Why Do Companies Need ERP Buy-In At The Executive Level?

ERP-system-application-management | Photo Courtesy of bbvatech http://www.flickr.com/photos/bbvatech/7345244598/sizes/q/in/photostream/Strong business cases can be made for best-of-breed ERP solutions, but the same holds true for solutions that standardize business processes on a single platform.

The decision should be based on a company’s specific business requirements, an article on the ERP Cloud News blog explains. Often times, it’s driven by a manager’s confidence in deploying an ERP system.

While such a system is designed to be an all-embracing technology solution, many businesses view it as “an island of excellence,” separate from the rest of the company’s IT infrastructure.

Some companies tend to outsource the application management side of the business. In other words, they don’t have someone in-house who understands the ERP component. This leads to a knowledge gap in the organization concerning how things are done.

That’s not good. When people don’t own and understand their system specifics, it can cause internal strife and increased turnover.

Having no in-house competency harkens back to the old data center approach back in the 1950s and ’60s. In those days, most small- and medium-sized businesses didn’t run their own systems. Instead, a data processing bureau processed the data for them.

The problem is that when your core IT system is completely out of your hands, there usually are significant agility problems, according to the ERP Cloud News article.

The key is to have ERP buy-in at the executive level. Managers need to know the requirements and objectives for the business management or ERP system to be truly valuable.

Any inefficiency in an ERP system will quickly be reflected in business operations and likely will develop into a growing problem. ERP systems, after all, have big appetites for data. Businesses must be prepared for the complex requirements that ERP transactions require.

Although those who tout the growth of subscription-based models would disagree, ERP systems aren’t likely to completely disappear, the article predicts. That’s because so many core functions require tight integration and already have optimized workflow bound into the end-to-end process.

Source: ERP Cloud News, November 2012