ERP: A Beast of Burden?

Christoph Grossbaier / October 25, 2017

At what point does the burden of managing an ERP system outweigh its ability to drive innovation and streamline operations? In most organizations the complexity of an ERP landscape grows over time, and while these systems might carry a critical and heavy load, the effort it takes to keep them running โ€“ at ever-diminishing speeds โ€“ frequently surpasses their output.

Weโ€™re at a point in time where scores of startups are continuously looking to disrupt established industries because they have the luxury of building their business from the ground up with modern, agile technology. But traditional players in any market donโ€™t have that luxury. To stay on top and maintain the pace of innovation that got them there, they need to understand when and how to overhaul existing systems to make sure the benefits always outweigh the burden.

In an ideal situation, companies could rely on one vendor and one system to keep cost and complexity low, and output high. But thatโ€™s far from reality. In fact, 50 percent of companies surveyed by APQC use multiple ERP systems, and 17 percent use a single system with multiple versions of the application and different process and data models. This complexity takes a toll โ€“ 60 percent of respondents said a convoluted ERP environment hurts the business by making it hard to access high-quality data fast enough to effectively support decision making.

Why is this Happening & Whatโ€™s the Result?

There are many reasons why sprawling and complex ERP systems plague companies so frequently. For example, many times individual business requirements cannot be met with a current ERP system, so in these cases a company will have to add โ€œsatellite systemsโ€ to handle the acute needs of a specific business unit or department. In other instances, a merger or acquisition creates an environment where the combined organization inherits disparate systems that have to be connected. And sometimes, vendors will force a company to migrate to their new system as they discontinue support for older systems.

The complexity that ensues forces organizations to confront a number of challenges that breed inefficiency and stifle innovation. Maintaining such a system is one of the largest issues because it requires a staff thatโ€™s well-trained on multiple systems and has the institutional knowledge to keep highly-customized legacy systems up and running. And when constantly changing markets, regulatory demands and new technologies require additional interfaces to an ERP system, teams often find these requests to be technically or economically unfeasible. All of this ultimately has an impact on the cost and speed of business processes. In most cases, a complex landscape is directly related to higher process complexity that introduces manual interface steps between systems and slows everything down.

When issues like these start to occur regularly, itโ€™s easy to see. But whatโ€™s not so easy is doing something about it. CIOs and IT leaders know that ERP consolidation is the only path forward, but tackling this daunting task keeps them up at night. They wonder how to convince business leaders of the value of consolidation, how to ensure a smooth migration and limit project risk, and how to ensure sustainable benefits and a high adoption of the new system.

Thereโ€™s good news. Process Mining can address these concerns and help to guide companies through each phase of an ERP consolidation project. Hereโ€™s how:

Step 1: Pre-consolidation
In preparing for ERP consolidation, the first step is to understand the processes that the system supports. By using the digital footprint of existing IT systems, Process Mining can provide a top-down view of every single process and how they vary from system to system. But more importantly, it can identify best practices across systems to provide a head start in designing a new system and ensure itโ€™s powering the most efficient processes from day one.

Step 2: Development of One ERP Template
By identifying best practices in the pre-consolidation phase, Process Mining can simplify the steps for defining a new template. It can be used to perform fit gap analysis where the new template is tested on a current implementation. Then, the template can be adjusted for a One ERP deployment โ€“ or change management for an existing system can be prioritized โ€“ based on fit-gap insights.

Step 3: Post-Consolidation
Once the project is in full-swing and a new system is rolled-out, monitoring adoption rates is critical to ensuring success and business value. Process Mining can immediately show how process are occurring and shine a light where they deviate from the as-desired and as-designed state. This gives an IT team and business leaders the ability to immediately react to unanticipated process loops, incorrect user handoffs or any other issues that might be commonly occurring. And as a company grows into its new system, Process Mining can be used to continuously analyze and optimize a system, and ensure that the benefits from such a massive project are sustained over time.

Real World Success
Multiple global organizations have already used Celonis Process Mining to guide their ERP consolidation projects to success. One large and very diverse retailer undertook a project to consolidate 26 ERP installations into one SAP system. Using Celonis to obtain full transparency into its purchase-to-pay and order-to-cash processes enabled the company to define new templates, simulate their usage, and achieve a faster rollout with less risks. An oil and gas company used Celonis to address low adoption rates after the rollout of a new system across many different regional organizations. By continuously monitoring and comparing the way processes were occurring with the way they were designed, the company identified the need for further training and was able to quickly and significantly increase adoption. Another organization used Celonis to reduce, separate and consolidate multiple ERP systems following a global merger. Process Mining enabled the organization to better understand the differences in processes prior technical migration.

In the end, Process Mining helped these companies complete their massive consolidation projects faster and with less risk, while maximizing the return on investment of internal and external resources, and ensuring that the benefits are sustained for the long term. With Process Mining, they can rest assured that a Beast of Burden is something their
ERP will never, never, never, never, never, never, never be.

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