapid change as business grows. At the same time, it must be intuitive enough for end users to master and powerful enough to leverage enterprise information so that all business users can make informed decisions that are aligned with corporate strategy.
Business is most effective when it remains flexible towards enabling transformation opportunities, and when it can serve customers and markets in the way they prefer, without sacrificing process integrity and business control. Enabling end-to-end processes that cut across usual system and organizational boundaries as well as operating for example from a central, shared services-enabled platform helps to project the value of world-class administrative, analytic, and operational systems into all parts of an organization.
Companies are facing a tough business environment in which the rate of change is accelerating and stakeholder involvement gets complex. In this situation, it is essential that businesses drive both competitive advantage and efficiencies. Means companies will need to adapt faster to create competitive advantage through increased flexibility and to drive efficiencies through integrated processes.
The most powerful end-to-end industry business processes are those that are highly relevant for a selected group of “Line of business” (LOB) – being the key influencers and accountable for business processes and respective software support.
End-to-end processes are important to help companies to achieve strategic business objectives and they span the boundaries of traditional applications as well as they run across organizational boundaries. We do see the most forward looking companies emphasizing Business Processes rather than software applications for silos.
From application centric to value centric
It was important to see that the selection of the right industry processes positions companies to exploit a clear market advantage. Diverse point solutions that may be competitive in markets such as CRM, HR, and PLM cannot provide seamless integration across multiple applications to execute end-to- end industry processes. Extended end-to-end scenario spanning multiple line of business, which historically still are typical best-of-breed application silos, is the primary objective this companies are striving for to achieve optimization and differentiation.
Business Process Outsourcing helps organizations remain focused on their key objectives, and enables them to preserve important resources for the maximization of core strengths and competencies. By leveraging the services of organizations that are optimized and dedicated to excellence in specific areas of key business processes, the balance of corporate resources can be brought to bear on creating real business value.
Formerly mainly driven by cost savings, centralized service delivery is now seen by many executives as an effective enabler of professionalism and management focus to support global expansion, market intimacy and compliance. Today, the forces of globalization and dependence on business networks challenge executives to consider different ways to serve customers, attract talent, run operations and drive innovation. Best-in-class general & administrative (G&A) processes, delivered also by shared service centers or specialized BPO providers, provide business leaders with the ability to focus on their core business, and their customers. These also serve as powerful examples of how an ERP system can contribute decisively in achieving business excellence.
Organizations are turning to shared services in a drive for consistency, improved quality, consolidation, technology enablement, labor cost savings and business value. The move to shared services also supports the increasingly popular concept that processes can operate more effectively when it is organized and managed according to its two primary responsibilities – transactional and strategic.
Despite this, some organizations have failed to realize the promised cost and service benefits of this approach. In such cases, processes have not been simplified, the technology has not worked or has not been implemented properly, and the people in charge have not been able to adopt the skills necessary to meet the new requirements of the organization.
An ERP-system needs to provide a solid transactional backbone for shared services when deployed on a single instance. In addition, alternative deployments are a good option for offering shared services for multiple, nonintegrated systems.
Examples today mostly span from HR to Finance, enabling for example automation of inter-company processing and invoice management, improvements in the provisioning of financial self-services through access to finance data by non-finance users and tight integration of ERP Financials to the interaction center supported by an Customer Relationship Management application. The combination of call-center functionality helps customers, vendors, and internal stakeholders request information and conduct activities, and support the shared service center in efforts to become more efficient.
Shared Services turn to business process automation
End-to-end processes and shared services coupled with innovative deployment options (see Enhancement packages concept) can create unique and exceptional value for companies of all sizes. An ERP system needs to support this ongoing transformation, enabling companies to connect business with partners, suppliers, and customers more effectively.
What we hear so far as feedback from the market, there are 3 areas the discussion goes along with: cost savings by standardizing core processes; achieve risk reduction and compliance by ensuring compliance assessment build in; quality improvements through harmonized data across the company and business insights. The most successful companies consider these critical areas and also derive positive changes for their business, needless to say that this deserves guidance to all internal and external stakeholders and transparency build in.
Thanks to the contributors and let me know your thoughts and watch out for the next blog MarketTrends@ERP (3) Market trends and business insights.