Table of Contents
The onset of real-time ERP
. . . .
3
The core of a modern enterprise
. . . .
3
Seven characteristics of real-time ERP
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4
Close financials in hours not weeks
. . . .
4
Fine-tune business operations on the fly
. . . .
4
Collect real-time metrics from the field
. . . .
5
Access transactions anywhere, anytime
. . . .
5
Personalize self-service transactions
. . . .
6
Engineer closer customer relationships
. . . .
6
Always be ready to innovate
. . . .
6
© NetSuite 2013. Seven Signs You’re on the Road to Real-Time ERP 3 | 7
Seven Signs You’re on the
Road to Real-Time ERP
The onset of real-time ERP
A step-change in the pace of business today brings enterprise resource planning (ERP) systems face-to-face with the largest transformation in their role since they were first introduced in the early 1990s. The rise of a new generation of business automation demands real-time information processing and visibility on a scale that was unthinkable just a few years ago. Coupled with— and in large part enabled by—this new wave of business automation, there has been a surge in the pace of business itself.
Executives demand the very latest information in front of them when they make decisions, and they expect immediate action to put those decisions into effect. With this acceleration of the business environment, large-scale projects whose progress used to be measured over years are completed in weeks or months, from new product development and expansion into new markets, to mergers, acquisitions and divestitures.
ERP systems have become a core component of every substantial enterprise, but they are largely unprepared for this new role as the real-time operational core. Historically, computerization in business served to automate previously paper-based transactions. The primary role of ERP has been to record and tabulate those core transactions in a reliable, auditable manner. There were occasions when introducing ERP also brought change, for example when re-engineering a process enabled cost reduction and efficiency gains through eliminating unnecessary steps.
Today, those improvements to the original core processes are mostly done. Traditional ERP has delivered its wins and the emphasis is more on maintaining integrity and reliability rather than trying to do anything new. ERP’s traditional role of delivering a robust financial record at the end of each period remains crucial, but it’s no longer sufficient.
The core of a modern enterprise
In the past decade, new swathes of digital operation have spread far beyond the original scope of computerization. It is now affordable and practical to automate processes and interactions we could never previously have dreamt of automating—or that were not even possible before the advent of Internet and mobile technologies. Near-ubiquitous connectivity coupled with real-time reporting and analytics have made it possible to give business decision-makers a live view of all the information and transactions happening throughout the enterprise.
This access to real-time information, insight and action is what business leaders demand to thrive in today’s faster-paced competitive environment. Business today needs real-time financial metrics for operational reasons. They want joined-up automation and they expect the core ERP system to be at its heart. For that to happen, ERP can no longer be focused solely on closing the books. Just as the role of CIOs today has gone beyond merely keeping the lights on, so CFOs must look beyond their financial reporting obligations to understand the potential for ERP to support the real-time information and process needs of the wider enterprise. A modern enterprise needs real-time ERP at its core.
Seven characteristics of real-time ERP
Many enterprises are already on the path towards real-time ERP. They may recognize the value of real-time information to enable rapid financial close and reporting. Many are investing in smart devices to gather data from the field or taking steps to deliver information and applications to mobile platforms. They are exploring the business potential of real-time data analytics or are introducing smart automation to enhance customer service.
Here are seven key indicators that demonstrate a move towards real-time ERP. Businesses with any of these characteristics will benefit from deploying a real-time ERP system to enhance their ability to achieve the goals implicit in these indicators.
Close financials in hours not weeks
Compliance and reporting demands are already pressurizing enterprises to accelerate their financial close cycles. The new imperatives of business are adding to the pressure, as executives look for solid benchmarks and milestones from which to make their forward plans. Most reputable enterprises now look to consolidate and close their books monthly when previously a quarterly close was all they could hope to achieve – and to complete the process in timescales measured in hours and days rather than weeks or months.
At color printing technology innovator Memjet, the backgrounds of its top executives created a de facto expectation of rapid close cycles. The CEO was formerly COO of top mobile chipset maker Qualcomm, while the CFO had been CFO at a major aerospace company. “The expectation was you close the books as fast as you can. It was an expectation because of where they had come from. The accuracy and timeliness of the data was an expectation we had to deliver on,” says Martin Hambalek, director of IT.
With 17 subsidiaries in Europe, the U.S. and Asia-Pacific, Memjet closes its books globally every month within 12-15 days and sends a suite of financial reports to its investors. With an eye on a potential public listing in the future, the company has taken care to make sure its processes are ready for Sarbanes Oxley compliance.
Fine-tune business operations on the fly
Responses to changing business conditions can no longer operate on the lengthy project-based cycles of the past. With faster reporting cycles and constantly improving access to real-time
information, executives can assess the effectiveness of business plans on an ongoing basis. They can then take corrective action to redeploy resources or fine-tune incentives to maximize returns or seize opportunities as they arise, impacting outcomes within the reporting period rather than waiting to discover after the fact how things turned out.
MYCOM, a provider of operational support systems (OSS) and engineering services to 3G and 4G mobile network operators, was able to improve operational performance in its North American operations after moving from once-a-quarter to once-a-week calculations of project profitability. The move gave managers much more insight into the day-to-day financial performance of each contract, resulting in more rapid project completion and an improvement of more than 5 percent in average profit margins.
© NetSuite 2013. Seven Signs You’re on the Road to Real-Time ERP 5 | 7
MYCOM closes its financials monthly, with each of more than a dozen businesses globally closing their books within five working days, allowing a global consolidation by the eighth day. Before moving to a real-time ERP system, this process had taken two to three months and a definitive global consolidation was only performed once a year. With better metrics to work with, MYCOM has vastly improved its forecasting and planning. The company now has weekly and rolling three-month forecasts and a pipeline forecast for the rest of the year.
Collect real-time metrics fr
om the field
The past few years has seen an explosion in the range and type of data that can be collected from across the physical enterprise and beyond by the use of RFID tags and smart connected devices, often called the “Internet of things.” Real-time ERP allows this data to be collected, matched with transactional data and presented in a reporting dashboard as key performance indicators (KPIs) and other metrics.
For example, Umalag Farms, the sole domestic supplier of Kobe beef in the Philippines, tracks its cattle with RFID tags, which report metrics such as temperature and location. The resulting data is stored and analyzed within the company’s NetSuite ERP system to manage the health, diet and condition of the herd.
Items can also be tracked after sale to improve quality of service and cement a closer customer relationship. For example, agricultural equipment manufacturer John Deere is instrumenting its newest farm vehicles with sensors that can record a range of performance and usage metrics. The primary role is preventative maintenance. Wireless connections allow dealers to run remote diagnostics to spot potential problems such as a worn-out air filter.
The manufacturer can also distribute software upgrades to improve performance or ensure better compliance with increasingly strict emissions regulations. The metrics collected are also fed back into product development to help improve future models. In the future, the company is exploring using some of the data collected to produce benchmarks of best practice so that it can help its customers optimize yields and get the most out of their use of the equipment.
Access transactions anywhere, anytime
The rapid uptake of smart mobile phones and tablets has fostered a surge in demand for easy-to-use mobile applications and web portals that are able to access enterprise applications. Everyone from the field service team to the executive board expects to access the information and resources they need to get the job done wherever they happen to be. In many cases, the same is true of partners and customers.
Real-time ERP systems have built-in support for mobile and web interfaces that are able to deliver timely information and perform instant actions to ensure staff and other stakeholders can make things happen when they’re out and about. The result is improved competitiveness, productivity and efficiency.
International publishing and media business Superyacht Group gave its salespeople mobile access to real-time analytics and customer records so that they could react quickly to customer demands regardless of their location. Combined with more streamlined processes, some individuals almost doubled their productivity while overall revenues improved 20 percent. “The fact that salespeople can pick up their iPhones and see where they are with their sales is invaluable,” says Pedro Müller, strategy director.
Personalize self-service transactions
One of the huge benefits of increased automation in business has been the enablement of self-service portals and applications. Self-service cuts out delays, reduces overheads and increases satisfaction when the customer, partner or employee can directly access the information or online resource at a time and place convenient to them.
Real-time ERP supports more effective self-service transactions because it is able to furnish up-to-date information about availability and schedules while providing instant confirmation and feedback when an action is initiated. When combined with real-time analysis and additional data sources, it can also streamline or enhance the experience by adding functionality such as auto-suggesting next steps based on its knowledge of the individual.
For Australian retailer Kitchenware Direct, this allows its online ecommerce site to serve personalized content to shoppers as well as connecting into social media sites so they can see what’s trending or share opinions with friends on Facebook, Google+ and Pinterest.
Engineer closer customer relationships
Automation is enabling new forms of customer relationship that were either impractical or simply not commercially viable with previous generations of technology. Today the low cost of powerful automation and ease of connectivity makes it feasible to engineer partnership-style customer relationships.
Sometimes this takes the form of remote monitoring of installed products as in the John Deere example mentioned earlier. In other cases, it may replace the product sales model with a subscription relationship in which customers pay a monthly fee that covers the cost of operation, restocking, maintenance and upgrading. In either case, the increased frequency of contact and more detailed usage information can be combined with other data such as social media monitoring to build a closer ongoing relationship based on mutual success and shared commitment.
Although the “as-a-service” model is most closely associated with the online digital offerings such as software as a service, it is beginning to emerge in more traditional industries. For example, Memjet has built automated ink reordering into its printheads in order to support a “print-as-a-service” business model. The print industry faces enormous change with the transition to digital content and Memjet is positioning its business to take advantage of a shift from printing in volume to printing on-demand. It believes a shift to a subscription-based model will give it an edge as this shift takes hold in the market.
Always be ready to innovate
Successful enterprises today keep themselves ready to adapt to market change and seize
opportunities to gain competitive advantage through innovation. The business environment is one in which rapid change is becoming the norm, and where the potential for digital innovation to disrupt established markets demands greater readiness to implement new requirements.
Therefore, ERP has to be able to support a business that can flex in response to changing conditions and emerging opportunities. Since so many of those opportunities depend on real-time information and interaction, that flexibility needs to incorporate real-time access to the core ERP system.
© NetSuite 2013. Seven Signs You’re on the Road to Real-Time ERP 7 | 7
Getting on track for real-time ERP
The technology foundation for real-time ERP combines functionality to support the various characteristics previously outlined. Essential ingredients include:
• A consistent master data model
• Bi-directional integration between front- and back-office systems
• Built-in real-time data analytics
• Ability to import from a variety of external data sources
• Powerful self-service functions
• Built-in support for mobile platforms and social media integration
• Flexible customizability of these functions to adapt to rapidly changing market dynamics.
To deliver this broad range of functionality with sufficient flexibility and responsiveness is a costly and complex mission when grafted onto traditional on-premise ERP systems. Much of the real-time interaction that today’s world requires has to take place over the web or to mobile applications, which earlier generations of ERP were not designed to support. Therefore a cloud-based alternative is often considered, especially as a means to quickly respond to real-life junctures such as acquisitions or spin-offs, new product introductions or the opportunity to expand into new territories.
In large organizations in which core financial data must be maintained in an existing ERP system, a two-tier ERP structure provides a mechanism for delivering the flexibility of a cloud-based system to provide real-time interactions, while connecting to the core headquarters system for financial consolidation. In smaller enterprises or for all-new ventures, a ground-up approach where the cloud-based system provides the real-time ERP core provides a more cost-effective and easy-to-manage solution.
As enterprises gear up to maintain their competitiveness in today’s fast-moving, always-on and highly connected business environment, they will increasingly seek to bring their ERP systems into shape to deliver real-time interactions, consolidation and reporting. ERP must reinvent itself to recognize the rapid expansion of automation into all aspects of business operations and deliver real-time information and response if it is to remain at the core of today’s successful enterprises.
