The Transformational Power Of Global ERP

May 17, 2007
ERP can help established companies establish IT best practices that add value to the enterprise.

Accenture research has found that high performing industrial equipment companies can outperform their competitors by leveraging a unique set of business capabilities, including a global operating model supported by an Enterprise Resource Planning (ERP) system.

ERP programs enhance a company's ability to organize and analyze financial, operational and external information so it can make informed decisions more quickly and efficiently. By providing information transparency and consistency, the programs support standardization and integration across an enterprise, facilitating a common culture across a global workforce.

For example, a company can establish shared services -- or even outsourcing -- in the financial, purchasing, and order management areas, allowing it to focus on the strategic priorities (e.g., global sourcing and manufacturing and global distribution networks) that underpin their market focus and positioning. The result is global flexibility and other distinctive capabilities that allow a company to maximize the financial benefits of globalization and that lead to differentiation and competitive advantage.

This is particularly critical in industrial equipment companies, where growth through acquisitions is a common strategy. But the strategy leaves many companies trying to run numerous, diverse legacy processes, practices, policies and systems. Here, ERP can provide the foundation for the effort to deliver business capabilities that allow a company to execute a unified business strategy.

Four Differentiating Factors Of High Performers

Accenture's research uncovered four critical factors that differentiate the high performers from their peers:

  1. Commit to a transformational business change program, supported and sustained by an ERP system. Absolute clarity about the company's strategic purpose and how an ERP implementation supports that goal, and it distinguishes companies who recognize that harmonizing processes and data enabled by ERP provides a backbone to develop common business systems that provide quality, consistency and predictability across the global operations.
  2. Tailor strategic components of their ERP systems, simplifying and standardizing the rest. While tailoring allows them to enhance distinctive capabilities, they are also careful to customize their systems only when such a move will achieve specific business objectives.
  3. Understand that ongoing workforce transformation and enablement are essential to the overall success of an ERP program. Achieving high performance through an ERP program requires companies to address the inherent organizational change challenges, mitigating risks and embedding advanced change management principles into their ERP design and rollout strategies. To this end, these companies engage the highest levels of the organization; develop clear organizational design, roles and team structures; build ERP skills by focusing on talent management processes, such as training and performance management; and provide the incentives that encourage those skills.
  4. Institutionalize metrics to change behaviors. High-performance industrial equipment makers know that information and data are key drivers of value, with the power to pull geographically scattered businesses into a more integrated, competitive virtual' organization. They also use metrics to align personal and organizational behavior with desired business outcomes and to measure progress against goals and assess success.

Lessons For The Future

Businesses that make strategic use of ERP systems realize their strategic priorities faster and more cost-effectively than their peers. Moreover, high-performance industrial equipment businesses know that ERP can help effect sweeping, transformational changes across multiple business units and functions if they follow three steps:

  1. Use ERP as an enabler of change, not just a technical implementation. This way, they can build a globally integrated operating model that will leverage the right set of capabilities -- people, processes and technologies -- across the organization.
  2. Use ERP to standardize and optimize common processes and to customize those that drive specific business goals. These companies will achieve the process efficiency that can power their distinctive business capabilities and sustain competitive advantage.
  3. Focus on workforce transformation and on-going enablement, along with defining enterprise metrics, to change behaviors in the organization, drive value and effectively manage the business.

The challenges facing industrial equipment companies will not soon disappear. But the way in which those companies use ERP to respond to those challenges can separate the leaders from their competition.

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