Does Standard Still Work for SAP ERP Systems?

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ERP - Enterprise Resource Planning

ERP – Enterprise Resource Planning

I have recently been to a wedding, where I was challenged by a fellow attendee on the topic of the ERP system’s relevancy.

 

When a company implements SAP or HANA, they will use the SAP Best Practices solution for managing the business and handling orders, for everything related to the business – process-wise. The challenging part is that many companies have their own, special processes in some areas. It could be the pricing, methods of dealing with customers, or calling customers in a different way. This often leads to a lot of extra work in the SAP system; the business has to be sure that the SAP system adapts to certain requirements – I can tell you from my own experience.

 

The ERP system is a complex one. Many companies are migrating away from the custom-made AS400 systems, where they could create and develop programs to handle all systems themselves. The reasoning is simple to follow: a lot of customization leads to a lot of maintenance. There are many advantages, but they come at a high price.

The custom system requires lots of effort to support and a lot of focus for the IT department to maintain the system. All of this costs time and money. The main issue is that it requires focus from all the people involved in the development process – they need to focus on how to create a standard ERP system. They don’t have the attention required to add extra information.

Having a standard system comes with many benefits – you don’t have to maintain a finance system or an ordering system, you get those as parts of the package. You are able to focus exclusively on those few critical components that make your company different from everybody else’s.

After the SAPPHIRENOW conference it became clear to me that most companies need to put much greater emphasis on innovation in order to find new business models. One of the ideas was that companies needed to almost become IT shops to take advantage of the Internet of Things (IoT) and all the new benefits of being able to connect much more closely with the consumers. If you are focusing on basic tasks only, you will not be able to innovate on top. The top is the place to be different. You cannot get a competitive advantage for your General Ledger function or other standard practices unless you have a really specific requirement in the process, but then that will be the area you need to improve.

There is a price to pay for having an SAP S4/HANA system, and it will likely be a high price, but this is what it takes to have such an ERP system of this type. It will allow you to focus more on just making your business run, rather than having to make sure the system is completing its basic functions.

I believe that custom ERP systems and standard systems can still provide great value, unless you have a very specific business – in that case, you may consider creating your own system. Just be aware that it will take a lot of time.

What do you think about the use of the ERP system?

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