More or Less ERP? That is the Question

The ERP is the lifeblood of most of the manufacturing industry but that industry is changing fast and most can’t keep up.

On March 17, Bob Mckee asked a very interesting question: “Does your current ERP system cost more than it delivers?

That is a very important question to ask for obvious reasons. The ERP is the lifeblood of most of the manufacturing industry but that industry is changing fast and most can’t keep up. Bob suggests that if your legacy ERP can’t deliver what you need then you should probably consider replatforming. He goes on to provide some wise counsel on that process but this is where I want to stop.

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What is it that you need your ERP to do?

Where does the ERP system stop and some other system begin?

The New Customer Experience

There has been a lot of digital ink spilled on the topic of the “B2B and B2C convergence” and much of it has furthered our understanding of the industry but the prevalence of the idea has somehow made it less significant. Allow me to give this idea the proper significance in your mind once again: according to the 2015 Oracle B2B Industry Survey, 84 percent of respondents said their customers’ expectations have changed because of B2C retail experiences.

What this means for those in the B2B industry, manufacturing or otherwise, is that customers want more self-service access. They want order status without calling or entering requisition numbers. They want to know inventory availability at the time of purchase, including on hand and ATP data. They want to put together their own quotes without talking to an inside sales rep. And yes, they want this all available on their mobile device too.

In the B2B context, customers want more access to the back end.

Let me affirm Bob in this, if your ERP can’t handle an order or provide inventory data then yes, you need to replatform. If it can, then you should be considering your ecosystem as a whole.

The Importance of Ecosystem

Very few of the customers I talk to have a single system that handles all of their back end processes. Over time manufactures acquire solution components that address specific needs. This isn’t a bad thing. They have a CPQ solution for complex quoting and pricing, an ERP for core business functionality, a PIM system for managing product data, a CRM solution for customers, etc.

This serves many manufactures well. They have the right fitting technology filling the proper gaps in their business. If you replace your ERP, every one of those integrations needs to be redone and all of your business processes will need to be remapped.

Is it worth it? Maybe…

At the end of the day a B2B seller’s job is to make a buyer’s job easier by providing him an exceptional customer experience and giving them the tools they need. If you want to sell more then give the customer a great experience. Anticipate his needs and meet them. Remove the roadblocks to doing business. Right now the trends are clear, customers want services accessible online. They need you to expose more of the ERP you already have not spend three years replace it.

An Ecosystem Divided Cannot Stand

The reality of today’s digital economy is that you can’t evaluate your back-end in isolation. An ERP doesn’t stand or fall on its own. The back office should certainly be a priority for manufactures. After all, this is where your product data and order history live; it’s where your customer data and their spending patterns get assessed; and it’s where contracts get created but how much money is it able to make in this digital economy?

The back-office, ERPs in particular, are business enablers, critical ones, but they will never be able to keep up with the changing demands of consumers.

Your problem may not be with your ERP. It may be in how you’re using it.

A robust back-end needs an equally effective front end to give it business value. This wasn’t always true but remember, “the times, they are a-changing.”

It won’t do to simply add an internet sales module onto your ERP system anymore and the rip-and-replace method won’t add value for years. If you want to grow your business and reach new markets you need a particular piece of your ecosystem to solve that particular problem. You need an e-commerce platform that can expose your ERP in a way that creates an exceptional customer experience.

Another Way Forward

If you think you have a problem in your ecosystem walk through the following evaluation process:

  1. What are your business goals? More revenue? Fewer customer service issues? Once you know what your major goal is, evaluate your ecosystem in light of that. Where is your technology hindering rather than helping?
  2. Think through how you are using your ecosystem in light of the problems you’ve identified. If bottom line growth is the goal, is your costs of service too high or are not taking in enough orders?
  3. Before you undertake the herculean task of replacing your ERP, consider if you could cut costs or increase revenue by improving your business capabilities in another area of the ecosystem. For many of you, a robust B2B e-commerce solution might turbo charge the ERP functionality you already have. For others, you need a guided selling and quote automation component to supplement the ERP.
  4. Remember this: an ERP can never meet all your needs. Your needs change too quickly. You should view core back-office infrastructure as a business enabler. Sometimes various components need to be replaced because your needs have shifted so dramatically but in most cases an ERP should execute the blocking and tackling of business. Let the ecosystem handle the rest.

Zach Hanlon is Director of Product Marketing for Oracle Commerce.

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