USING TECHNOLOGY IN BUSINESS FOR GROWTH & PROFITABILTY

Necessity of a Digital Nervous System (DNS)

With globalization resulting in extremely high competition, organizations are required to meet customer expectations before time, in order to delight them, so as to make the difference. To sustain and grow in the face of competition, today’s companies are required to be very fleet footed to respond to the demands of the market. Therefore, organizations require an infrastructure with built-in intelligence to respond to the market demands, on time. This is achieved through a combination of computers, telecom, software, connectivity and information utility devices. These in fact form the Digital Nervous System (DNS) of the organization. The center of this digital nervous system will be the Enterprise Resource Planning (ERP) software. With Customer Relationship Management (CRM) application and Supply Chain Management (SCM) application added to it, it gives the organization the necessary competitive teeth. Equivalent to a biological nervous system, DNS is a digital system built on a combination of hardware, software and connectivity; making it possible to receive a stimuli, process the same and trigger a response at the earliest. It is a digital process linking every aspect of an organization's thought and actions.

Why do Companies require ERP ?

Many corporates have information flow challenges due to lack of an integrated transaction information system in place.

An integrated transaction oriented information systems is concerned with the seamless flow of data among the business functions of the enterprise, resulting into improved administrative and operational efficiency in the organization. The absence of such systems in the enterprise may result in to following business challenges:

* High lead time in business processes
* High cycle time in business transactions
* High Inventory
* Poor utilization of financial resources
* Poor productivity
* High stock out etc.

The planning and control oriented information systems are concerned with improved coordination and collaboration among different business functions enabling enterprise to be more dynamic and intelligent in decision making. The lack of such systems may results into the following business issues:

* Poor utilization of enterprise capacities and resources
* Unsatisfied customers and suppliers
* Unable to handle competitiveness
* Poor flexibility in demand supply management
* Unable to plan growth and future etc.

Functional Modules of ERP Systems

Activities comig under functions of a company consists of functional module. Financial Accounting, Inventory management, Invoicing, HR management, Production planning, Costing, Maintenence management, Sales & distribution, Customer relationship management, Supply chain management etc are the examples of the functional modules. These functional modules are seamlessly integrated in an ERP package. The entire data of all these functional modules reside in a single database engine and therefore the organization does not suffer from data dis-integrity that normally happens due to multiple unconnected databases that normally exist with many functions of a company.

From a user prospective, an ERP package is all about a central database connected to the customer front end through tools (software technology) and rules (standards and benchmarks).

Expected Tangible Benefits of ERP Implementation

· Substantial reduction in Inventory
· Substantial improvement in manpower and machines productivity
· Reduction in financial close cycle
· Improvement in cash management
· Reduction in wastage and improvement in its management
· Reduction in transaction cost of management

Expected Intangible Benefits of ERP Implementation

· Improvement in customer responsiveness
· Improvement in order management
· Improvement in production planning based on forecast received from sales
· Materials planning generated from the system to optimize inventory levels.
· Automation of the import process with item valuation

· Online availability of the inventory and its valuation, leading to visibility of both raw material and finished goods inventory at all stages
· Product wise tracking of costs and revenue with consolidation of financial information
· Integration of cost and financial books, elimination of the need for reconciliation between the two, improves the account transactions.
· Real time tracking of material price and usage variances, efficiency variance.


Points to ponder:

· Automating what is being done manually is not an ERP implementation.
· ERP implementation is all about implementing a centralised application package to use data intelligently to arrive at informed scientific decisions.
· Reputed ERP packages have many global benchmarks & standards (rules) available in it. Applying it intelligently for organization benefits it a lot.
· Please ensure localization (local taxes, statutory rules etc) possibility in the ERP package.
· Please look for ERP packages with concurrent license. Versus named license, concurrent license offers tremendous cost advantage (saves up to 2/3rd of the cost).
· Look for a package which is easy to use.
· Look for a package which does not call for installing an entire new IT hardware infrastructure (saves cost)
· ERP implementation brings tremendous change management in the organization. Please prepare the management and staff through training and orientation to face the changes.
· ERP implementation is achieved through a top down drive approach. If the CEO is not involved in the organizational change management, it could come a cropper.
· A senior officer with the required level of empowerment needs to be made as the responsible co-ordinator of the implementation. He should have easy access to all functions and its heads for smooth ERP implementation.
· Be prepared to experiment by applying global benchmark in your business practices. You could gain tremendously here.
· If it is deemed as a onerous task by the company, go for ERP implementation in phases. Take up easy implementable functional modules first and go for complex functional modules later in phases.
· To phase out the budget, go for minimum concurrent licenses at the beginning and increase the same over the time, as per the requirement. This allows easy investment in phases.

The post is made to advise corporates and organizations on the importance of applying technology within it for being more customer focused, more process oriented and to avail the benefits of incorporating global standards in its business process. Once upon a time, ERP packages stayed only within large multi and transnational corporates those of who availed the rich benefits that it offered. Now it is the turn of the SMEs. SMEs are playing a greater role in the economy of countries. Therefore time has come for the SMEs to implement such technology solutions so as to benefit from it to meet the business objective of growth and profitability. From leveraging IT, companies are today consolidating IT for profitability and growth. Companies that are not leveraged on technology will get pushed aside. It is time the CEOs realized this and go for incorporating appropriate technology solutions for taking his company forward.