Aug/091
Do ERP Best Practices Equate to Award Winning Company Performance? Part 2
Best-In-Class Performance 
We should understand what Aberdeen defined as best-in-class so we have a meaningful yardstick by which to measure. These metrics are of course closely related to the manufacturing sector, but you can easily see that many of them would apply equally well to non-manufacturing environments. At the end of the day, there will still be a top 20% in any industry, a bottom 30%, and those 50%’ers stuck in the middle.
The data contained in Table 1 should be a huge wake-up call because it indicates that the top 20% are getting leaner and meaner, and thus stronger. The rest (average and laggard) are not keeping pace, which leads to the conclusion that the competitive advantage gap between the best-in-class and the others is growing larger.
How do the best-in-class do it? Do they have better visibility and communication across departments and functions? If so, is it due to different or better versions of software? Are best-in-class companies perhaps operating more current versions of their ERP systems than the rest of the companies surveyed? The reported data indicates that 62% of the best-in-class companies are running on the publisher’s latest available software release or one release back, compared to only 17% of the companies in the average or laggard classification able to make the same claim.
Is this the first piece of evidence suggesting that keeping an ERP system current and updated (a best practice) correlates to better hard dollar results for a company? Stay tuned as we will examine this question and more in the next posting.
Jeff Mack
President & CEO
ICS Support, Inc.
Aug/091
Do ERP Best Practices Equate to Award Winning Company Performance? Part 1
We often disseminate information about best practices for a company involved in selecting and implementing an ERP business system. These words of advice are frequently rather academic in nature as they are generally not linked with any real before and after examples. So it got me to wondering about how we can derive cause and effect analysis between ERP system best practices and best-in-class company performance. And as I thought about this further, many questions came to mind.
- Do best-in-class companies adhere to best practices regarding their ERP systems?
- If so, is there a direct and traceable connection, or is it more of a feel good association?
- Is the ERP system implementation viewed as an event or a journey?
- What percentage of system functionality is actually being used?
- Do they opt for best-of-breed point-to-point solutions or a well integrated suite of products?
- Who’s the best person to place in charge of the ERP system?
- What impact do post go-live practices and decisions have versus pre go-live decisions?
- How do they view the practice of customizing their ERP software?
- What’s their strategy regarding upgrades and keeping their system current?
- How and when do they measure ROI?
As you can imagine, it would require an exhaustive study to connect all the dots and produce empirical data to answer these questions across all major industries. So I settled for the next best thing – I found an Aberdeen Group study entitled “ERP in Manufacturing 2009 – Expanding Beyond Traditional Boundaries”. This study solicited feedback from 435 North American manufacturers in a diverse set of industries. Since the manufacturers serve a strong cross section of industries, I am inclined to believe that the reported data is reasonably comparable for distributors, service industries, and several other industries not specifically targeted in this study.
In the next several days, I will tackle some of these more tantalizing questions to determine how the star performers view and manage their ERP systems and investments.
Jeff Mack
President & CEO
ICS Support, Inc.