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We all know that the wave one in transforming the enterprise was the mass adoption of Enterprise Resource Planning software (early 90s). This wave began by streamlining core business processes using best business practices (for the industry) and standardizing it across the organization. Wave one also took it to the next level by automating extended enterprise processes such as supply chain and supplier management. This set the stage for wave two as well.

Having created tons of transactional data, the enterprise was glut with information which needed to be understood. Wave two comprised of establishing a BI platform to streamline and decipher data so that it could be put to intelligent use. This created the second level of transformation in setting up a datawarehouse, datamarts and plethora of information visualization & dissemination methods to feed to the business user. Wave two also brought in the discipline of managing master data across the enterprise. While this was happening, at various maturity levels, organizations are waking up to realize that there exists a gap between process automation and performance management. This according to me sets the stage for Wave three of the transformation.  

Gaps in ERPAt the outset of the current economic crisis and concluding global recession (hopefully I am right), it has become imperative that the management teams are bang on in executing their strategy. To elaborate this a bit more, the CXO team has to get these basic steps right:

a)      Defining business objective and goals (in the dynamic economy)

b)      Allocate resources and take actions to achieve these objectives

c)       Analyze and report on the results, and

d)      Take necessary corrective actions to course correct, mitigate risk and ensure success

Sounds simple. But it isn’t. Let’s take stock of what the CXO team has at their disposal. They have an excellent operational platform (ERP) that allows them to execute business processes such as order-to-cash, procure-to-pay and asset-to-retire. They also have a sound BI platform that pulls the right KPI which helps them understand operational efficiencies. But then they are at loss when it comes to marrying top down planning – corporate budgeting and simulation systems with underlying operational platform. The net result is that this approach has resulted in organizations achieve operational excellence but not their strategic objectives.

So the next decade will be spent in transforming the enterprise (Wave three). It will be to take a top down approach in reviewing the gaps between the strategic intent and underlying operational systems and fix it. Some of the examples of addressing these gaps are as shown below:

a)      Consolidate multiple instances of ERP to a single global instance.

b)      Refine the underlying financial transactions to align with the EPM requirements (eg: align movement types, multiple currency needs

c)       Implement robust integrated planning processes using SAP BPC application

 I am convinced that customers will be taking this route as I have seen two such instances where a large Oil major in Indonesia (we all know who) went ahead with reimplementation of SAP ERP in 2009 and one of a leading conglomerates in Philippines has budgeted for re-implementation (I want to call it replumb) in 2011. Any supporters to this claim?

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  1. Gregory Misiorek
    i’m sure we will find a new term to resolve the old question: who did it and for how much. in other words, we will continue using DOCuments for business event tracking and statements for the high-level overview (MAP) of the operations.

    who remembers DSS and AI these days?

    maybe, we need to hire a Gartner analyst to tell us what comes next 😉

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    1. Magendar Rajasekaran Post author
      Hi Greg,

      My take on this very specific. As I am meeting CXO across various organizations, they are a bit disillusioned with their transactional (ERP) footprint as it has been deployed with operational efficiency as the key objective. When it comes to leveraging this investment towards performance management (IP/BPC), there is a gap between what ERP can offer and what is needed to put together a EPm roadmap. I don’t think that we will need an analyst to tell us that. Two of my customers have already budgeted to revamp their ERP implementation to suit EPM needs. This is a big shift in thinking which is already taking place.

      Magendar

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  2. Samir Neji
    While I AGREE on wave 1, wave 2 may not have been better. Wave 2 had an EPM component which did not work for building resilience across a volatile decade, which has passed us.

    Wave 2 always had a SILO EPM component, This did not include an integrated strategy and hence it has failed to perform on an enterprise level. (U will find CFO silos and Operational Silos, with Supply chain silos / CRM silos – These LONERS MEET FOR occassional CHIT CHAT / meeting each other over coffee and biscuits). 

    According to me, Wave 3 is the learning from these HISTORIC coffee/Biscuit sessions – Realisation that there is no option to an aggressive realignment of EPM infrastructure, which should start working at an enterprise level. 

    I dont think that wave 3 will be a fresh attempt to do whats undone and redone in wave 1 and 2. It will be a relook on prior strategies which has failed and hence a top down view in adoption of resilience and flexibility as key criterions for investment.

    EPM at an enterprise level will evolve out of this initiative which is Wave 3. All other systems will be feeders as business will refocus on strategic intent. Operational efficiencies (one achieved thru ERP) is no more strategic and hence useless as a competitive advantage).

    Building an integrated EPM strategy requires competence across the past and future. This is a highly skilled and experienced activity which requires very less time to define – If we can do well, Organisations can save millions of dollars on repeating the same mistakes in Wave 2.

    Samir, EPM lead.

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    1. Magendar Rajasekaran Post author
      Hi Samir,

      You got it right. In wave 2, organizations have dabbled in EPM without giving due consideration for the wholistic EPM framework. It has been a piece meal approach arriving from consolidation or from budgeting. Very few folks have got it right from strategy to operational planning to consolidation and finally closing the loop by using intuitive reporting.

      Let’s call this a ‘renewed’ Wave 3 (thr right hand side of the hype cycle) – shall we?

      Magendar

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    2. Muthu Ranganathan
      ePM is the most strategic initiative every organization has to take, and offcourse should use the technology solutions as enabler.

      Good blog and good thoughts from Samir as well.

      regards
      Muthu

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