How important is ERP really?
The importance of an ERP system varies from company to company and from industry to industry. For example, in order-driven manufacturing companies—where the ERP system supports core processes such as order intake, production, and delivery—it becomes highly business-critical if the system does not perform as expected. In other words: the more tightly a company is time-bound to its customers and suppliers, the more business-critical the ERP system becomes. In other companies, where the system does not affect customer-facing or production-oriented processes, it is possible to operate without ERP for a longer period.
In companies where most business processes are supported by ERP, any malfunction will quickly have a noticeable impact. Problems with ERP systems are therefore, in many cases, synonymous with business problems and can significantly affect the company’s performance in both the short and long term.
Since ERP is a strategic tool that deeply permeates the company’s processes, the acquisition, replacement, and further development of the ERP system must receive the full attention of top management.
Conversely, when used correctly, ERP is an opportunity to create order internally and can serve as the glue that holds the business together—or even act as a key growth driver. Due to its business importance, we recommend that companies facing ERP investments treat the implementation as a strategic business initiative of major significance for the organization’s future development.
Because ERP is a strategic tool that reaches deeply into business processes, top management must pay close attention to its acquisition, renewal, and ongoing development. Decisions related to ERP are business decisions, and therefore it is essential that top management exercise due diligence. This also applies when a company considers going global. Here, the ERP system can serve as an important tool for building the business in new markets and ensuring that activities in these markets remain aligned through common processes. At the same time, the system can provide both overview and flexibility.
