Getting your own back on ERP

ERP systems are expensive, no two ways about it, and by now your FD and shareholders are looking for a little return on that huge investment. Mark Lilje, MD of RangeGate South Africa, discusses ways to get a little payback, and get it now.

ERP systems are traditionally built around the financial components of the business and have left the operational aspect as an afterthought, hence the massive business process re-engineering projects of the mid-1990s.

What needs to take place before any return on investment can occur is integration with operations, as that will deliver current, accurate information at the coalface to the ERP system powering business decisions.

Although there are many information integrity solutions on the market, they can be almost as costly as the original ERP system. It is clear that the best place to start ensuring consistent, accurate, real-time information is at the point of collection, and doing this drastically reduces costs to the organisation.

Responding to this need, some ERP vendors are beginning to incorporate these edge solutions into their solution but as it is not their core business it does not receive much support and they can be tricky to integrate.

ERP vendors are also billing their solutions as all-encompassing, but it is nigh impossible to have a single solution of that size handle all of a company`s needs.

The benefit to users is that the attention ERP vendors have given to the integration of their solution with operations, particularly in logistics, warehouse and retail environments, is that vendors with a niche focus can truly add benefit to their systems and improve the return on their ERP investment.

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The niche focus vendors, on the other hand, add value by providing additional operationally focused business processes, allowing users to derive increased benefit from the ERP system and its promise of reduced costs, enhanced efficiency and accurate and real-time information, reduced shrinkage and proper reporting by connecting to an efficiency optimisation component.

The niche focus vendors have gained valuable experience in integration and other operational issues that the ERP vendors simply do not get involved in because it is not their core business. The two operating together form a chain in the complete value solution that users want and need.

A simple optimisation solution based on a wireless, mobile infrastructure in the warehouse or retail outlet will significantly enhance the accuracy of information, improve the speed of capture, make more efficient use of staff and improve the speed of doing business and improve customer service levels.

That results in extended benefits such as reduced stock levels, reduced shrinkage, better work performance tracking and identifying areas of growth for staff, all achieved through an efficiency solution that relies on an ERP back-end.

It is clear then that adding a solution of that type to an existing ERP implementation will improve ROI, as ERP depends on the quality of the information it feeds back to business in the form of reports. At an average of between R40 million and R60 million per ERP implementation in large companies, an integrated efficiency solution is a very small fraction of the cost and extracts a disproportionate amount of return.