Enterprise Resource Planning (ERP) systems are intended to bring an organization’s core business processes together. Finance, purchasing, inventory, customer management, reporting, and operations can all benefit from having connected systems and a reliable source of information.
Selecting the right ERP can be challenging because, although businesses across industries share many common functions, the processes used to carry them out can vary significantly.
A manufacturer, feed mill, grain elevator, production livestock business, insurance carrier, healthcare organization, and financial services company may all need to manage customers, transactions, and financial data. But underneath those common needs are very different workflows, terminology, regulations, and operational requirements.
That is where an industry-specific ERP can provide significant value.
1. My Precious Snowflakes
Most businesses share certain fundamental processes. They purchase goods and services, pay invoices, manage customers, track financial performance, and produce reports.
But the similarities only go so far.
Feed mills and manufacturers may need to manage raw materials, production schedules, formulas or bills of material, quality controls, and finished inventory. Insurance organizations deal with policies, billing, claims, underwriting, rating, and regulatory requirements. Healthcare organizations have their own combination of clinical workflows, financial processes, privacy requirements, and compliance considerations.
A “catchall” ERP can often be configured or customized to support specialized requirements. The more important question is: how much effort does it take to make the technology fit the business?
A targeted ERP starts closer to the way the organization already operates.
2. Pennywise, dollar foolish
Sometimes the clearest indication that an ERP and a business aren’t well aligned can be found outside the ERP itself.
When an ERP is not configured or extended to support the specific needs of a business, employees may be forced to fill the gaps with manual processes that are difficult to maintain and prone to human error.
Employees spend time moving and reconciling data. Critical processes become dependent on spreadsheets or individual employees. Eventually, the organization may find itself building business processes around the limitations of its technology instead of using technology to support its business processes.
An industry-specific ERP at a premium won’t eliminate every manual process, but starting with technology designed around the needs of the industry can significantly reduce the number of gaps that need to be filled.
3. To customize or not to customize?
No ERP is going to perfectly match every organization out of the box.
Some customization is to be expected! But, if you’re spending the same or more money on customizing an ERP as you spent on the ERP itself it may not have been the right ERP for your organization to begin with.
Customization comes with tradeoffs. The ERP will be more fine-tuned to your business, but when system upgrades come up, there is risk that your customizations may be missed or not compatible with the upgrade.
This is something to keep in mind when selecting your ERP for the long term.
4. To thine ownself be true!
One of the biggest advantages of an industry-specific ERP is that the organization doesn’t have to start every conversation from zero.
Terminology, common workflows, reporting requirements, and industry-specific processes may already be reflected in the platform. Depending on the industry, that can also include functionality supporting regulatory or compliance requirements.
This can make implementation conversations more productive because teams can spend less time explaining fundamental industry concepts and more time determining how the technology should support the organization’s specific needs.
It can also make adoption easier for employees when the system reflects terminology and processes they already recognize.
5. Choosing the right ERP starts with understanding your processes
ERP selection can easily become a technology exercise: compare features, evaluate vendors, review pricing, watch demonstrations, and select the platform with the strongest scorecard.
Before choosing or replacing an ERP, organizations should understand how work actually moves through the business.
Where does information originate? Who needs it next? Where is the same information being entered more than once? Etc.
Understanding those processes helps an organization distinguish between what it truly needs from an ERP and what simply exists because “that’s how we’ve always done it.”
What does this mean for you?
There is no universal rule that an industry-specific ERP is always the right answer. For some organizations, a general-purpose platform with strong configuration and integration capabilities may provide the flexibility needed, especially when industry-specific ERPs may not be keeping up with the technological or user interface times.
The goal is to find the technology that best supports how the organization operates today while providing room for where the business intends to go tomorrow.
That can be achieved by thinking long term for business and considering the following questions:
How much effort ($$$) will it take to make that application work the way our business actually operates?
Ultimately, the value of an industry-specific ERP isn’t simply that it offers specialized features. It reduces the distance between how the technology works and how the business works.
At Captios Partners, we help you evaluate your business, workflows, and technology needs through the lens of your goals. Understanding how your business operates today is the first step toward determining what technology should support it tomorrow and where enhancements can be made. Reach out directly to Michael at Pelsoci.michael@captiospartners.com to start the conversation.