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ERP: A Beast of Burden?
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 may carry a heavy, critical load, the effort to keep them running—at ever-diminishing speeds—frequently surpasses their output.
We’re at a point 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 don’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 ensure the benefits outweigh the burden.
Why do Companies have difficulties with ERP-systems?
Ideally, companies could rely on one vendor and one system to keep cost and complexity low, and output high. But that’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—60% 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.
There are many reasons why ERP sprawl plagues companies so frequently. Many times individual business requirements cannot be met with a current ERP system, so a company adds “satellite systems” 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 need to be connected. And sometimes, vendors force a company to migrate to new systems as they discontinue support for older systems.
The ensuing complexity forces organizations to confront several challenges that breed inefficiency and stifle innovation. Maintenance is one of the largest—requiring staff well-trained on multiple systems with the institutional knowledge to keep highly-customized legacy systems up and running. Regulatory demands and new technologies are other challenges—requiring additional ERP interfaces that may be technically or economically unfeasible. In most cases, a complex landscape is directly related to higher process complexity, introducing manual interface steps between systems and slowing things down.
How Can You Address Complex ERP Landscapes?
When these issues occur regularly, it’s easy to see. What’s not so easy is doing something about it. CIOs and IT leaders know ERP consolidation is the only path forward, but tackling this daunting task keeps them up at night. How can they convince business leaders of the value of consolidation? How can they ensure a smooth migration and limit project risk? How can they ensure sustainable benefits and a high adoption of the new system?
There’s good news. Process mining can address these concerns and help guide companies through each phase of an ERP consolidation project. Here’s how:
Pre-consolidation. The first step is understanding the processes the system supports. By using the digital footprint of existing IT systems, process mining provides a top-down view of every single process and its variances. More importantly, it can identify best practices across systems to provide a head start in designing a new system and ensure it’s powering the most efficient processes from day one.
Development of One ERP Template. Once best practices are identified, process mining can simplify the steps for defining a new template. Then it can be used to perform fit gap analysis where the new template is tested on a current implementation. These insights can then be used to adjust the template for a One ERP deployment, or you can prioritize change management for an existing system.
Post-Consolidation. After the project is in full-swing and a new system rolled out, it’s critical to monitor adoption rates to ensure success and business value. Process mining can shine a light on deviations from the as-desired and as-designed state. This gives IT and business leaders the ability to immediately react to process loops, incorrect user handoffs or other issues. And as a company grows into its new system, process mining analysis and optimization ensures the benefits are sustained over time.
Achieving Real-World Success
Many global organizations have already used Celonis Process Mining to guide their ERP consolidation projects to success:
One large and very diverse retailer undertook the consolidation of 26 ERP installations into 1 SAP system. Using Celonis to obtain full transparency into purchase-to-pay and order-to-cash processes enabled the company to define new templates, simulate their usage, and achieve a faster rollout with fewer 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 ran versus the way they were designed, the company identified a 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 to technical migration.
In the end, Celonis Process Mining helped these companies complete 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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