Nov 26, 2020

Inverting the ERP Pyramid – New Reality in the Next Normal

Reset will inspire leaders with bold goals, commit to continued simplification to building resilience in the next normal, and celebrate wins along the way.
This article was originally published on ET CIO.

We are witnessing history in making. Businesses are tapping into every possible resource to change & adapt. Year 2020 exposed kinks in our ‘digital armour’ across all the aspects of traditional & modern business models. Businesses found some glaring flaws in their “digital transformation”. On the opposite side of the spectrum, there was a switch to remote working, which happened almost overnight, and the world was introduced to the “zero-touch” world. 

Most of the changes that we have done to survive in the short term were not easy to incorporate but they were all done in the shortest time possible. These actions were about right-sizing operations, re-orienting sales channels, adopting a new P&L, to address shifting preferences and behaviours. The world is no longer linear, The Greatest Reset of Everything is taking place as we speak – a Reset to restoring trust, to reset from rapid iteration, and a reset to Everything as a Service.

Reset to restoring trust: Go Slow to Go Fast

Agility is going to become a new buzz word. It will take on a completely new meaning. In the parlance of ERP, it would mean the ability to explore multiple cash flows and supply chain domains at once and combine them into something valuable. CFOs will need to work with all stakeholders. CFOs would need to create new data-driven ideas and then work with the CEO to bring it all back to the board. To make a greater impact, businesses need to go cautiously, as they need to prioritize building trust amongst its employees and other key stakeholders like investors to reset performance expectations.

According to Aurobindo Pharma, one of India’s leading pharma company, the digitalization is an evolving journey. One needs to start slow but have a bigger vision. Already matured processes will be easier to digitalize. However, above all, you need to have a plan on how you will manage the change and adoption of digital, following your organizational culture.

Reset from rapid iteration: To Inverting the ERP Pyramid

Complexity creeps in quietly and starts killing creativity, as the management starts spending time on the process instead of reaching out to customers. In a survey, 85% of CEOs have ceased to be value creators and they blame factors like complexity for their woes. The current situation demands a reset from iteration, to gain significant operating leverage without compromising on value. Until now, we have had the luxury of working with technologies we understood well. Every generation of ERP packed on more and more functionality and added complexity over time. So, with high switching costs & associated risks, it is not surprising that rapid iteration emerged as a key strategy.

Westpac, one of Australia’s largest banks, will use Cloud ERP and EPM to reduce their cost & complexity while helping to meet regulations for the New Zealand business to operate independently from their parent company in Australia. As an established bank with a long history, Westpac turned to the cloud to simplify its IT infrastructure and create a consistent customer-centric experience across the multiple brands they operate in Australia and New Zealand. This gave Westpac the edge it needed to position itself better in an increasingly regulated and competitive industry. 

Going forward, the challenge will be to work with technology that we do not understand well at all. Not every organization on its own will be able to understand these technologies and how they relate it to their businesses. By the time many of these technologies hit their stride, it may be too late to catch up. So, it is imperative to start exploring early.

Reset to Everything as a Service: To frictionless innovation

One report says that a tech-enabled transformation will increase shareholder return by 9% to 22%. CFO’s will have 92% of transactions automatically reconciled; global intercompany balances across hundreds of legal entities reconciled in 90 minutes; expense allocations reduced by 98%; accounting for open purchase order accruals globally is complete in just three hours; and, the company reducing its manual accounting by 35% with multi-ledger, multi-currency journals.

Technologies such as AI, ML, IoT, and blockchain are constantly evolving and hence their value to businesses is also growing. The implementation of these technologies is fast becoming synonymous with growth and profitability. With eCommerce driving demand-driven supply chain, shipping and logistics companies will transform how goods are moved across parties and companies with IoT embedded into ERP, as movements will be tracked and machines will be capable to reorder items and even request maintenance when needed without any human intervention. 

Apollo Tyres, one of the largest tire manufacturers, has been working on upgrading software and taking advantage of cloud-based technology. Apollo has radically changed its supply chain with an integrated cloud application suite embedded with evolving technologies like AI, IoT, etc. Now, they can track their shipments everywhere via a weblink and hence have brought in transparency in the whole supply chain. 

In other words, self-driving ERP as a service will be a platform leading to business outcomes driven by continuous frictionless innovation as a service, not just a point application aimed at production or operations. This evolution of ERP as a service into enterprise business capabilities is driven and controlled more by the business than by IT. 

Reset will inspire leaders with bold goals, commit to continued simplification to building resilience in the next normal, and celebrate wins along the way.

Other Supply Chain News

3 Questions from Your Future Supply Chain Talent

Hunting for the critical supply chain talent? As you prepare to onboard new supply chain talent, are you ready to answer the questions they will have?

This article outlines the top three questions that students have around the supply chain. Read on, so you can prepare and answer your incoming talent.

Making data-driven decisions to improve supply-chain performance

Have you reviewed to confirm how your current supply chain performance is driving financial outcomes?

This article makes a case for the development of coherent strategies and making data-driven decisions to improve supply-chain performance. A tailored transformation program targets the most beneficial actions.

Supply Chain News: 5 Key Capabilities for Digitizing Business

Enterprise digital transformation catapulted to the top priority for business executives for 2021, according to a recent key issues study by The Hackett Group.

This article outlines five essential digital business capabilities that accelerated companies’ digital programs in response to the 2020 crisis.

Leave a Reply