Digital Transformation with ERP: A comprehensive guide

Date: 19 July, 2023

Is Digital Transformation just a catch-all phrase or more?

While the word ‘Digital transformation’ has gained significant popularity over the years it has been difficult to decide if it is a mere buzzword or a necessary intervention for businesses of all sizes. Its essence goes beyond just the trend label. It looks different for every company. Referring to it as a foundational change would be apt, extending beyond the mere superficial adoption of new technologies or migration to the cloud. In general terms, we define digital transformation as the integration of digital technology into all areas of a business resulting in fundamental changes in how businesses operate and how they deliver value to customers.

Digitisation, Digitalisation, and Digital Transformation

Digitisation is the process of converting analog information into digital format which involves taking physical or analog data, such as text, images, audio, or video, and converting it into binary code that can be processed and stored digitally.

For example, scanning a paper document and saving it as a PDF file is a form of digitisation. It focuses on preserving and reproducing analog information in a digital form.

Digitalisation, on the other hand, involves comprehensive transformation of processes, systems, and activities to leverage digital technologies and take advantage of their capabilities. Digitalisation involves integrating digital technologies into various aspects of an organisation’s operations, often to improve efficiency, effectiveness, and innovation.

For example, Online Payment Digitalisation: Customers can click on a payment link, access a secure payment portal, and make payments electronically using various payment methods.

Digital Transformation, in a definitive term, is a more strategic concept that encompasses a profound and comprehensive change in an organisation’s mindset, culture, processes, and business models to fully embrace digital technologies and drive innovation. It involves using digital technologies to create new business models, improve customer experiences, and drive organisational change which speaks as a more holistic approach than others .

For example, adoption of Digital Marketing by firms to drive online sales through traffic to its website and social platforms.

According to the World Economic Forum, 87% of companies acknowledged that digital transformation will disrupt their industry, but only half of them claimed to be adequately prepared. This indicates that there was a recognition of the significance of digital transformation, but many organisations were struggling to keep up with the pace of change.

Digital Transformation with ERP A comprehensive guide

The Year 2020: A Year of Digital Transformation

87% of companies believed they needed to embrace the tech intensity to be successful in the future

As per tech intensity quantitative research 2019

The survey was done in 2019, a pre-pandemic era and while believing this the pandemic pushed us a few years ahead of the curve and changed the way we do business in all sectors and regions.

Digital Transformation with ERP

What is the need?

Digital transformation digitises various business processes which helps in Streamlining the operations.
The real time visibility of an ERP system helps in gaining Real-time Data and Insights.
While enabling employees to share data documents and insights in real-time it helps in Improving Collaboration and Communication within the Organisation.
By integrating customer data and interactions it helps in having an Enhanced Customer Experience.
ERP systems generate reports and analytics that provide meaningful insights into business performance, trends, and opportunities which further helps in bringing Data-driven Insights and Reporting.
As businesses grow, managing operations, data, and processes manually becomes increasingly challenging .It widely improves Scalability and Growth that a business needs.
With the help of Regulatory Compliance it helps the organisation stay compliant.

Choosing the Right ERP System

“How you gather, manage, and use information will determine whether you win or lose.” - Bill Gates

Tips for Selecting the Right Vendor

1.Define your requirements to the vendor clearly.

2. Look for vendors with expertise in your industry.

3. Evaluate the Vendor’s Track record and Reputation in the market

4. Assess the vendor's ERP system to ensure that it offers the necessary functionalities and features that align with your business processes and requirements.

5. Consider the vendor's ability to integrate their ERP system with other existing systems or third-party applications used in your organisation.

6. Evaluate the vendor's implementation methodology, support services, and post-implementation support.

7. Assess the financial stability of the vendor to ensure their ability to support the ERP system in the long run.

8. Consider the total cost of ownership beyond the initial licensing and implementation costs.

9. Consider the vendor's approach to collaboration, communication, and relationship building.

10. Evaluate the vendor's future roadmap and commitment to innovation.

Get a detailed idea on how to choose the right ERP partner. Read our blog

Customisation or Out-of-the-box?

It is important to understand that the Customisation of an ERP is a major process of tailoring the functionality, workflows, and features of the ERP system to match the specific requirements and processes of an organisation.

Customisation allows the organisation to align the ERP system with its business processes and workflows by custom-building it, enabling a closer fit between the system and the needs of the organisation.
It gives a competitive advantage to the organisation by helping it differentiate itself from other competitors.
By simplifying complex processes, customisation helps in giving an enhanced user experience.

The out-of-the-box features usually

reduce the time required for implementation since these features are readily available and preconfigured. It allows organisations to deploy the system faster and start reaping the benefits sooner.
reduce the need for extensive development and customisation efforts, resulting in lower implementation costs.

Integration and How

Let us understand a few examples of Integration with other tools and the features they unlock:

1. LS retail: LS Retail a comprehensive software solution designed specifically for retailers integrated seamlessly with a ERP solution like Microsoft Dynamics 365 Business Central to offer these benefits:.

It combines the robust ERP functionalities with retail-specific features like point-of-sale (POS), inventory management, merchandising, and pricing.
It ensures seamless synchronisation of data which means that if a change is made in one system, it is updated in both.
As the organisation grows or expands into new markets, the integrated solution can accommodate increased transaction volumes, new store locations, and additional sales channels.
Integration enables businesses to leverage customer data stored in Business Central for personalised marketing campaigns, loyalty programs, and targeted promotions thus enhancing customer engagement.

2. B2B Customer Portal: A B2B customer portal is a secure online platform that enables businesses to provide their B2B customers with self-service access to information, services, and resources.

Integrating a B2B portal with an ERP solution helps access relevant information, place orders, track shipments, manage invoices, and communicate with your organisation, all through a self-service portal.
With the integration, customers can place and manage orders directly through the B2B portal. It enhances the order management system.
The integration here provides consolidated analytics and reporting. This provides insights into customer behaviour, purchasing patterns, and engagement metrics.
The integration enables workflow automation by leveraging the capabilities of the ERP system. For example, when a customer places an order through the portal, the integration triggers automated processes within the ERP system, such as inventory updates and order confirmation emails.

To understand more about integration capabilities of an ERP system with another platform, refer to our blog

The implementation and integration of a new ERP solution brings a major change in the organisation and helps in gaining a competitive edge with the competitors but not being able to manage the change might lead to the failure of the set objective which is the digitalisation of the process and digital transformation in the organisation.

Let us gain an understanding of how to manage and evaluate the change and stay on top of the defined goal.

How to Handle Change Management and Training

Change management plays a crucial role in the successful implementation of an ERP system. It focuses on preparing and supporting employees for the changes that come with the new system, addressing resistance, and fostering employee buy-in. Here’s why change management is significant and strategies for managing resistance and ensuring effective system adoption through comprehensive training programs:

Significance of Change Management

Minimise Resistance: Change management helps to identify potential sources of resistance and address them.
Promote Employee Buy-in: Effective change management fosters employee engagement and buy-in by involving them early in the process. It provides opportunities for employees to contribute and provide feedback.
Smooth Transition: Change management ensures a smooth transition to the new ERP system. It reduces the risk of disruptions, productivity loss, and employee dissatisfaction during the implementation process.

Strategies for Managing Resistance and Fostering Employee Buy-in

Communicate and Create Awareness: Transparent and frequent communication is vital to build awareness about the reasons behind the ERP implementation and the benefits it will bring to the organisation and employees.
Involve Employees in the decision making process: Such as selecting the ERP system, defining processes, and designing workflows.
Address concerns and provide support: Offer Training,resources, and assistance to help employees navigate the changes.
Leadership Support and Role Modelling: Leaders should actively demonstrate their commitment to the ERP implementation, communicate the importance of the change, and serve as role models for embracing the new system.
Celebrate Successes: Recognise and celebrate milestones and achievements throughout the ERP implementation. This helps maintain momentum, boosts morale, and reinforces the positive outcomes associated with the change.

Providing Comprehensive training Programs

Ensure System Understanding: Training should cover not only technical aspects but also the impact on day-to-day tasks, new processes, and the benefits it brings to employees and the organisation.
Customised Training Approach: Tailor the content, delivery methods, and level of detail to meet the specific needs of various departments.
Hands-on Training: Hands-on training, such as workshops, or guided practise sessions, allows employees to gain practical experience and build confidence in using the new system thus increasing the level of comfort with systems like ERP.

Monitoring and Evaluation of the ERP

It is essential to evaluate and monitor the ERP and here is why:

Performance Analysis

Identify System Performance: It allows organisations to identify any bottlenecks, performance issues, or areas requiring optimisation.
Measure Key Performance Indicators (KPIs): It helps evaluate if the ERP system is delivering the expected outcomes and meeting organisational goals.
Proactive Issue Detection: By identifying problems promptly, organisations can take corrective actions before they escalate and impact operations.

User Feedback and Issue Resolution

Collect User Feedback: Regularly collecting feedback from system users allows organisations to identify pain points and potential areas for improvement.
Address User Concerns: Addressing user concerns and issues promptly helps build trust and enhances user adoption.
Continuous User Training and Support: Based on user feedback, organisations can provide additional training or support to address specific user needs.

Continuous Improvement Initiatives

Process Optimisation: Organisations can use this information to identify areas for process optimisation, automation, or streamlining.
System Enhancements and Upgrades: It allows organisations to stay updated with the latest system capabilities, bug fixes, security patches, and feature enhancements provided by the ERP vendor.

Emerging Technologies

It is important to acknowledge the ever-evolving nature of technology and the impact of emerging technologies on digital transformation.

Emerging technologies, such as artificial intelligence (AI), machine learning (ML), Internet of Things (IoT), blockchain, and robotic process automation (RPA),are shaping the future of digital transformation. They have the potential to further optimise processes, enhance data analytics capabilities, improve decision-making, and enable new business models.

AI and ML can unlock valuable insights from large amount of data, enabling predictive analytics and intelligent automation. IoT connects devices and sensors, allowing for real-time data collection and analysis, leading to increased operational efficiency and improved customer experiences. Blockchain technology enhances data security, transparency, and trust in transactions, while RPA automates repetitive tasks, freeing up human resources for more strategic activities.

Incorporating these emerging technologies into the digital transformation journey can open up new possibilities for organisations. By leveraging the power of AI, ML, IoT, blockchain, and RPA, businesses can enhance their ERP systems’ capabilities, optimise processes, and gain a competitive edge in the market.

However, it is important to approach the adoption of emerging technologies with a strategic mindset.As technology continues to advance at an unprecedented pace, organisations must stay informed and agile. Regularly monitoring emerging technologies and their potential impact on the digital transformation journey is vital.

Role of business leaders in Driving Digital Transformation

Vision and Strategy: They define the goals, objectives, and desired outcomes of the transformation initiative. And by aligning digital transformation with the overall business strategy, leaders provide a clear roadmap for the organisation’s digital journey.
Change Management: Leaders can communicate the importance of digital transformation, create awareness, and foster a culture that embraces change.
Investment and Resource Allocation: Business leaders play a crucial role in securing a necessary budget and resources, and prioritising investments based on strategic goals and expected return is one of their main tasks.
Collaboration and Stakeholder Engagement: Business leaders need to engage with executives, department heads, employees, and external partners to ensure alignment and support for digital transformation efforts.
Technology Adoption and Innovation: It is one of their tasks to stay informed about emerging technologies, assess their potential impact on the business, and encourage experimentation and projects to drive innovation and improvement to foster a new culture.
Talent Development and Digital Skills: Leaders must prioritise talent development and ensure that employees have access to training and development programs to acquire or enhance digital skills.
Performance Measurement and Evaluation: Business leaders are responsible for defining key performance indicators (KPIs) and metrics to measure the success of digital transformation initiatives.
Customer-Centric Focus: The leaders of the company are capable of driving a customer-centric approach by making sure Customer insights and feedback should drive decision-making and shape digital transformation strategies.

Conclusion

In today’s rapidly evolving business landscape, digital transformation has become imperative for organisations seeking to stay competitive and achieve long-term success. As discussed in this blog, ERP implementation plays a pivotal role in the digitalisation journey, offering a strategic step towards embracing the digital era.

“The biggest part of our digital transformation is changing the way we think.”

In conclusion, ERP implementation should be viewed as a strategic step towards digitalisation. It empowers organisations to embrace the digital era, achieve operational excellence, and gain a competitive edge in the market. By leveraging the benefits of ERP, organisations can enhance their agility, efficiency, and decision-making capabilities, driving long-term success in the digital age.

We encourage you to consider ERP implementation as a vital component of your digital transformation journey. Embrace the opportunities it offers to streamline your operations, improve collaboration, and drive growth. If you’re ready to embark on your digital transformation journey with ERP, reach out to our team of experts for guidance and support. Together, we can help you navigate the complexities of ERP implementation and unlock the full potential of digitalisation.

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