Achieving High Performance Through Strategic Use of ERP

March 12, 2008
Research shows that globally integrated operating models are the key to value creation and high performance in the industrial equipment industry.

Enterprise Resource Planning (ERP) systems play a particularly important role in their support, as globally integrated operating models are sustained by highly efficient business systems that could not exist without the common, harmonized data and processes generated by ERP.

Accenture’s most recent cross-industry survey of organizations with enterprise systems confirms the benefits of standardization and integration efforts powered by ERP—especially for top financial performers. Relative to their peers, high-performance businesses using ERP systems have returned more than twice as much to their shareholders in the past five years.

Like leading companies in other industries, high-performance industrial equipment organizations plainly make much more effective use of ERP systems than their competitors. By leveraging the transparency and consistency that ERP systems deliver, leading companies have extended the scope of their global operating models and thus maximized the financial benefits of globalization.

Success factors

 There are four critical factors that explain why high-performance businesses use ERP systems much more successfully than their peers.

• Approach ERP implementation strategically, as part of a transformational program of business change
• Engage the entire workforce in a process of ongoing enablement
• Selectively customize components of their ERP systems to achieve differentiation
• Institutionalize metrics to drive value delivery and continuous improvement.

Organizations that place standardization use of ERP systems at the heart of a transformational program of business change benefit from it. For example, leading companies recognize that harmonized processes and data enabled by ERP systems provide the backbone for a common, repeatable business system that ensures quality, consistency and predictability across the global organization. Instead of struggling to run diverse legacy processes, practices, policies and systems when new businesses are acquired, they have a common global operating model supported by ERP systems.

Managing human performance is a central challenge in achieving high performance during enterprise change. Indeed, according to one study, the majority of project failures are due to human and organizational problems. High-performance businesses that implement ERP as the foundation of an optimized business system and global operating model know this, recognizing in particular that their workforces must develop new skills if their companies are to succeed.

Top performers are more likely to tailor strategic components of their systems, simplifying and standardizing the rest. Their goal is to enhance distinctive capabilities and facilitate the differentiation that sustains competitive advantage. High-performance businesses only do this when such moves will achieve specific business objectives; they continually standardize and simplify everything else.

One of the strongest and most consistent differentiators of high performance is the use of metrics and analytics. Leading manufacturers understand that information and data are key drivers of value, with the power to pull geographically scattered businesses into a much more integrated and competitive “virtual” organization. Metrics also align personal and organizational behavior with desired business outcomes and allow progress to be measured against goals.

ERP systems nourish and strengthen any globally integrated enterprise and support high performance in our industry. These systems facilitate the optimized business systems that sustain global operating models. And businesses that make strategic use of ERP systems as part of a program of transformation and ongoing improvement not only realize their strategic priorities faster and more cost-effectively than their peers, but they also deliver more value to their shareholders—more consistently and for longer periods of time than their competitors.

Paul Loftus, [email protected], is North American Practice lead for Accenture, a consulting firm in New York City.