Why ERP is Important

Why ERP is More Important than Ever

The business environment is evolving rapidly in recent years.  The origins of these rapidly changing environments are the new technology adoption and the new normal as a result of COVID-19.
This article explains why ERP (Enterprise Resource Planning) is more important than ever because of these changes.

Emerging of New Technology Adoption

In the last few years, the adoption of many of the new technologies is driving company innovations.  These technologies include:

Industrial 4.0 and IoT

The Fourth Industrial Revolution (or Industry 4.0) is the automation of traditional manufacturing and industrial practices.  It is the use of modern smart technology such as large-scale machine-to-machine communication (M2M) and the internet of things (IoT).  These technologies are integrated for increased automation, improved communication, and self-monitoring.  It uses smart machines that can analyze and diagnose issues without the need for human intervention.

Big Data Analytics

Big data applications are applied in various fields like banking, agriculture, chemistry, data mining, cloud computing, finance, marketing, stocks, healthcare, etc.

Decision making will be carried out base on the analysis of a large amount of data.  Some examples of Analytics using big data include:
  • Retail – Optimize staffing through data from shopping patterns, local events, etc
  • Distribution – Route planning to save on fuel and time.
  • Manufacturing – Quality of the product, Supply scheduling, Tracking defect in the Manufacturing process, Predicting output, Expanding Energy Efficiency, Testing of new manufacturing processes, developing a new manufacturing process.

Artificial Intelligence

Artificial intelligence (AI), or machine intelligence, is intelligence demonstrated by machines.  Leading AI textbooks define the field as the study of “intelligent agents”: any device that perceives its environment and takes actions that maximize its chance of successfully achieving its goals.

High-profile examples of AI include:

  • Autonomous vehicles (such as drones and self-driving cars)
  • Medical diagnosis
  • Creating art (such as poetry)
  • Proving mathematical theorems
  • Playing games (such as Chess or Go)
  • Search engines (such as Google search)
  • Online assistants (such as Siri)
  • Image recognition in photographs
  • Spam filtering
  • Predicting flight delays
  • Prediction of judicial decisions
  • Targeting online advertisements

Some of the typical AI usage, together with Enterprise Resource Planning (ERP) are:

  • Cash flow forecast
  • Sales forecast and inventory planning
  • Create a recommendation of additional purchase to a customer when they are making payment at the Point-of-Sales (POS) and placing an order.

The New Normal after COVID-19

The COVID-19 pandemics in 2020 brought about a rapid change of work processes.  Due to social distancing, people have become the weakest link in the business processes.  The epidemic has since created the need for changes in working procedures and consumer behaviour.

Remote Working

Remote working and working from home have become the new norm.  And this brought about new challenges. The employee has to be able to carry out their work without the need to physically present at the company premises.  So, ERP systems that allow remote access became a necessity.

Adoption of Cloud Solutions

The employee has to access to company system remotely, and the urgent need to deploy the solution rapidly.   These needs accelerated the adoption of cloud solutions, such as cloud ERP.

Rapid Adoption of E-Commerce

COVID-19 sped up the change in consumer behaviour in adopting online purchases.  This change will likely remain permanent even when the pandemic ends.  So, why is this making ERP more important than ever?

Digitization Initiative

Companies realized that they have to accelerate the digitization initiative.  These initiatives often include the following.

E-Payment

The need for E-Payment is the result of E-Commerce transactions and the need for non-cash/contactless transactions.

PEPPOL

The employee is no longer able to go to the office to mail out or receive documents such as purchase orders, invoices, etc.  Companies have to send these documents through other methods.  A method such as PEPPOL can send out E-Invoicing, E-Purchase Orders, etc., through designated gateway providers.

IMDA implemented the nationwide E-invoicing network in 2019 to help businesses improve efficiency, reduce cost, enjoy faster payment, and stay green at the same time. This network is an extension of the International Peppol E-Delivery Network, allowing businesses to transact internationally with other linked companies.

The Important of Enterprise Resource Planning (ERP)

What does Enterprise Resource Planning (ERP) software has to do with this?  And why ERP is more important than before.
The critical contribution of ERP to this evolving business environment is its two unique strengths:

Integration

What benefits will you achieve if companies do not integrate the implemented technologies such as E-Commerce, AI, E-Invoicing into your core business processes?  They will incur more human intervention and human error, which will translate to higher costs.
Companies should integrate their ERP with these technologies into seamless business processes.  Thus, it reduces the manual effort and human error.

Depository of Data

ERP is a nature depository of data of your company’s operations and business.  ERP keeps all your business transactions in one single database.  It serves as part of the big data for analytics and AI.

Companies can use ERP to execute the recommendations and instructions generated by AI and Analytics.

Buyer Beware

After understanding why ERP is more important than ever, you may be thinking of two questions:

  1. How to Select the Right ERP, if you currently do not have an ERP
  2. How to Implement ERP to achieve the benefits

So, what does a company need to beware of in embarking on such a project?

  • The company must ensure that its selected ERP can be accessed remotely.  The selected ERP can be either a Cloud ERP solution or enable through IT infrastructure for remote access.
  • Integration between systems can be complicated.  A poorly implemented integration will lead to long term problems.  Avoid integration through the export and import of files.  The recommended methods for integration between systems are either through API or Web Services.  Check that your selected ERP can handle these modern methods of integration.  If your vendor proposes using the file import and export method, you should be cautious.  It is often an indication of the lack of technical experience.

Conclusion

Most of the companies are probably in a crisis.  But in a crisis, there are also opportunities.

Please take advantage of the various government support and adopt new technologies when they are relevant.

With proper planning and execution, companies will emerge stronger.

If you like to discuss further and understand more about ERP implementation, please do not hesitate to contact us.

About the Author

Raymond Yap is a veteran in ERP who implemented the world first Cloud Enterprise Resource Planning (ERP) for his manufacturing company in 1996. It was a Singapore government-sponsored ERP program called “MRP Online” to help Singapore SME towards digitization.

Since then, he spent his career in the ERP industry as consultant, sales, and management of ERP companies.

Raymond also taught in Nanyang Polytechnics, Temasek Polytechnics, and other Universities on topics related to manufacturing, ERP, and IT. He also conducted public ERP seminars in Singapore and Mauritius about the evaluation and implementation of ERP Solutions.

Raymond accumulated rich knowledge and experience on ERP and its application to business operations both as end-user and vendor. He has dealt with hundreds of companies in Singapore and the region on ERP projects.  His experience allows him to share on the practical approach to ERP selection, implementation and maximizing the ROI of ERP Projects.