Enterprise Resource Planning (ERP) is an integrated software that simplifies day-to-day operations for businesses. These operations can include accounting, project management, risk management, supply chain operations, and more.
What does Digital Transformation Mean to Your Business?
As demonstrated above, ERP can prove to be a valuable step in your digital transformation. It can serve as a foundational element that you build future systems upon. It is important to understand the systems your business needs to adopt, in order to digitally transform and ultimately scale your business and turn your business into a success.
This article covers why an ERP system is a crucial part of digital transformation, and how to align ERP implementation with digital transformation strategy.
Digital Transformation Needs an ERP System
As ERP systems are designed to simplify daily tasks and make them more efficient, they provide countless benefits. Here are some of the reasons why adopting an ERP system is a good choice if you plan to move toward digital transformation:
As companies increasingly adopt digital systems and more of their data ends up in internet-hosted applications and servers – data protection becomes an indispensable step in the journey towards digital transformation. Furthermore, there are legislations across the world that mandate companies that have access to sensitive data – such as healthcare companies, to take steps to protect private customer information.
ERP solutions have built-in systems that provide added security and protect sensitive data from unauthorized access. With standardized security practices, risk management, and attack prevention, cybersecurity threats are efficiently reduced with ERP implementation.
Globalization in a business context refers to international integration. ERP is crucial for enterprises that aim to go beyond their local audience and compete in the global marketplace. This is because with ERP integrated systems such as Warehouse Management Software (WMS), which is a supply management application – businesses develop a competitive edge.
Nonetheless, it is also vital to choose ERP systems that combat the challenges that stand in the way of globalization – such as currency exchange, translation, multi-company transfer of inventory, and more.
ERPs track and collect vital information, which can be used to solve numerous problems and provide better experience to customers. ERP combines with analytical tools to enable businesses to develop models that solve problems such as how to deliver goods on time, how to properly schedule staff to prevent paying overtime, and how to operate efficiently without too little or excessive inventory.
In other words, ERPs can predict future trends based on present information such as global market, customer data, and performance indicators.
According to the Aberdeen Group, the need to communicate with team members located in different locations is the second most important reason why companies adopt ERP systems. ERP systems facilitate external and internal collaboration. ERP collaboration tools are especially significant if you want your business to develop a hybrid or a remote working model.
With cloud-based systems that enable digital file management, remote presentations, and easy data sharing – ERP is crucial for businesses moving towards digital transformation. As ERP allows for a centralized system that is accessible and shareable by all authorized members, it boosts collaboration and eliminates geographical barriers.
How to Align ERP Implementation with Digital Transformation Strategy
As discussed above, ERP can serve as a foundational element in your pathway towards digital transformation as it would create a single source of truth in your organization, enable easy communication, and facilitate scalability. While there is no magical formula to make your ERP implementation successful, there are ways to increase your chances of success:
- Have a Clear Strategy:
It is important to define your goals – delineate what you aim to achieve by implementing a new ERP system, and how the ERP will help you attain your strategic goals and objectives. Your digital transformation goals can be:
- Reducing costs
- Increasing revenue
- Boosting productivity
- Customer experience
- Competitive advantage
- Don’t Get Caught in an Analysis Paralysis:
Each hour you spend on overanalyzing what ERP software you should adopt, could also be spent on implementing it, which is far more effective. While it is vital to be smart and efficient while understanding what works for your business, it is also important not to lose track of time.
- Strong Implementation is Better than Strong Selection:
At the end of the day, you need to remember that it is your employees that will be making the best use of the ERP system. Therefore, training employees with the system is crucial to optimize it and achieve your goals.
- Quality Assurance and Risk Mitigation:
The best ERP implementation systems have quality assurance and risk mitigation plans in place. This can be done by working with third-party companies that can analyze the risks of the project, how it can be kept on track, and how those risks can be mitigated.
While ERPs can serve as a step towards your digital transformation journey, they also need to be adopted properly, with the help of the right team, to ensure success. It is vital to look at ERP implementation successes and failures and adopt risk mitigation strategies to understand what works best for your business. DEHA Vietnam presents its consultation service to help you design a digital transformation strategy that aligns with ERP implementation.