Businesses like yours are looking to digitally integrate their processes sometimes start with transforming their ERP system. Often a change in an organization’s ERP system is advertised as “digital transformation.” But really, what is digital transformation? For that matter, what is ERP modernization? In this blog post, we examine the differences between Digital Transformation vs. ERP Modernization.
Okay… but what actually is Digital Transformation?
Digital Transformation is something different for every organization, and data and analytics form a huge part of it – they give you reams of real-time information you can use to make informed business decisions.
If the data shows your customers are mobile-first, your business needs to be mobile-first.
If the data shows that automating particular processes can increase profitability, that’s what you do.
If data shows margins are better when customers purchase products occur online, focus more budget and time on extending your digital reach and increasing resource investments to this area.
If 3D printing becomes more accessible and you find that it meets a particular customer challenge, embrace it. Ideally you’d already have a plan in place if your data had identified an opportunity/justification for its use.
That’s what Digital Transformation is really about, adapting the culture of your organization so it’s always looking forward to how it can better operate with new technology. Whether it’s a new process, strategy or product, it needs to be designed and developed so it can easily change as the world evolves.
Now, what is ERP modernization?
In a nutshell, ERP modernization is taking your old ERP and upgrading to the new.
This can mean you:
- Use a Managed Services offering to ensure your current system is error-free
- Add a module to extend the functionality of your current ERP system
- Re-implement the latest ERP system available
- Migrate from an on-premise system to the cloud
- Do all of the above
Cloud-based technology has been disruptive across the business landscape, but so has improvements to ERP systems. The most modern ERP systems focus on integrating your finance, operation and supply chain data with the rest of your departments to create a holistic view of your business. The upside to having such comprehensive data is that you can crunch numbers to answer various questions to make data-driven decisions for the future.
A cloud-based ERP modernization effort can yield benefits such as:
- Increase worker productivity because employees can access the ERP regardless of location
- Lowered hardware costs because you don’t have to maintain the on-premise servers
- The ability to more easily scale your technology in conjunction with your business growth
Modernizing your entire IT system (including your ERP) can also mean involving a Managed Service. Using a Managed Services offering alleviates the pressure on your existing IT department. What happens if your senior IT person retires and your junior IT person gets sick? Do you have someone you can call as backup?
Or even if you have a well-established IT department that maintains your ERP system, ensuring they keep up with the ever-evolving skills can take up more resources than you can afford. Having someone on call regarding the latest update or disruptive technology related to ERP technology is something to consider.
How is ERP Modernization and Digital Transformation related?
Digital Transformation is the phrase on everybody’s lips. Entrepreneurs shout they’re redefining it, technology providers promise they’ll deliver it and businesses… well, they just want the commercial advantages it brings.
But does anybody actually know what it is anymore and how do they know when they’ve got it?
Contrary to what most organizations will tell you, digital transformation isn’t about investing large amounts of money in new products; it’s not just about migrating to the cloud; it’s not just about employing a digital team and it’s not making wholesale changes for the sake of change to your business. Although it might involve an element of these over time.
ERP modernization is one of the more significant activities under the digital transformation umbrella. ERP modernization is an opportunity to reshape your finance department, your operations, and your supply chain, along with technology to better address the challenges of the future.
How do I know when I’ve digitally transformed?
Sorry to be the bearer of bad news, but you’ll never “achieve” a complete digital transformation, and this is because for as long as customer needs/demands change, technology evolves, and markets and industries fluctuate, you’ll need to adapt. What you will need is a scalable technological grounding, and your ERP systems are key to this.
Modern cloud ERP platforms should allow you to create a flexible framework of applications and service delivery models that allow you to evolve to meet changing demands.
By all means, set yourself targets, make the right changes for your organization, analyze the data and then celebrate your successes. At the end of that period though, please don’t be surprised when a revised digital transformation strategy is required.
It’s because technology is more affordable and accessible to everyone, real Digital Transformation is about being fluid enough as an organization to change when the macro and micro factors that impact your business, occur.