|  Simply setting up an ERP solution isn’t enough. Businesses need to realise that ERP is a ‘living’ system that needs to be constantly optimised, saysUDAY K You’ve made it into the ERP world. You’ve taken the difficult decisions about organisation structure, process definitions, data definitions and hierarchy, configuration, security and training. This called for a lot of key changes such as setting up new standards, retiring legacy systems, and above all, changing a few practices in company policies/culture. Through all this, as an organisation, you have laid a foundation for future systems. It is an accomplishment. That’s the positive part. But here’s what many users say about their new ERP system: “I prepared the excise invoice of product X and then found that the product is not physically available in stock.” “No matter what you do, a few components are always short on the production line.” “Demand patterns have become so unpredictable that I am left with non-moving stocks or am short on required stocks.” “Can we have a handle on the exact cost of our products. Can we track our costing precisely?” No matter what position you are in, you may have heard these comments quite often. This is where organisations face the real challenge: Optimising ERP. ERP Maturity Model ERP implementation is not the ‘be all’ and ‘end all’ for any growing organisation.  Though technology dependent, it is a living system and passes through different stages of development and maturity. As the business grows, ERP should be adaptable to meet the changing processes, organisation structure and demand patterns. There are many challenges that a company which has set up ERP encounters in its endeavour to achieve peak performance. The most significant results require a lot of effort after the ‘go-live.’ And this is where most companies falter. As such, any ERP system is unique, but the stages of maturity after go-live normally fall into one of the following three stages: Stage 1: Chaos The implemented system needs to be streamlined to ensure that all the components of the system are stabilised and work in harmony. After go-live, the company usually turns its attention to gaining administrative and information stability. At this stage, the focus areas for attention are redefinition of user roles and responsibilities, establishment of new policies to support the ERP infrastructure, and integration and utilisation of the information generated from the new ERP system. The maximum energy is however spent on handling the change in the culture brought about by an ERP implementation. Unfortunately, once through the deadlines of implementation, organisations go back into old habits and routines. The alignment of business processes and ERP definition is lost. Manual systems and reports are created to work around perceived system constraints. Exceptions, that are not mapped properly during implementation will hinder regular processes time and again. Workarounds that have been designed increase operations and steps in the processes, thereby rendering them inefficient. All this, coupled with transactional complexity, business case exceptions and frustrated users often drives organisations into their first post-ERP projects. Such organisations will face a lot of problems after go-live till they streamline their processes on the ERP system. Stage 2: Stagnancy Even after a successful implementation and streamlining of new processes, organisations still do not get the expected benefits from ERP. Such organisations are reasonably satisfied with the implementation but they had hoped for a higher ROI. Organisations in this stage need to refine and improve the performance of the business. The improvement can be achieved in two phases: A) Incorporate unused functionalities of the ERP system into the business process. This would help the business in one of the following ways: - Manual activities would be eliminated and replaced with automated ERP system driven transactions.
- Activities mapped using system workarounds can be done away with, thereby reducing transaction complexity and operation cycle time.
B) Increase the intelligence of the system with advanced planning engines, schedulers, etc. ERP could thus be used as the base foundation on which several other best-of-breed solutions can be built to provide extra business intelligence to the ERP system. Stage 3: Growth At this highest stage of development after go-live, organisations seek strategic support from the ERP system. This requires the system to align with the corporate vision and business strategies. The focus moves over to profit, working capital management and people growth. ERP plays a crucial role in improving the value chain, providing for efficient capital management and optimising customer/product mixes. The company is thus completely transformed into an entity that is responsive to client needs, has a pulse on market movements and hence can forecast and plan with a higher degree of accuracy. This calls for a comprehensive approach to the technological, strategic and operational aspects of the ERP system wherein IT forms the backbone of the infrastructure and supports, facilitates and monitors the different resources across the organisation at various levels. Effective post-implementation To help organisations get the maximum possible benefit from ERP in the post-implementation stage, Ernst & Young recommends a combination of optimisation approaches. Leveraging our rich global experience in ERP implementation and reviews, these approaches help bring the right perspective at any stage of the post go-live environment. ERP optimisation ERP optimisation intends to provide an approach to extract maximum benefits from ERP post-implementation. It comprises three distinct approaches: - Streamlining of operations to help organisations that have not achieved a stable operating environment post-ERP implementation. There is a high possibility of companies slipping back at this stage if issues are not addressed in time.
A short situational analysis would be done to establish causes and help the company with solutions in stabilising and streamlining processes. - Operational improvement by reviewing the existing ERP with the key business drivers in mind. This helps to identify unused functionalities of the ERP application, complex mapping of transactions and neglect of ERP generated reports. The system can then be optimised to improve efficiency.
- Strategic transformation takes the CEO’s perspective of the company’s business strategy. This considers ERP as the backbone to transform organisational strategic objectives into tactical, reliable and measurable goals and monitor them on a continuous basis.
Business benefits There are a lot of opportunities for companies desiring to extract maximum value and competitive advantage from the existing ERP system. The benefits to the companies would be: - Increased efficiencies through integrated processes.
- A strong coherence between strategic objectives and tactical plans and goals.
- Strong alignment of people, processes and technology with organisational goals.
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