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How to decide if ERP best practices are the best for your business

ERP vendors often claim their software incorporates business process best practices that are best left unchanged. But how do you know if these ERP best practices are right for you?

One argument often used in selling packaged ERP is that it incorporates industry best practices in its design and...

functionality. Prospective buyers are enticed with the notion that implementing this new system and its ERP best practices will help them improve performance by providing a platform for adopting best practices. The argument is also used to encourage implementers to change their procedures to fit the software, rather than change the software to fit their current procedures.

Implementing a new system to exactly emulate existing systems and processes is not, however, likely to generate improved performance or cost savings. Consider the definition of insanity often attributed to Albert Einstein: doing the same thing over and over and expecting different results.

All that aside, it is reasonable to ask if the procedures included in packaged software are really best practices. And just what are best practices anyway?

Wikipedia offers a reasonable and useful definition: "A best practice is a method or technique that has consistently shown results superior to those achieved with other means, and that is used as a benchmark. In addition, a 'best' practice can evolve to become better as improvements are discovered."

In business, as in every other human endeavor, innovations and improvements most often evolve as people try new ways of doing things in an attempt to improve -- by doing them better, stronger, sleeker, faster, cheaper or in another advanced way. When successful, these improvements are discovered and emulated by industry peers and competitors alike, until they become normal or standard practices. They are also called best practices because they work and are used by the industry's leading practitioners.

Maybe you believe that the way you handle a particular customer request, say specifying a unique size or configuration of a product, is a key factor in your company's success. Your process is primarily based on spreadsheets and phone calls with engineering, however. The ERP system you are considering may include a rules-based product configurator that accomplishes the same task more efficiently. ERP-based product configuration would represent a best practice, in this case.

As these procedures and practices become known and accepted, developers will accommodate them in their software, creating ERP best practices. Customers and prospects will expect and demand that they do so, and competing products will include support for these functions as well. After a time, the majority of ERP systems will include these so-called industry best practices.

ERP best practices, or merely standard ones?

But now it is reasonable to ask, so what? Since every business does things this way, and every software package supports it, can it really be a best practice or is it really only a common or standard practice?

The primary counterargument is this: as indicated in the Wikipedia definition, best practices evolve. By the time a so-called best practice gets into a packaged software product, the ongoing drive for improvement has rendered yesterday's best today's routine or average. Who wants to be average?

Nevertheless, established and proven practices should certainly be considered, at least as a starting point for any performance improvement initiative. If you want to get ahead of the competition, it is a smart move to catch up first: Implement good practices that industry leaders have shown to be solid, reliable and beneficial, then improve from there to gain your own competitive edge that, if effective, may well become tomorrow's best practice that others will strive to emulate.

In summary, emulating best practices, even if they may be best only in a historical sense, is not a bad starting point for developing your own competitive edge. When evaluating ERP best practices, it is important, albeit difficult, to identify those practices that are, indeed, better than current policies.

You may want to engage an objective, independent outside advisor who knows your industry, but is not employed by or closely associated with your current or prospective ERP supplier to help you make that determination.

Other local procedures and practices may, in fact, be unique and valuable to your way of doing business and serving your customers. You will want to maintain those truly valuable practices.

Ideally, your ERP system will have enough flexibility to accommodate those unique needs without resorting to modifying the ERP code. Using the system tailoring and configuration options to adapt your software to support your unique needs, rather than customizing program code, is a best practice that will not be overtaken by new developments, and will never become outdated.

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This was last published in March 2017

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