Intelligent ERP: The Foundation of Digital Evolution

Tamara McCleary

Tech Unknown | Episode 4 | Season 2

Featuring guests Lisa Anderson, Tim Crawford, Eric Kavanagh, and Tom Roberts and host Tamara McCleary

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What causes a traffic jam? Isolation and lack of coordination. Everyone’s headed in the same direction, but each driver doesn’t know what all the others are doing. A sudden, unexpected lane change is all it takes to slow everyone to a crawl.

The same is true of business traffic jams: Supply chain bottlenecks, shipping close calls, and customer service fender-benders are all due to lack of a holistic vision of the enterprise. With communication and coordination, businesses can take charge of real-time data and keep the organization running at peak efficiency in real time.

Intelligent ERP is the foundational layer for this next evolution of business. But implementing it to maximum effectiveness requires new processes, new skill sets – and a cultural mindset that embraces change.

Our guests on this episode of Tech Unknown explore what intelligent ERP can do for businesses. More importantly, they dig into what business leaders can do before, during, and after an intelligent ERP implementation in order to get the most from their investment.

Listen to Learn:

  • How to maximize ERP effectiveness through customization
  • How intelligent ERP drives better business outcomes
  • How to empower real-time decision making with intelligent ERP

To learn more about intelligent ERP, visit S4hanaopp.com

About Our Guests:

Lisa Anderson

Lisa Anderson is the president of LMA Consulting Group. She’s an expert in manufacturing strategy and supply chain transformation, a public speaker, and author of I’ve Been Thinking: Turning Everyday Interactions into Profitable Opportunities.

“I’ve seen dramatic improvements in customer service levels, operational profit, working capital, and, very importantly, growth and improved customer experiences [with Intelligent ERP].” –Lisa Anderson

 

Tim Crawford

Tim Crawford is the CIO strategic advisor at AVOA, advising business executives on strategic IT transformation initiatives. He also hosts the CIO in the Know podcast.

“It’s important to understand what changes you need to make from a process and organizational standpoint, which goes well beyond the technology itself. When you do that, the opportunities really show themselves.” –Tim Crawford

 

Eric Kavanah

Eric Kavanagh is the CEO of The Bloor Group, a strategic consultant to the United Nations, and journalist at eWeek.com.

“A real-time ERP solves hundreds if not thousands of problems before they even appear. So it really is the next generation of business. And I’m quite sure that the success of tomorrow really hinges on decisions made today to move in that direction.” –Eric Kavanagh

 

Tom Roberts

Tom Roberts is the global VP of Software Services for SAP. You can find more from Tom in his articles on LinkedIn.

“It’s about giving information back to users in real time, or near real time, so they can make informed decisions. And not wait for the report at the end of the month, or the end of the quarter.” –Tom Roberts

Did you miss our last episode?

Check out our previous episode with guests Colin Shaw, Rohit Tripathi, and Pekka Porkka: “Say What? How CPaaS Improves Customer Experience And Business Operations.” Click here to listen.

Episode 4 Transcript:

Tamara McCleary: Welcome to Tech Unknown, a podcast to prepare your organization for the tech-centered future of business. I’m Tamara McCleary, CEO of Thulium.

Our big umbrella topic this season is data. We’re digging into how sharing data across the organization – collecting, processing, and analyzing it – can increase efficiency, reduce costs, and improve customer service.

This episode, we’re talking about the biggest possible picture: How businesses can get a holistic view of the flow of data across the ENTIRE organization. More than that, how they can use that view to redefine, evolve, and transform? The technology that makes all of it possible is intelligent Cloud ERP.

Enterprise resource planning systems – ERP – have been around for a while. But the latest generation are more powerful and easier to use than their predecessors.

Tim Crawford: Modern enterprise solutions provide something that’s pretty unique from their generational past. Modern solutions will provide greater insights to data. They offer greater speed, flexibility, and ultimately that leads you to more accurate and faster decisions for your business.

Tamara: That’s Tim Crawford, CIO strategic advisor at AVOA. He’s talking about the ability of a modern intelligent ERP to connect every part of an organization.

Tim: The combination of advanced technologies when married with ERP systems brings together the advantages of data as well as new technologies. The combination of analytics, AI, machine learning, along with data leads to a number of advantages, and using technology like cloud and hybrid as a combination with that is a pretty sophisticated and potent combination.

Tamara: In other words, ERP helps integrate data and processes across the organization. Why does that holistic approach matter?

Think of it like being stuck in traffic.

You might actually be stuck in traffic right now, come to think of it. But why do traffic jams happen? Highways are designed for fast and efficient travel. But what happens when one driver is trying to merge, and another driver doesn’t see them coming?

A crash, or at least a near-miss, and a slowdown for everyone else. All because one driver didn’t know what another driver was doing.

No one can see the entire flow of traffic and keep it running smoothly. That leads to backups, delays, and crashes.

This is the kind of situation many businesses are in. You can have great people, equipped with good technology, following processes… but if you have that lack of integration and oversight, you end up with traffic jams. You can get backups and bottlenecks in the supply chain, inventory on hand, shipping, and more.

As the president of LMA Consulting Group, supply chain expert Lisa Anderson has seen it first hand:

Lisa Anderson: If they don’t have their systems tied to their processes and their data, what happens is that we don’t know what to order in order to support production. So, production ends up running behind, or we’re constantly changing the schedule. We end up with customer service issues because keeping up with customer changes and understanding what requirements are throughout the supply chain, meaning, like, they have multiple facilities… even with one facility, having the right product in the right place at the right time is no easy feat if you don’t have the holistic view of the supply chain.

And, truly, the missing data can create havoc because your system, even if you have the best system ever, is not going to work if you don’t feed it with good data, and if you don’t have the data in the right places, and you don’t, you know, run your processes in the right sequence and the right order. So, there’s all sorts of things that will go wrong, even in the best of circumstances, if you don’t find a way to make sure that the people, the processes, and the systems are complementing each other instead of fighting against one another. So, that’s really what I’ve seen as far as the results.

Certainly, poor customer service. Definitely, that also results in lackluster profitability because you don’t have as powerful results in your operational efficiencies, and you definitely don’t have as effective of results in your supply chain. So, your purchase price variances can be, you know, negative because you don’t know what you needed ’til the last minute. So, there’s all sorts of things that can go wrong there, added freight cost, expedite cost. And that’s on the purchasing end as well as the customer end. And then, there’s, you know, cash flow, for sure. So, one of the top things that goes awry when you don’t have the holistic view of this high-level planning equation, or the order fulfillment process, or whatever you wanna call it, is that you have to increase your levels of inventory, which is cash flow, in order to support at least reasonable levels of customer service.

And so, pretty much every dollar that you have in inventory that is not being effectively used to cover for volatility in your customer base or your supply base, perhaps, is just basically wasted money that you cannot invest elsewhere.

Tamara: I can’t imagine any businessperson likes the phrase, “wasted money you cannot invest elsewhere.” So let’s flip that around: If you can modernize your ERP and get that holistic, integrated vision…

[Celestial choir and harps]

You can RECLAIM that money by cutting costs, increasing efficiency, and getting rid of those traffic jams forever! Hallelujah!

Imagine a city where city planners understand how the whole city is connected, how much traffic there is during different times of day, where there’s roadwork, how the weather affects traffic… then taking all that data in real time, turning it into insight, and being PROACTIVE about strategically managing the traffic flow. Think how much you could optimize and route traffic to keep people moving!

That’s what business with a modern ERP system can do. They’re getting real-time insight, from the big picture to the little details, and they’re using it to run the entire organization more effectively. Here’s Eric Kavanagh, CEO of the Bloor Group, to explore the possibilities:

Eric Kavanagh: So, you take some data in. You do something with it, then you persist it, and someone else does something with it.

And one of the key issues that comes into play there is latency, meaning in the old way of doing data management, there’s a lot of latency between the time data is acquired, the time it’s used, for example, the times it’s updating. These are all sort of batch processes that take time and introduce a variety of issues like data quality, like cost, for example. It becomes expensive to keep moving data all around.

And the modern ERP system, enterprise resource planning, the modern ERP system, if it’s in memory, as SAP S/4HANA is, can really tackle data management in a much more immediate fashion. And in doing so, you lose a lot of the difficulties. You manage to circumvent some of the challenges and hurdles that had been really plaguing traditional data management for decades.

Tamara: Modern ERP systems enable information management as a discipline – a strategic part of your organization’s operations. It’s about treating data as the priceless business asset that it truly is.

Here’s Tom Roberts, global VP of Software Services for SAP, with an example of a business that was able to optimize the flow of information, eliminate traffic jams, and see some astonishing improvements.

Tom Roberts: A UK-based company called Ultra Finishing has used the technology and taken this approach to really bring together all of their order processing. You know, this particular company had a problem where, through acquisitions and through history, they had a number of different legacy systems that were handling inbound order management. And for them, this represented a real obstacle. So taking a low-code approach, they worked with one of our partners, called DataXstream, that has a product called OMS+. OMS+ is all about this order management system and bringing it together. Now they built that and put it on SAP Cloud Platform. So think about this. This is very-specific technology built by one of SAP’s partners running on SAP’s Cloud Platform, right? And what it did was it allowed them to retire a bunch of legacy systems that they were, you know, that they were operating on. And in the end, take what they call order input speed, which is the rate at which orders are able to come into their manufacturing capability, by 40%. Now, if you’re a manufacturer, and you’re in business, this is an example where a technology choice of using SAP Cloud Platform, coupled with the low-code approach, really changed the game for that small business. Right now, they have a single way for these orders to come into the business, they can do that 40% more quickly, that’s a real value to their customers, because they’ve reduced that frustration of how these orders are coming in, and as well for their employees supporting those orders as they’re coming in, and do it in one unified way.

Tamara: Sounds great! So, what’s holding businesses back? Tim says that the mindset is the major challenge:

Tim: The biggest issue that I often see companies using when they consider modern ERP solutions is they’re bringing forward a lot of that inertia and process debt into these modern systems and the challenge is it really doesn’t give the modern system an opportunity to show its value to the business. So it’s important to understand what changes you need to make from a process from a cultural standpoint, organizational standpoint, which goes well beyond the technology itself. When you do that, the opportunities really show themselves.

Tamara: So it’s not just about buying shiny new technology. The tech is the foundation, of course. But what makes the difference is how the tech enables you to transform how you do business. That transformation touches every part of the organization, from customer service to the finance department. You have to have people willing to change and the capacity to adopt new processes.

Lisa: You have to start with the people. You could have the best system ever, you can even have the best processes documented, and still, it would be an utter disaster if you didn’t have your people on board. So, you start with people.

Tamara: Of course, the process of adopting – and adapting to – a new ERP is going to be different for each business. Customization is a crucial part of the equation.

Lisa: By no means do I find that clients can just follow generic best business processes even for their industry. Instead, really, what they need to do is tailor to what’s gonna make them the market leader and what’s going to give them an upper hand, if you will, with their customers, and in terms of their supply base, and with their particular employees. So, how do we tailor our processes, utilizing the system to achieve it? Because with robust ERP systems, like SAP, there’s always a way to tailor the processes to meet the needs. It’s just understanding how to do that.

And that’s how I see folks… you know, once they do that, which, of course, is no easy feat, but, you know, it’s not like you have to get 100% to the end goal, you have to be moving a directionally correct way to achieving these simultaneously and not thinking it’s all one thing, and, you know, it’ll get you to where you wanna go. So, when you’re looking at the whole things together, you know, I’ve seen dramatic improvements in customer service levels, operational profit, working capital, and, very importantly, growth and improved customer experiences.

Tamara: The whole process of modernizing your ERP is like building a burrito at one of those choose-your-own-toppings places. The meat, cheese, beans, salsa – those are all of your business units, data streams, and processes. The ERP is the warm, fluffy tortilla that brings everything together into one coherent whole.

Some businesses have pinto beans and white rice. Some have every single topping – even the guacamole! And that costs extra! But no matter how you customize your ingredients, the ERP keeps it from falling all over your lap. Metaphorically speaking. Man, I shouldn’t have skipped lunch today.

While I run for a snack, here’s Lisa Anderson with one of the many success stories she’s helped create for her clients.

Lisa: Sure, sure. I mean, one that just comes to my mind is the client that, you know, had an ERP system but really wasn’t utilizing it at all. Well, you know, they weren’t utilizing it to any capacity other than to take orders and to ship orders, really. And so, they were able to get by, but, really, it was limiting the growth because they couldn’t take credit card orders, it would take them forever and a day to close a month-end, and, actually, to even invoice customers.

So, they could hire additional people and continue to hire additional people, but you’d still be limited by what you can do without leveraging technology. And, by all means, you know, when it comes to things like taking customer orders through portals and e-commerce, you know, it’s just not gonna happen very effectively in a manual way.

And, really, also, they’re a manufacturer. And so, without having those materials that are in your ERP system, if they’re outside of it, you can get by. However, growth is just problematic because keeping track of all of that and knowing what’s available for your customer orders, it’s just a time-consuming task. So, they were limited for growth.

And so, you know, we worked through that by taking the holistic view of how do we consolidate and make sense of this from a process point of view, how do we clean up the data and make the data accessible, and how do we leverage the system in order to automate the process in a way that would provide additional value? And so, when we went live with pricing, you know, we were able to shorten the time to invoice pretty dramatically.

We also worked to make other process improvements and leverage additional pieces of technology when it came to determining what to order and what to purchase in order to support production, so we had more of the right items in place. We didn’t have to expedite as much in terms of changing schedules and moving materials around, and we were able to keep up with that in a much better way.

So, you know, we started…we did the crawl, walk, run type of scenario. We went down that path and are leveraging more advanced technologies in a simpler way so that we can be successful, you know, with growing the business. And the great news is, is that the business is growing and, you know, we’re able to keep up successfully with that growth. You know, as we iron out and continue to improve these processes, money and more money is gonna…profit will flow to the bottom line.

Tamara: There are two major ways that businesses can customize their ERP burrito: through APIs and with low- or no-code customization. Here’s Tom to explain:

Tom: APIs are the doorway to the gateways that are going to allow you access to the really valuable content that’s living inside another application. Many of us grew up in a world where data sat in the database and in order to access that information, you went right at how the data looks, not the way it is anymore. The way it is today is that the data is really defined by the semantic layer inside the application. And in order to access that, you come in through the interfaces, the APIs. SAP API Management, of course, is a version of giving you an ability to tap into that really valuable content that’s sitting and managed inside of that application. And this greatly reduces work that a developer needs to do in order to get the quality insights that they need out of that application and use it in an accurate way.

Tamara: APIs make it possible for an ERP to share data with hundreds of different software solutions. Low-code and no-code customizations make it easier for businesses to create their own highly customized solutions to meet internal needs – without having to be expert programmers.

Tom: Why low code? Well, even if you were to just take the movement of existing customizations associated with our previous version of the ERP, SAP ECC [Enterprise Central Component], and say, I want to bring all of that innovation that I added to our customization, that I brought to that solution, you’re talking about billions of lines of code that need attention, right? They need to be modernized or rewritten. You’re not going to do that with traditional means; you really need to do that with a low-code approach in order to be efficient,

When you move to a model like low code, this empowers what we call the citizen developer, right? This empowers people who are not traditional coders to create applications to meet their needs on their own. So you reduce the supply chain. And you increase… you take the people who have the content knowledge of what they actually wanted to see in the application and you empower them.

Low code is now possible because of the evolution or the advancement that’s been made in development tools, right? In the old days, if you go and look at what it takes to develop and be a programmer, coding is very deliberative. It’s very specific. And as such, it’s labor-intensive. Whereas if you go with a low-code approach, in many instances, you’re visually creating the application that you want to see, and you’re letting the technology work for you. So in effect, it’s the new way to really build applications, and it can have up to 50% increase in efficiency.

Tamara: In other words, if your burrito needs kimchi and grape jelly to fit your business needs, low-/no-code makes it easy to whip them up in the kitchen and add them in.

Okay, before I give everyone indigestion, let’s move on to another success story. For this one, we’re taking you to a bustling hive of high-tech wonder: a truck stop.

Wait… a truck stop, Tom?

Tom: Those of you who logged a lot of miles on interstates will have seen Love’s, the truck stops that dot the entire United States. In fact, they’ve got 480 locations in 41 different states across the United States and across North America. And it’s a $26 billion company. You know, the problem that Love’s has is not a unique one. They have a backlog and a big demand for business apps. And they really had no quick way to really solve that they tried a couple of different tools that are out there in the marketplace. And none of them were really a fit. And as you can imagine, because this revolves around their customers, as most things do, and how many locations they have, they really had a high emphasis around mobile, right? They really had a particular interest in that. And they’re an SAP customer, but they use other technology.

They have the classic scenario where they wanted to integrate or connect to SAP applications, but they also had information that they wanted to bring into these apps in non-SAP systems. So a classic hybrid approach where they’re trying to really meet the needs of the truckers, who are highly mobile, and their employees. So this is where the solution came in handy and really delivered a lot of value. So some of the things that you would think that they would be interested in, of course, are in these heavy-duty tires. Right. So truckers’ whole world revolves around tires, and they have a thing called tire pass. And so they created an application that made it easy for them to take care of things like roadside assistance associated with the tires that are something you would classically understand for a trucker. And these are the types of things that are top of mind, as if that tire goes out, you know, they’re not making money. And so these are the kind of apps that are mission-critical for them, but also have to bring together different things from the back office and allow them to support also things for hospitality and even in the financial sector. So they had needs across their entire enterprise and they wanted one way to do it. So Love’s is really a great example of using this type of low-code approach to resolve a backlog and meet the needs of some highly, highly mobile customers.

Tamara: This story shows how every modern business is digitally connected and data-dependent. As in any industry, truckers are now mobile workers who telecommute and depend on technology to be productive. And intelligent ERP can keep them moving the same way it can keep your supply chain running smoothly.

If we go back to our traffic analogy…

Sorry to bring you back here, but we won’t stay long. As I said earlier, businesses need visibility, communication, and collaboration to keep traffic flowing smoothly throughout the organization. But there’s one more thing we need: real-time feedback. Imagine driving a car on a five-second delay…

Now imagine running a business on a three-MONTH delay. Better yet, imagine how much better you could run it in real-time.

Tom: Our founder Hasso Plattner really had a vision that when you talked about ERP systems, his vision was that there shouldn’t be replicating data all over your enterprise, there should be one source of the truth. And, you know, throughout the years and different iterations of our ERP offering, going all the way back, this was always the guiding vision. The database underneath the ERP system is really 10 years old now. And I can remember a number of years ago, when this was the big news at Sapphire dropped on everybody, all of our customers, all of our partners, that we would be moving to this new architecture and moving away from the classic relational database and going to an approach where the data would be stored in columns instead of rows where really, the primary reason for that wasn’t to have any architecture but was really to move to real time or near real time, data retrieval for masses of data so that you could have the analytical view of your entire enterprise.

Taking this columnar, in-memory database approach allows us to serve up views or intelligence associated with the enterprise, and that’s why we’re now using this term, intelligent enterprise. It’s one of the keys to it, because it’s not just enough to keep track of those transactions. It’s about giving information back to the users in real time or near real time so that they can make the informed decisions and not wait for a report at the end of the month or the end of the quarter. That’s a very powerful concept.

Tamara: Here’s Eric with a few examples of what real-time information management with intelligent ERP looks like in real life:

Eric: So with data management, a lot of times you get all these different copies of data that are pulled off, extracted, and loaded into other systems like CRM systems, call center systems, reporting systems, whatever the case may be, you wind up with lots of different copies of that data.

Well, theoretically, with an intelligent ERP, you don’t need all those copies, and so you increase all sorts of data-quality issues by doing that. But you also can benefit from the power of immediacy, meaning you can now run forecasts on live data, instead of, again, waiting for some extraction from ERP system, which then gets offloaded and loaded into some other kind of system, that’s your forecasting system. Well, now you don’t have that latency. You don’t need to have that latency. You can do your forecasting from within the system.

And theoretically, you should also have access to all sorts of other useful data like preferences for being contacted, for example. So an intelligent ERP, theoretically, in the best-case scenario can solve just countless data management challenges. And help an organization really stay on top of what it’s doing and what its customers are doing, what its customers want.

So if you get into the whole business of procurement and supply chain, which of course is central in the world of ERP, one of the really cool benefits is that you can reduce waste. You can expedite delivery. You can reduce quality problems that typically plague organizations. There are all these benefits you can get from having a robust, real-time ERP system.

So, if you think about what that means in terms of stores, being able to have the right products at the right time, it’s huge because then your customers get what they want. They don’t have to wait for products. You know which products are in high demand, and you can optimize that supply chain. So, you reduce CO2 emissions, for example, because you just don’t have as many trucks going back and forth. You can reduce warehouse costs.

You can expedite the time of the delivery. Basically, in the supply chain world, a real-time ERP solves hundreds if not thousands of problems before they even appear. So it really is the next generation of business. And I’m quite sure that the success of tomorrow really hinges on decisions made today to move in that direction.

Tamara: So let’s put it all together – and let’s unravel this traffic jam once and for all. In order to modernize with intelligent ERP, you have to start with the right mindset: An openness to change, a willingness to experiment. That has to come from leadership and be adopted across the organization.

Then you’re ready to implement a next-generation ERP and start putting it to work. You can customize it through API-enabled software solutions or create your own customizations in a low-/no-code environment. But make sure you’re letting the ERP capabilities drive your new processes – don’t try to shove your old workflows into the new system.

Once you have your data streams integrated and key processes automated, you can have that clarity of vision to go from this….

[Beeping, frustrated yelling]

To this…

[Smooth traffic whizzing by]

All the way to this.

Thanks for listening to the Tech Unknown podcast. To learn more about intelligent ERP, go to s4hanaopp.com. You can also find a transcript of this episode and more at digitalistmag.com. And make sure to subscribe wherever you listen to podcasts.

I’m Tamara McCleary, and until next time: Stay sharp, stay curious, and keep exploring the unknown.


Tamara McCleary

About Tamara McCleary

Tamara McCleary is CEO of Thulium, a social media analytics and consulting agency, driving Smart Social through proprietary data analytics and award-winning storytelling. Tamara ranks in the top 1% in influence globally. Named the #1 most influential woman in MarTech by B2B Marketing, recognized by Entrepreneur Magazine as one of 10 Online Marketers to watch, and named Top Digital Marketer by Brand 24 in 2019. Featured multiple times in Forbes for her pioneering influencer marketing strategies on social media for B2B and Enterprise, Tamara serves as a unique advisor to leading global technology companies such as Verizon, IBM, Mercer, MMC, SAP, Dell EMC, and AWS.