Building a viable foundation and digital platform
A common problem in middle market organizations is relying on homegrown or custom-built technology applications instead of more modern, integrated solutions. This challenge was highlighted in our recent white paper: Charting the course: Navigating your digital transformation journey. These inefficient custom applications are being used for simple functions such as reporting, as well as for very complex activities including inventory management, scheduling and cash management.
Often, these solutions were built at a time when there were not yet appropriate solutions in the market or there was a desire for a highly customized system, or as a Band-Aid due to lack of funds. While these systems have typically worked well for very specific needs, they can be limiting as companies try to grow. They also tend to poorly manage the complexities of today’s business; they ultimately can be more costly than newer, market-ready solutions.
While each organization is unique, a digital foundation typically consists of four specific components as illustrated below. Each of these serves a different purpose, but combined, they provide the ability to transform your organization through efficiencies, cost savings, customer satisfaction and speed to decision.
Enterprise resource planning (ERP) is the center of all organizational processes. Typically, an ERP system includes all accounting functions, production, inventory and supply chain management, and business intelligence. An ERP is generally the application all employees access on a daily basis that collates needed data from any ancillary tools.
Customer relationship management (CRM) helps manage and improve an organization’s relationships and interactions with customers and prospects. A CRM system typically helps organizations stay connected to customers, increase internal communication, streamline processes and ultimately increase profitability. CRMs are often used throughout the prospect-to-quote process. Frequently, CRMs are viewed as solely a tool for the sales team. However, when CRM platforms are fully utilized, they allow for pricing controls and interface with accounting and operations to eliminate duplicate entries; they also serve as a true customer portal to simplify communications and provide an enhanced level of self-service.
Human resource information systems (HRIS) help manage the hire-to-retire process in a single application, combining employee data management, payroll, recruitment, benefits administration, time entry, employee self-service and communication. Like the ERP system, an HRIS platform is an application all employees access within an organization. An HRIS system simplifies human resources processes and enforces the needed controls related to daily processes, and decreases or eliminates the need for paper documents.
Enterprise data warehouse (EDW) tools are the collection point and repository for all data, often from disparate sources, in its raw form. EDWs allow for a reduced number of integrations by storing all necessary information in a single location, as opposed to multiple integrations among an organization’s tool set. EDWs cleanse data to allow for simplified reporting and data analysis, and perhaps most importantly, allow the creation of a single version of the truth.
Establishing a robust digital foundation allows organizations to be more agile throughout the business life cycle. As your organization grows or shrinks, or differentiates products, processes or legal structure, the foundation provides stability during the many changes you will experience. Carefully considering and evaluating the long-term impact of each of these systems is critical to success.
Look for our next article soon, where we will address how to manage perception and change in your organization, especially how these relate to your digital transformation.