Enterprise resource planning (ERP) is nothing new - it has been around long enough for the basics to have been firmly established. Companies that have implemented such systems are reaping the benefits. However, there remains a need to optimise deployments of ERP systems - such as the popular SAP R/3 system - and in so doing, move beyond the basics to realise the true potential of this powerful and deep-reaching technology.
This is according to Steven Freemantle, business maturity advisor at Business Connexion`s Combined Design Engineers (CDE) Competency. He contends that businesses have to mature around the application of SAP systems to gain optimal business value.
"Getting past the `implementation phase` mentality is important in gaining the true benefit from SAP. With the technical implementation successfully bedded down, it is up to users and managers to exploit the technology`s potential to create business value," he says.
The challenge within a SAP environment is to give users a deeper understanding of the power of integrating the system and demonstrate how R/3 reports can provide an accurate and appropriate view of business performance. "With the technology issues resolved, achieving business value rests in the people using it," he states.
The people using SAP are often unaware of the repercussions of their actions in one section of the business, on other processes both up and down the information exchange chain. As a highly integrated solution, data input in, for example, the order system sets off a sequence of events that can ultimately have a significant impact on business efficiency.
All data within the system is entered by people, and as such, Freemantle says this seemingly innocuous concept is a critical point at which problems can occur. "The entry of accurate data has a direct effect on trust in the system. If managers cannot trust the data, they are unlikely to act on it and will tend to use their gut-instincts or external sources for decision making," he explains.
A simple illustration demonstrates the point. An order is entered into the system, but the customer cancels. However, if that cancellation is not entered into the system, employees in production will notice an excess of products building up in the warehouse. They are likely to lose faith in the instructions coming down the line from sales and rely on their feel of stock levels instead of the reports from the SAP system.
"The point is that the power of integration can provide all contributors in the supply chain with a realistic view of how effectively demand is meeting supply. To be entirely effective, the truth must reside in the system - and SAP users must endorse that reality," explains Freemantle.
Business Connexion has developed an effective programme for SAP optimisation, called ongoing value optimisation (OVO). The programme is designed to address essential business value drivers, including decreasing operational costs and stock levels, increasing revenue and customer service, and introducing improved optimisation and flexibility.
Freemantle stresses that the process of OVO is driven by changing the way that people think and behave. "This process is about helping SAP users to change the way they are doing things to get more value from the system. They should see the data with a deeper understanding of how every piece of information impacts the business both up and downstream of their activity. And when trust in the data has been established, management can use the analysis capabilities in the reports produced with confidence.
"Management should continually look at the data that resides in the system. Data does not miraculously appear; someone puts it in and must be held accountable for it," he continues.
Freemantle says this is such a critical factor to achieving value from technology that he believes data entry principles should be used to manage individual performance against key performance indicators. "Relying on the system means relying on the people that use it," he states.
The investment in a multi-million rand ERP system will only bear dividends when people are behaving in a way that supports real-time, accurate and reliable data capture and processing. As such, Freemantle says optimising SAP is a matter of changing the focus from the technology - which held centre-stage during implementation - to the people. "It is a process of education - creating the understanding of what happens in the SAP system and how each action impacts the system across the extended supply chain. It is a practical rather than theoretical exercise. Working with real and relevant data results in measurable behaviour change. With this approach, we have successfully helped many clients to take the step towards improved business value," he concludes.
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