ERP or BPM? How to get the best of both
While the ultimate goal of business software is to increase productivity and profits, many organisations are not sure how to choose the right mix-and-match of solutions to achieve their goals in a cost-effective, timely manner.
This is particularly true for ‘big ticket’ software investments like enterprise resource planning (ERP) or business process management (BPM) software in terms of both price and complexity.
However, although their goals might be similar, ERP and BPM solutions are not interchangeable. The fact that many organisations believe they are is based on a widespread misunderstanding of what each solution is designed to do, says Denis Bensch, CIO, FlowCentric Technologies.
So, for example, while the need to improve business processes is well recognised – a recent BPTrends Report noted that 93% of companies are involved in multiple efforts to improve their processes – the number using either BPM or ERP software to achieve this is split fairly evenly.
“Rather than look at BPM and ERP in terms of an either-or scenario, BPM should rather be regarded as an extension of ERP. We recommend managing the process in a BPMS and then integrating with the ERP to create the transaction. This plays to both system’s strengths,” Bensch says.
He explains that at their core, ERP solutions are about a central database that is accessed and used by all functional departments within the organisation – accounts, distribution, sales, inventory and so on. The central database provides a single source of truth across the entire organisation, with all employees and all departments working with the same data at the same time.
“ERP delivers convenience and improved efficiency. But essentially, ERP solutions are transaction-based: something has either been ordered, paid for, deducted or it has not,” Bensch adds.
However, confusion may arise because of the way ERP solutions are structured: a suite of applications or modules that deal with the major business functions. Thus, most ERP solutions incorporate an embedded workflow component which many businesses attempt to use as if it were a BPM solution.
“This will inevitably lead to frustration as an ERP workflow module is not designed to do what a fully-fledged BPM solution does,” Bensch says. “Its functionality is limited in that it is built to automate the tasks of the ERP system rather than automate general processes across disparate systems. Nor are they built to integrate to systems outside the system they are part of.
“BPM is about the process; ERP about the transactions that happen along the way. BPM is more about the authorisation of buying and paying for something than it is about the actual ledger entry. It works to understand, manage, improve and automate business processes,” he adds.
What if budgets are constrained? Where should a company begin in order to enhance productivity and profits?
According to Bensch, a business could opt for an ERP solution if it has very few formalised processes, or alternatively has established processes that are well-aligned with the ERP’s offering. A vanilla ERP installation is fairly simple, and shouldn’t require extensive, costly customisation before it could deliver value.
However, a company with well-established unique processes could require extensive customisations to the ERP solution. In this case, opting for a BPM solution would be better as mature BPM platforms are built to facilitate the rapid automation of custom business processes. They can usually be up and running much faster than ERP customisations.
“The problem with customisation isn’t a once-off either,” he warns. “Even if the initial installation and customisations go well, every ERP upgrade thereafter needs to be extensively tested before roll-out. It is impossible for the ERP development team to know of, or compensate for, all the customisations being made by implementation teams in the field. BPM solutions, on the other hand, are built to be customised and updated according to a business’s changing requirements.”
Customisation and integration therefore are the two key factors to bear in mind regardless of whether an organisation is planning to invest in either solution, or both.
This is particularly important when choosing an ERP solution; its integration capabilities must be both well established and well documented. If the ERP system doesn’t properly support integration, any attempts to link it to a BPM, or any other software, may become an expensive exercise in futility.
If planning to deploy both ERP and BPM solutions, Bensch recommends going with the ERP system first as future integrations will depend on that. However, business process solutions which are not dependent on the ERP could be implemented at the same time or even before the ERP installation.
“The key is to keep the ERP solution as standard as possible, with customisations confined to the BPM system as far as feasible,” he says.
Finally, businesses would do well to ensure that both solutions are either onsite or in the cloud, rather than have a mixture of both.
“Having both solutions hosted on the same infrastructure makes installation and integration far easier,” Bensch concludes.