Should we be afraid of standardization? – ERP today

Many organizations, whether they are implementing a new business system such as an ERP solution, or evaluating their entire application landscape, face the conflict between simplification and standardization. They also struggle to ensure that the distinct industry and organizational needs for which they are required are met.

In recent years, one of the most significant attempts to address this challenge of complexity in the area of ​​back-office systems such as ERP and HCM has been the adoption of industry-specific strategies. These assess business processes (and underlying technology) from the perspective of identifying core capabilities, common to all companies or businesses, and then focus on features and processes specific or unique to a given sector.

The goal has been to create a “best of both worlds” scenario that allows a business to maintain its unique footprint and competitive advantage, while reducing the complexity that can frustrate growth and time to market.

The impact of “industry-specific”

The trend towards industry-specific software has led to a wave of acquisitions and organizational changes at nearly all major software vendors. These purchases were aimed at acquiring the capabilities, functionality and innovation created by industry-focused vendors. Information to acquire GT Nexus in the field of logistics and shipping, Oracle purchase identify for health care, and SAP to assume
Ok for expense management are all examples. The goal is to provide solutions with end-to-end business processes for a given industry “out of the box”.

Systems integrators enter into this equation and add value to customers by knowing how to navigate the platforms developed as a result of these acquisitions. They also help interpret a customer’s demands and needs, turning the promise of software into successful solutions. So the question becomes how to set the right roadmap so that you can take advantage of all the standard capabilities you can, while meeting the industry and your own unique needs. In our experience, there are three major layers.

The fundamental layer begins with an acknowledgment of what is common to all industries. These can be understood as the achievement of best practices in business functions common to companies, as well as similar processes, or even the regulatory context. This layer should ideally be covered by the core functionality of enterprise software, such as Oracle Cloud ERP.

The second layer focuses on taking into account what is specific to a given industry. For example the control of subcontractors in construction, the management of subsidies in higher education etc. This layer typically requires a combination of the vendor’s industry software and an industry expert systems integrator’s “accelerators” – predefined templates, solutions and extensions that address industry-specific processes, analysis and results. industry.

The final layer is what sets an individual business apart – the “secret sauce” that makes that business unique. It’s important to recognize that it’s not just about their proprietary or patented products. The advantage with which a business is often defined is in terms of back office capabilities. Examples may include better use of specialist resources or integration of processes to enable better planning across the enterprise – and if you have adopted cutting-edge capabilities and industry-specific processes, this enables your organization to focus on this area.

In practice, these layers are not of regular “thickness”. In our experience, when evaluating successful technology investment and use, approximately 80% is covered by off-the-shelf software plus configuration, 15% by industry accelerators, and the remaining 5% is industry-specific. a given company.

However, through these three layers, it is essential to manage complexity by focusing on results and doing business the right way. Businesses should always prioritize the highest return on investment and low-hanging fruit to build momentum around these programs.

The limits of sector specificities

Many vendors now claim to have best practices, standardized processes out of the box, as well as industry-specific accelerators derived from deep domain expertise. And at the same time, corporate clients will inevitably focus on what they perceive to be unique to them. When trying to address complexity, these two conditions combine in the question of what cannot be standardized.

It is the area of ​​specific intellectual property in a company, and identifying it is not an easy task. This can include things like ‘project bibles’ in construction, different analytics for reports, or even just processes within a given company that are known to be different/better than the competition.

By working with your system integrator, you can both identify these upstream areas and develop your roadmap to ensure standardization and simplification of common areas. It can also ensure that the right time and investment is put into the things that really set you apart. This can cause conflict between operational and technology leadership, so change management is an essential part of any attempt to move toward less complexity. The good news is that even if a process remains unique, the investment made by some publishers in their platform allows them to be delivered and supported in a standard way.

The search for standardization has a calming influence against projects that “shine and die quickly”.

As an example of this blended approach, at Inoapps we have a client that designs, builds and installs 5G towers around the world. They used Oracle ERP to standardize procurement and HR, while maintaining the unique aspects of their speed of response in creating new customer-defined projects using Oracle APEX’s low-code development capability. The client uses process standardization to accelerate customer-requested innovation and do it quickly.

Managing complexity will always involve a sophisticated compromise. Industry demands and the changing business world are constantly changing, but for many companies, this must be weighed against the way things have always been done. Therefore, managing complexity is perhaps more accurately described as better managing the challenge of innovation. Again, this must be driven by a constant focus on the best result or the achievement of the best process.

Technology and complexity

Companies rightly prioritize incremental gains in the early cases of investing in new technologies, on the path to continuous improvement and optimization, and most software platforms and vendors support this. approach. But also, companies today realize that they must plan for real new opportunities: the rise of the subscription economy, the opportunities for expansion and commercial exploitation of new data are examples.

In the midst of this tension, IT is often a safeguard that prevents further complexity. The quest for standardization and evaluation of what can be achieved with existing technology investments from trusted partners is a calming influence against the threat of hundreds of isolated, “glow and die fast” projects. Indeed, the biggest threat from complexity now often lies with business departments chasing something new rather than just IT wanting to play with shiny new toys.

Indeed, IT itself has had to deal with years of complexity and the impact of new products and innovative technologies, changing the face of a market. The lesson learned is that to tame complexity, you must first embrace a level of standardization and recognize that as a business, or even an industry, you may not be as unique as you thought. But once those layers of commonalities have been stripped away, a company is left with what it does better than anyone else, and it can focus on those strengths to set itself apart from the competition.

Andy Bird is CEO of Inoapps

Sharon D. Cole