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ERP Solutions and the Changing Role of the CIO


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ERP Solutions and the Changing Role of the CIO

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ERP Solutions and the Changing Role of the CIO

  1. 1. ERP Solutions and the changing role of the CIO – Roadmap to business innovation leadership ERP Solutions of the CIO This e-book explains how new Enterprise Resource Planning software solutions (ERP) support the changing role of CIOs today and analyses the most important current ERP trends.
  2. 2. Table of contents Introduction: The changing role of the CIO I. Investing in IT II. ERP solution benefits III. Top Trends CIOs should consider IV. Which ERP forwhich organisation? Conclusion
  3. 3. The changing role of the CIO Introduction It is difficult to find another role in today’s business world that has changed as rapidly as that of the chief information officer (CIO). Only a few years ago the heads of information technology departments were mainly there to make sure the infrastructure a company needs to perform its ‘business as usual’ was in place and functional. But with the ever-growing importance of technology-driven innovation their role has changed fundamentally. Not only has it become more diverse and challenging, CIOs now need to cover a whole lot more ground and stay on top of a rapidly changing field defined by quick shifts and advances. Above all, they are suddenly shouldering a much higher amount of responsibility. The nature of the CIO position has changed substantially with rapid and successive developments altering the very fabric of the business world, making it the responsibility of the CIO to incorporate these new methodologies and applications into business. This fundamental shift in the role of the CIO reflects the deep changes business environments undergo on many different levels. ‘The visual, social, virtual, and mobile transformations that are already happening are creating a new golden era of technology-enabled innovation, and the CIO needs to be leading the charge,’ says Daniel Burrus, CEO of Burrus Research(1) . The single most important factor in CIO personnel decisions is now what new, innovative solutions they can bring to the company. In stark contrast to the old image of the CIO as a dry IT-guy, s/he is now supposed to ‘wow’ the board with amazing schemes to facilitate company growth and performance. Not all CIOs are up for this challenge. Recent surveys revealed that more than half of the CIOs participating in Gartner’s large-scale report Taming the Digital Dragon: The 2014 CIO Agenda feel that technological change is happening too quickly for them to keep abreast. The requirement to deliver both basic IT for an organisation while preparing it for new issues around big data, the Internet of Things, cloud computing and up-skilling workforces, will require a “bimodal” approach to IT. ‘Most organisations will require a two-speed approach’, says Gartner Fellow Dave Aron. ‘The first will remain as conventional IT with conventional vendor and approaches to things like risk and governance; and the second mode will be non-linear IT, with uncertainty and the need for innovation, collaboration and new skills(2) .’’ What is becoming clear is that the mounting challenges at the crossroads between technology and business innovation are leaving CIOs in need of the right tools to enable positive change for their companies. (1) (2)
  4. 4. I. Investing in IT The opportunities IT-solutions offer for any business are virtually endless – and decision makers know this. According to a Gartner’s study, top business priorities shifted in recent years from cost saving, which was prevalent during and shortly after the global financial crisis, to growth and profitability. For no less than 41 percent of all companies growth is now one of the top-3 priorities, and IT solutions play a pivotal role in making this happen(3) . The figures are overwhelming: Half of all companies participating in the study plan to increase their IT spending in the following year, and 52 percent already have a digital strategy in place that is aligned with the company’s overall goals(4) . ’This requires CIOs to prepare for the first significant wave of IT investment in more than five years’, Gartner’s concludes. The willingness to invest heavily in new IT solutions is a direct consequence of the recognition that new technologies can positively affect any internal department that needs improvement. ‘Social, mobile, cloud and information continue to drive change and create new opportunities, creating demand for advanced programmable infrastructure that can execute at Web-scale’, says David Cearly of Gartner(5) . Another factor is the heightened focus on business analytics. The most significant keyword in this respect remains Big Data, which is widely acknowledged to hold tremendous potential but relies entirely on IT innovations that were unavailable or impractical only a few years ago. Considering all this, it is no surprise that investing in IT is very much on top of many a company’s agenda. Having said that, of course cost effectiveness also remains a business priority, and often CEOs feel as if their IT departments could do more to keep the costs down. More than half of the companies cited in Gartner’s report believe that the most significant way CIOs can boost their contribution would be for them to ‘run IT like a business’(6) , prioritising the streamlining of processes and cost- effectiveness. How can a CIO bridge the gap between the demand for paradigm-changing innovation and the pressure for cost- effectiveness? One way forward lies in the implementation of enhanced Enterprise Resource Planning (ERP) software solutions, which manage work-flows and information across locations in one unified system. (3) Gartner, CEO and Senior Executive Survey 2013: CFO Focus Turns to Growth, p. 3 (4) - ibid. (5) (6) Gartner, CEO and Senior Executive Survey 2013: CFO Focus Turns to Growth, p. 1
  5. 5. II. ERP solution benefits As detailed above, a sound IT strategy is the driver behind most recent paradigm shifts in business, be it information management through the cloud and remote working, or performance and resource management across various locations. Most CIOs who face the challenge of leading business innovation today rely on ERP systems to achieve their goals. In short, an ERP solution is a business application that integrates all functions individual departments operate with into a single software application. The usage of only one platform greatly facilitates a wide variety of processes. While ERP systems do not automatically generate innovations, the way they improve the very structure of information opens up a number of opportunities. Here is an overview of the most important benefits an ERP system offers: A single view of your business The use of a single, unified system reduces the manpower wasted on manually tracking down vital information across the company. Information is to be found in one central spot rather than in dozens of disparate departmental systems. This allows for the gathering of data in real time and greatly helps in reducing so-called ‘information silos’ that obstruct full inter-departmental co-operation. Streamlining of processes Similarly, reporting systems used to evaluate and process information of all kinds are streamlined, preventing different departments from ‘speaking different languages’ when communicating. This ensures the smooth completion of standardised processes and fosters inter-departmental synergies. Transparency With all company data stored on the same system, privileged departmental information is a thing of the past. This is especially helpful for senior management personnel. They need comprehensive and intelligible overviews but without an ERP solution they have to rely on disparate information prepared for them by others. The complete visibility ERP software provides ensures that they keep the macro perspective in sight easily. Short- and long-term ROI Modern, enhanced ERP solutions can greatly improve a company’s performance from day one. Right after installation, re-structured and streamlined information allows for new insights into the way a business works from the inside. The accumulated savings in invested project hours, and the new clarity of view that can uncover previously hidden cases of resource wastage, make for a very strong return on investment immediately. At the same time, the performance of ERP solutions keeps improving the more relevant data it has access to. A company that continuously feeds its ERP system new information will see that the full potential of enhanced resource planning is practically limitless. Ideal for international companies Resource planning is particularly challenging for global companies with offices in several countries. The different business cultures and legislation frameworks prevalent in each country can lead to friction losses that negatively affect the whole. A global ERP solution that enables companies to have global access to production, inventory, purchase, sales, and order information across the business and to automate complex processes between sites leads to major improvements of company processes and increases transparency. Global forecasting possibilities, financial aggregation, and international invoicing as well as the support of international bank formats are also crucial for the management of a global company. Because ERP solutions can easily be implemented on any base structure, they allow for the synchronisation of business data across various countries and continents. No matter whether offices work in Portuguese or Polish or whether transactions are made in euros or yen, the data they will be working with looks the same anywhere. ‘An ERP solution allows us to integrate information across countries, for example between our main office in Portugal and our production in Poland. With an ERP solution all systems are always updated, and with all the information centralised we can react more quickly to the customer’, says Tiago Pinho, Chief Technology Officer at ERTGRUPO(7) . (7) Sage customer testimonial,
  6. 6. Effective 2-Tier Strategies The implementation of an ERP system enables a company to run an efficient 2-tier approach. It allows departments to focus on their core area of expertise - whether a region or industry segment - while still benefitting from being part of a larger organisation. The data and qualitative information used to frame decision making is more relevant to the daily operations of businesses in practice. Best solution for mobile technologies Modern ERP systems are specifically designed to take full advantage of the ‘digital revolution’. Recognising that more and more businesses rely on the hyper-versatile communication structure that mobile devices made possible, ERP solutions can be accessed from nearly any device fit to do so. Be it a smartphone, tablet computer or smartbook, employees can update the system with their latest information as and when they care to. Easy to synchronise with 3rd party solutions Another advantage of ERP systems is that they can connect easily to software platforms used by external applications. The collaboration with supply chain partners and customer portals can be greatly facilitated by directly linking to their software interface, extending visibility and control for both sides. Single software package for the whole company With company-wide ERP solutions the same software package is used across all departments. This means that no expensive and troublesome updates of individual software systems will be necessary. The purchasing and maintenance of software systems is centralised, freeing up resources in the individual departments and avoiding incompatibility problems across different branches. Suits all sizes of businesses Since an ERP solution is a software system based on modules, it is highly flexible and can be adjusted to the needs and requirements of any company, no matter its size. Companies that rely on highly complex processes and structures benefit most when a wide variety of modules are implemented, whereas businesses using a more straightforward model can use the core benefits of ERP systems with a slimmer solution. Security The usage of ERP systems can substantially increase security across the whole company because the same protocols can be applied onto the entire system in only one step. There is no more need for various security solutions tailored to individual department requires. In addition, security breaches from the user side also diminish since each and every transaction made on the system can be easily tracked, increasing accountability and ease of control.
  7. 7. III Top Trends CIOs should consider ERP solutions and how they are used undergo constant changes. CIOs need to be up to date with the latest trends that will dominate user practice and impact on future planning. Cloud-based ERP Arguably the most talked about change in ERP technology in recent years, the advent of the Cloud means significant changes to the way an ERP solution can contribute to a company’s success. The ability to use applications straight from the web without resorting to static, on-premise software is less costly and more speedy than traditional systems. The time savings in installing cloud-based systems, in comparison to on-premise ones, are enormous and can literally save years. It is little wonder therefore that customer demand for cloud solutions has been increasing steadily over the past years. ‘The convergence of trends in cloud computing, embedded analytics, and commerce will drive new competitive dynamics, offering new applications and functionality to customers and end users while also driving demand for related security technology and services,’ says Christine Dover of Enterprise Applications and Digital Commerce(8) . Interestingly, the rise of Cloud-based ERP also means that competition among ERP suppliers is increasing. Cloud- based solutions can be developed and supported much more easily than on-premise systems, which encourages ‘small’ players to take a stab at the market. Mobile ERP Going hand in hand with the Cloud is the further development of mobile ERP and BYOD (bring your own device) schemes. As briefly mentioned in section II, the ubiquity of handheld and portable devices of all kinds means that nowadays business is done in various places, all the time. The direct connection to the main system via such devices is an invaluable asset. ‘Gone are the days of accessing ERP systems from a single computer – now employees use phones and tablets just as much - if not more - than they do a computer or laptop’, says Eric Kimberling, managing partner at Panorama Consulting Solutions. ‘Vendors are finally beginning to provide compelling and secure ways for employees to accomplish this, so look for increased adoption of mobile solutions(9) ’. The inclusion of BYOD can also add to the cost- effectiveness of ERP solutions. Employees can use their familiar, private devices on top of company-owned ones, reducing the need for IT support and diversifying usage. Usability Looking beyond these three top trends in the industry, many believe that usability will quickly become the real overriding issue with ERP software. Experts say that Cloud-based ERP and mobile ERP could have developed much faster, had it not been for relatively poor user friendliness in these areas. ‘Vendors realise they must make investments to reduce the complexity of ERP and make it more usable for end users’, says Rebecca Wettemann of Nucleus Research. ‘It’s not just doing mobile, but making mobile more intuitive. It’s not just adding new features but really thinking about making the UI more user friendly(10) ’. When adapting to new software solutions, businesses tend to behave as consumers first, expecting intuitive design. New ways to provide such a beneficial user experience will be a major trend defining ERP development in the next years. (8) (9) (10)
  8. 8. IV Which ERP for which organisation? When choosing the right ERP system for their company, CIOs need to be treading carefully. Due to the popularity of ERP solutions, there is now a myriad of service providers on the market, promising any number of things to extend their client base. A judicious decision for the right system and the right ERP partner is crucial for the success of an ERP implementation. The six most important criteria when assessing the best ERP solution are the following: Future Proof It is vital to understand that an ERP system fulfills its potential best when it is thought of as a tool to facilitate the positive long-term development of your business. Before deciding on which system or which modules to get you need to be aware of where you want your business to be in five or even ten years. The further ahead you plan now, the more adapted your ERP solution once you reach the next milestone. Tailored to Your Business Each business is different and each company has its own priorities. When dealing with a potential ERP supplier, it is important to make sure your specific needs and demands are met all the way. From the initial road map to the system settings and tools that will ultimately be used – each step needs to be perfectly tailored for the client’s needs. Solid Implementation It is impossible to spend too much effort on the pitch- perfect implementation of your ERP system. A smooth and solid start to the ERP solution usage makes sure everyone is on board with the structural changes and guarantees the best results from day one. The implementation needs to be both quick and thorough, and has to include employee training as well as a forward-thinking deployment strategy for a successful transition. Relying on standardised implementation models that have been tried and tested many times over can help speed up the process significantly. Integration The choice of the right ERP solution depends to a large degree on the systems it is supposed to replace. In nearly every case there are parts of the pre-existing setup that can be easily integrated into the new one. With the right solution internal data can be transferred cleanly from one platform to the other. Experienced partner While ERP systems are easy to use once everything is running smoothly, without an experienced partner who can deliver expert consulting services and support there is a risk of running into trouble, especially during periods of adjustment. It is absolutely crucial that your support partner truly understands your industry – not everything that works for a car part supplier will matter to a bookseller. It is also imperative that your ERP partner has a proven track record of successful projects and can be expected to still be in business many years down the line. Considering how fast the field of ERP is moving, this latter point is not to be underestimated. ROI As mentioned above, in order to justify the implementation of an ERP solution, CIOs are reliant on a quick return on investment. Few companies will be willing to wait for years until the new software platform makes back the money it cost to install; it is therefore vital to ensure that the ERP system of choice is functionally rich, efficient, and user-friendly enough to have an immediate impact on daily business. What helps is that a savvy ERP setup usually reduces the cost of IT purchases and maintenance sufficiently to offset other costs right away.
  9. 9. Conclusion The times when a company’s IT system was merely a tool to conduct the business activity, which functions just fine on its own are gone forever. Today the information technology a business uses directly reflects its strategy and vision. This is why ERP systems are now the most customary solution favoured by CIOs in all business segments. In an environment where the efficient management of information decides over success or failure, a well-implemented ERP solution allows a company to grow and prosper according to its potential. Of course, it is not the ERP system in itself that provides innovation. It is the possibilities it creates through the delivery of better business intelligence that enables better decisions. It is up to the CIOs to become the leaders of innovation most companies now require them to be with the help of ERP software. While the possibilities are endless, the changes and constant updates ERP systems undergo require CIOs to stay truly engaged with the opportunities that keep occurring. ‘The inventive CIO is reborn’, says Gartner fellow Mark Raskino. ‘The inventive CIO will strive to develop unique new technology capabilities for competitive advantage, using a powerful and creative internal technology resource base. If your company wants to remain a leader in your industry, information and technology must become a core competency again(11) ’. (11)
  10. 10. Pour plus d’information : Tél. : +33 556 180 134 Sage (UK) Limited, North Park, Newcastle upon Tyne, NE13 9AA Telephone: 0845 485 9800 Sage ©2014 - All rights reserved - Sage - Simplified joint stock company with a capital of 500,000 euros - Head office: 10 rue Fructidor -75017 Paris France - RCS Paris 313 966 129 - The information contained in this document may be altered without prior notification. The logos, product or company names mentioned in this document which do not belong to Sage, are used for identification purposes only, and may constitute trademarks for their respective owners. - Photo credit: Kerry Harrison - S1093_MME_02-14