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Successful ERP migration requires business process redesign

Analysts say companies should take advantage of their ERP migration or upgrade project to redesign key business processes.

Going into it, you might think the real work of an ERP upgrade or ERP migration is the software implementation...

itself, assuming it’s an on-premises project. But rolling out the software, testing it and training users on the new system is only part of the undertaking. Experts say that companies that fail to execute a business process redesign will miss out on important benefits like productivity improvements and cost savings.

“Companies should always do some type of business process improvement, whether it’s redesigning processes or optimizing [or] improving them in advance of the new system, during implementation or after,” said Frank Scavo, principal analyst at Constellation Research.

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Often, the new system will provide entirely new capabilities, such as scrap reporting, quality management or tighter inventory management. “The payback [for the ERP upgrade or migration] is in being able to do new things, so you will need to take a closer look at the processes that touch the new capability,” he said. It is helpful to map out the old process on large storyboards for all to see, along with the future state or “to be” process. Then you can prepare people to use the new process once the implementation is complete.

Business process redesign is all about engaging the individuals who work with them, said Mark Hadler, consulting partner at Cognizant, based in Teaneck, N.J. As with any “people issue,” companies will need to do some change management to ensure that the changes flow smoothly. One good way to do that, according to Hadler, is to have the people affected by the process take the lead in its redesign.

“The challenge is to get the business organization to look at its processes and motivate them to reduce cost, take out steps and increase efficiency,” Hadler said. People on the ground are much more likely to have good ideas about how to change things for the better than IT staff, he added.

Focus on business process adoption during ERP migration

When implementing the new ERP software, it is a best practice to match the company’s business processes to the application -- even if that means redesigning the processes -- according to Brad Little, vice president at French consulting and services group Capgemini. Today’s ERP software packages incorporate leading industry business processes, so it is best to adopt those as much as possible.

If the business processes are integral to the company’s competitive advantage or relate to a legal obligation or regulation, ask the IT department to tweak the application to fit, Little said. Even in this case, however, companies may need to revisit how they do certain things to ensure the existing process still makes sense. One of the worst things a company undergoing an ERP migration can do is “automate a mess,”  lazily maintaining the status quo without looking for a better way, Little said.

When it comes to the processes at the heart of how the organization provides value to its customers, make sure they are sound. There is a growing school of thought that business processes, more than any technology or product, are the key to innovation and competitive differentiation. With an ERP migration or upgrade at hand, there may be no better time to focus on key processes, whether fine-tuning them or giving them a wholesale revamp.

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