ERP upgrades: Where’s your focus?

<!–ERP upgrades–>ERP upgrades are a fact of life. According to a study conducted last year, 73% of Oracle customers upgrade to stay supported. Only 2% claimed that their decision to upgrade was due to ‘competitive pressure’.

So yes, ERP upgrades can be necessary, but should they really be dominating the corporate agenda?

This question struck me while visiting several manufacturing and logistics companies. Almost every company was obsessed with the next ERP upgrade and the new reporting features and functionality that would soon be available.

Their preoccupation was understandable: ERP upgrades are challenging. However improved automation of existing processes and ever-more-detailed reports are hardly a competitive differentiator.

The idea  – or hope – is that all that historical data will, somehow, result in more profitable supply chain decisions. Exactly how this will be accomplished remains something of a mystery.

There is a real gap between possessing huge quantities of accurate data, and the ability to use that data to make significant improvements to the bottom line. As my last post indicated, the next big thing is supply chain planning and optimization (SCP&O) – a mature technology that sits on top of ERP systems and uses the data those systems generate to arrive at optimized supply chain decisions.

SCP&O is about a real shift in focus from the past to the future. Instead of focusing on historical data, SCP&O gives you the business control you need to make optimized decisions and achieve your KPIs.

Of course ERP systems remain fundamental. They provide the accurate data that SCP&O systems need to support better, more profitable supply chain decisions. Another driver behind the increasing reliance on SCP&O that we’ve witnessed over the past decade has been a growing appreciation of the importance of collaboration.

Collaboration helps avoid unfortunate situations where managers pursue local optima to the detriment of the supply chain as a whole. And, of course, the more you collaborate, the easier it is to look at the big picture and optimize across multiple, interdependent operations.

Getting the most out of your next ERP investment will require a change of focus. Historical data is simply a means to an end. That end is the optimized decisions that SCP&O enables.

The missing piece of the profit economy isn’t ERP