ERP systems have been around for more than four decades, serving as a critical backbone for modernized, integrated business operations. Yet, every few years the same question comes up: are ERPs still relevant considering the significant transformation of business technology?

For nearly every organization, the answer is still yes. ERPs, like other systems, have evolved along with the times. Today, an ERP can bring together every aspect of a business from inventory, production and logistics, to finance, sales, marketing and more. It creates a foundation for leveraging unified data and insights both from within an organization and outside the organization.

Yet, ERP implementation success can be challenging due to its complex nature, which has led some to question its value. The key to ERP success is starting off on the right foot by investing in a proper and comprehensive planning approach in order to streamline implementation and achieve the intended results.

Embracing a Modern ERP System

ERP systems have embraced the changing nature of access, shifting from on-premise to cloud models that offer improved methods of connecting with other important systems, platforms and apps. The transition from standalone applications to highly integrated systems has been designed to support digital transformation efforts and Industry 5.0. We now have the ability to incorporate technologies like automation, AI, machine learning and real time data analytics to improve business productivity and efficiency.

However, tools and technologies are only as good as their ability to support business objectives. Consider creating a strategic blueprint that maps ERP capabilities to top strategic priorities for the next three to five years. Many companies jump straight to defining the technical aspects of an ERP roll-out, completely overlooking the need to align the effort with business objectives. This is a recipe for failure. Without proper planning, teams risk locking in inefficiencies, wasted time and budget, and a lack of adoption among stakeholders.

Planning in Stages

An important step toward success is to identify and document macro business objectives. Leaders should prioritize any issues impeding the organization from delivering on its strategy. Is process inefficiency eroding customer satisfaction? Is data quality and governance limiting effective decision making? These questions are critical in defining the right ERP scope.

When high-level objectives are left undefined, it leaves room for individual interpretation during implementation, which can result in technological decisions that don’t support or align with business needs. Companies can be hesitant to share baseline data and organizational challenges with external consultants, or even internally, but transparency is vital. The roll-out will have a much better chance of success when everything is laid out on the table.

With clearly outlined and aligned business objectives in place, implementation teams can have informed conversations that accurately identify how to shape the ERP. Most ERP implementations require some level of customization, but decisions around development work must balance short-term budgets with long term goals. The planning process should ensure that any customization aligns directly with future operational and architecture strategies rather than immediate operational fixes.

Considering Change Management

Considering change management early and continuously in the process is also vital, as it prepares the organization for transition and can flag any disconnects between executive goals and operational capabilities. Again, when everyone involved understands the end goals, it's easier to onboard teams through each stage of change, with minimal confusion or pushback.

A big part of change management is also determining what needs to change. Are you adapting the business to fit the ERP standard workflows, or are you adapting the ERP to maintain a key differentiator that sets you apart from competitors? This decision should be guided by strategic relevance rather than convenience.

If the behavior is highly unique to the company and supports an important aspect of the brand, it may be better to customize the ERP to support it. On the other hand, if the behavior is not differentiating, and is just a result of a current structure, there may be a benefit to working with teams to modify the behavior and create a better process that improves long-term productivity and efficiency.

To AI or Not to AI?

Everyone is understandably excited about automation, AI and machine learning. These tools can be highly beneficial as part of an ERP, but the real-world applications, especially for AI, are still emerging. During planning, discussions should include whether AI should be part of the upfront roll-out or whether it can be implemented later. AI’s role in ERP success should be seen as incremental. Leaders should first solidify foundational operational challenges then identify where the use of other tools, like AI, can extend the value of the ERP.

When supported by a strategic and well-planned approach aimed at achieving clear business goals, ERP systems remain highly relevant. But it’s important to remember that each scenario is unique, and care should be taken to build transparency and change management into the process. Out of the box implementations can provide a basic framework, but customization can safeguard an organization’s unique differentiators and help position the ERP for company-wide adoption and success.