Why ‘Antisocial’ ERP cannot survive

28th April 2014

ERP was developed for a different era; one characterised by booming economies and double-digit growth. But in the midst of the networked-economy, businesses find themselves operating in a profoundly different environment marked by increased business complexity, unfettered competition and rapidly changing business models.  And as Gary Simon, FSN’s managing editor discovers in this new executive briefing written in conjunction with FinancialForce.com, it’s an era in which mastery of customer, employee and other stakeholder relationships through the application of social business tools has become crucial to success.  

 

 

 

Introduction

ERP was developed for a different era; one characterised by booming economies and double-digit growth.  In those heady days the emphasis was on maximising transaction throughput, ‘straight through processing’ (low error rates) and reducing average transaction costs.  ERP was internally focussed, and principally concerned about efficiently marshalling resources, such as, people, assets, cash and processes.

But in the midst of the networked-economy, businesses find themselves operating in a profoundly different environment marked by increased business complexity, unfettered competition and rapidly changing business models.  It’s an era in which mastery of customer, employee and other stakeholder relationships through the application of social business tools has become crucial to success. 

Jacob Morgan, author of The Collaborative Organization: A Strategic Guide to Solving Your Internal Business Challenges Using Social and Collaborative Tools, writing in Forbes magazine1, puts it this way.  “Much of what we are seeing inside of our organizations as it relates to “social” collaboration is being fuelled by what is happening in the consumer web.  Technologies such as Facebook, Twitter, Linkedin, Foursquare and many others have given rise to more robust and business oriented counterparts such as Jive, Yammer, Chatter, and dozens of others.  The technologies in the consumer web help encourage and support new behaviours such as creating communities, being open and transparent, sharing information and ideas, easily being able to find people and information, and collaboration.  These behaviours (and technologies) are now making their way into our organizations and are helping shape the future of work.”

Accenture2, the consulting organization sees it as an evolutionary process in which collaboration becomes firstly embedded in business processes, fuelling efficient and effective communications that create real business value. And this provides a platform for organizations to move beyond “simple transactions” to interacting with customers and employees in a more personal way.   

So what is the nature of these interactions? 

Customer –centric ERP

Two decades ago, it was considered fashionable to be “customer-oriented.” A Harvard Business Review article titled “Staple Yourself to an Order” claimed that the quality of the customer experience was directly related to the efficiency of the firm’s order management cycle, from planning to post-sales service3.  Operational efficiency was considered a key competitive advantage, but since that time there has been a wholesale shift in thinking from a purely ‘mechanical’ line of attack to a truly customer-centric approach in which the entire organization is driven (almost obsessively) to enhance the customer relationship. 

But customer relationships are not amenable to being neatly compartmentalised. In practice they straddle many touchpoints in the organisation and smart businesses know that the relationship has to managed carefully from its inception in the realm of customer relationship management systems (CRM) through all of the back office functions (invoices, payments, credits, product or service delivery) served by ERP.  In short, if a business is trying to be customer centric and has not included ERP in its plans, it is only going half way.

So what started as standalone Customer Relationship Management (CRM) has grown into “ERP at Customer Speed,” completing a new vision for ERP where businesses are winning and retaining customers by aligning ERP processes around all customer touch points – creating a unified, informed view of the customer across the entire organization.  Deloitte3 explains it another way.  “We believe that to move the needle in today’s business ecosystem, a company should consider stapling itself to the customer.” 

And it is technology (especially cloud-based applications) that are increasingly allowing companies to respond to customers as well as the constant need for innovation.  Take for instance the trend towards increasing personalization of the ‘customer experience’ through individualized dynamic pricing and promotions.  Cloud-based ERP applications are making a decisive difference since they can deliver greater flexibility and operational efficiency through automation of finance processes where traditional ERP systems with rigid data models simply cannot cope.

ERP goes social

Central to the new understanding of social interactions are underlying technologies which form the bedrock of collaboration.  These include workflow, instant communications and other social tools that allow key stakeholders in the process to ‘follow’ metadata (customers, products, orders) in the same way that individuals might follow a celebrity in the consumer web.  It means that anyone in an organization (with the appropriate security permission) can follow any customer interaction and use the insights gained to enhance their knowledge about the customer, its buying habits and preferences.  By leveraging this more comprehensive view of customer behaviour organizations improve their capability to anticipate the customer’s likely reaction to special promotions, new product introductions and pricing changes. 

But realizing this ambition relies on the seamless integration of every aspect of the ‘quote to cash’ cycle so that those charged with process are firmly linked to each other and to the processes in their charge.  FinancialForce ERP, a unified family of cloud solutions built on the Salesforce1 Platform is at the forefront of these changes.  It connects customers, employees, partners and products into a single system, providing everyone with a consistent view of the entire customer journey.

Furthermore, instant communications, such as, Salesforce’s “Chatter” is also important since ‘anti-social’ legacy ERP systems lack visibility to the conversations surrounding a customer or transaction despite thoughts, feelings and personal interactions being key to personalizing the customer experience. As a result, customer-centric ERP with embedded social tools that allow contextually relevant conversations to be tracked alongside transactions, accounts, reports or other objects are poised to displace the anti-social ERP systems of yesteryear.

Social is becoming pervasive

Although many organizations are focussed on the customer as the number one priority it would be misleading to suggest that social collaboration is only relevant to the ‘quote to cash’ cycle.   The internal application of social business tools provides rich opportunities for driving innovation, productivity, and process improvement.   In the past, the key to enhanced productivity has been the standardization and automation of core financial processes; but what happens when a transaction does not ‘conform’? When a dispute arises or an error occurs?

The cost of fixing a wrong transaction is about 80 percent more than one processed correctly at the first attempt. When cracks appear in automated systems, workers resort to a variety of communications methods such as email, telephone conversations, ad-hoc meetings, and walking the corridors of a building to get the information they need to remedy a problem. On average, workers spend 25 percent of their working day simply looking for information.  Ironically, the early stages of Cloud computing have contributed to the problem.  Standalone CRM in the cloud creates fault lines in the ‘opportunity to cash cycle’ between CRM and ERP.  But these early implementations are being displaced by much more comprehensive software solutions in the cloud such as FinancialForce which firmly interleave CRM and ERP so that it is one contiguous process.

Resolving errors relies on know-how, experience creativity, professional judgment, persuasion, negotiation and communication, but these ‘softer’ attributes are not well catered to by anti-social ERP.  On the other hand, social business tools embedded in modern ERP allow conversations traditionally lost in a sea of emails to be attached to any business activity helping to put more context around a cold transaction. As a result, employees better understand customers, suppliers and each other, enabling them to make better, transparent, and quicker decisions.

 

 

‘Millennials’ will not work with anti-social ERP

By 2020 millennials are projected to be half of the entire U.S. workforce1.  These are the children of the Baby Boomers and grew up with the many social media platforms that in common use today.  They are steeped in the immediacy of the internet, and the speed and variety of communications such as Twitter, Facebook, Skype, and Instant Messaging (IM).  They have instant everything, choose the information they want, and personalize the way that it is delivered.  Their leisure use of the internet bears no resemblance to the clunky and anti-social ‘user experience’ which is commonplace in the business world.  Businesses may find that attracting and recruiting top talent into the finance function will be a challenge without modern social tools embedded in their ERP systems.

Summary

The concept of ERP as a unified platform for transaction processing remains valid but few of these historically inward-looking legacy systems, (many of which were developed more than two decades ago) can keep pace with the rapid market changes and consumer demands for personalised service and innovation.  Central to improving operational effectiveness is socially-aware ERP which encourages collaboration and knowledge sharing about customers at every stage of their journey through the ‘quote to cash’ cycle underpinned by CRM and ERP tightly integrated in a single unified environment.  But at the same time, the pressing requirement for embedded social business tools marks a watershed for ‘anti-social’ (legacy) ERP, finally confirming an unbridgeable gap between its limited capabilities and the modern need to improve the customer experience and enhance competitiveness through a better understanding of customer behaviours.

However, it is not just the sales cycle that benefits from deploying socially-aware ERP in the cloud. Other business processes such as ‘purchase to pay’ and ‘record to report’ can leverage social capability to enhance understanding and organizational effectiveness.  Finally, young workers entering the workplace expect to use social tools in the same way that they do in their private lives.  Companies that do not grasp the nettle will find themselves not only competitively disadvantaged but also unable to attract the best talent.

 

 

 

 

 

 

 

 

 

 

Biography

Note1 Five Trends Shaping The Future Of Work; Jacob Morgan, Forbes Magazine 20 June 2013

Note2 Technology Vision 2014, Accenture

Note3 Staple Yourself to the Customer, Deloitte Consulting, January 2013

 

 

 

 

 

Disclaimer of Warranty/Limit of Liability

Whilst every attempt has been made to ensure that the information in this document is accurate and complete some typographical errors or technical inaccuracies may exist. This report is of a general nature and not intended to be specific to a particular set of circumstances. The publisher and author make no representations or warranties with respect to the accuracy or completeness of the contents of this white paper and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose.  No warranty may be created or extended by sales representatives, or written sales materials.  The advice and strategies contained herein may not be suitable for your situation.  You should consult with a professional where appropriate. FSN Publishing Limited and the author shall not be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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