Internal operations getting increasingly important year by year for every company. To stay competitive they have to run fast, efficient, integrated and flexible processes. These processes usually run by expensive ERP systems which doesn't end at "the borders" of the company but involve customers, partners and often authorities too. It's essential that you have an ERP system which is the best possible.
What is the best ERP?
The ERP has one single objective to support the companies strategy through its operations. According to Peter Drucker companies have to choose between three strategic directions: customer focus, operational excellence or product. One of them must got priority.
ERP supports internal process so it must be about operational excellence even when the company is focused e.g. on customers. In that case there will be a contradiction between ERP and business interest. How could be an ERP system be effective if e.g. the company tailors product pricing and service models in an extreme way to serve it's customer the best? Product focused companies have less problems with the ERP because product development process is largely independent of operations.(However products has an increasing service part).
Operational Excellence
If the strategic direction is operational excellence then the Back Office processes and the ERP system supporting it can be managed like a factory. You can use classic production organization, measurement and improvement methods (e.g. Six Sigma). To have the best ERP the job is to set up the right KPIs and working permanently on improving them. Care must be taken that the processes are not only fast but also stable and use resources the most effective way. Lean Six Sigma can help in that.
Typical KPIs can be:
- Processing time for customer requests (e.g. a new order)
- Reporting; time after all data present to the report be ready
- Work in Progress; task just being processed
- Operational cost, including full worktime spent on operations.
Naturally to define the right KPIs a careful analysis is needed. Common sense tells me that these must be identical in similar companies but I have never heard about any study about this.
Customer Intimacy
If the strategy focuses about customer intimacy a more refined approach is needed. While finance and reporting is stable we must be more flexible in products and delivery. We have to replace the product concept with something more flexible. E.g. we could think in services instead of products and work-flows instead of simple delivery. In this case the operations is build about modules which can be programs, products, resources (e.g. applications, databases), experts and partners. Key accounts and customer support partners have a more broad task than before; they have to collect and monitor customer needs and problems to be able to deliver tailored solution by putting together different resources in a complex work-flow. E.g. I can imagine that a company doing market research could set up for me a tailored solution; the basic solution is a company database, which I can extend at wish with a news watching module (personalized to my interest), more analysis if I request, expert advice in case I need, legal support, Q&A, partner watch, CRM application... and so on. All resources (which includes data, humans and third party) are personalized - i.e. so do I feel. The very personal experience is build on standard modules.
The old KPIs are still valid but we need further ones; to measure the performance of these personal workflow (e.g. where are the bottlenecks, how much time it takes to set up a new service, how effective are the new work-flows...).
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