Can ERP Systems be Used to Drive Innovation?

May 22, 2013

InnovationOrganizations that have implemented ERP systems have long complained that deployments are too costly, time consuming and risky, so it is pretty rare that organizations look at ways to leverage enterprise software to drive innovation. Indeed, without the right expertise and guidance, ERP implementations can be difficult, even without the grand ambition of driving innovation. Case in point: our 2013 ERP Report confirms that most projects cost more than expected, take longer than expected and fail to deliver expected business benefits, while our organizational change and business process management report released last week reveals that most implementation challenges are related to people and business process issues – not technology.

Given this backdrop, it’s no wonder that most organizations struggle with the basic blocking and tackling of ERP implementations, let alone finding ways to drive innovation. Part of this lies in the nature of ERP projects: most are driven by managers of back-office functions such as finance and accounting, which aren’t typically on the leading edge of technology. In addition, companies often bite off more than they can chew by trying to implement too much change in too little time, which undermines any hope of creating more innovative business processes.

But is it possible for ERP systems to drive innovation? Absolutely. Here are a few things to consider when determining how to best incorporate innovation into your ERP system environment:

Innovation starts with your implementation phasing strategy. If innovation is high on your list of expected business benefits, then make sure you phase your implementation in a way that gives you time to focus on more innovative business processes. Unrealistic timeframes are sure innovation killers since it forces the team into reactive mode rather than encouraging the team to focus on optimizing organizational creativity. Make sure that your rollout strategy takes an incremental approach to give the project team time to create better processes. This more incremental approach may mean phasing the rollout more granularly by geography, business process, software module or both.

Rethink business requirements definition and ERP software development. The traditional waterfall development approach to ERP implementations is not conducive to innovation, flexibility and responsiveness. Instead, this school of thought suggests a linear and sequential approach where requirements must be fully defined, the system fully tested and the organization fully trained before going live with the new ERP solution. Obviously, this approach has some merits, but it also affords less flexibility than a more nimble development approach similar to agile development. Even business startups are more commonly taking a less linear and more flexible approach to business planning than the traditional method of fully developing and testing a business concept before going to market. ERP implementation teams can learn from these playbooks to create environments that may not be perfect at go-live, but can more nimbly respond to potential innovations and improvements.

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One thought on “Can ERP Systems be Used to Drive Innovation?

  1. Great post – there’s always a lot of questions when implementing a Sage ERP X3 system and it’s easy to see why. Without the training the systems can be rather confusing but at the end of the day they do drive innovation. Using the ERP systems gives you a clear line and strategy and innovation grows from this.

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