Wave 3 – What’s next after ERP & BI?
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.
At 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?