ERP Solutions and the Changing Role of the CIO

1. ERP Solutions and the changing role
of the CIO – Roadmap to business
innovation leadership
This e-book explains how new Enterprise Resource Planning software solutions (ERP) support
the changing role of CIO's today and analyses the most important current ERP trends.
ERP Solutions
of the CIO

2. Table of contents
Introduction: The changing role of the CIO
I. Investing in IT
II. ERP solution benefits
III. Top Trends CIO's should consider
IV. Which ERP for which organisation?
Conclusion

3. Introduction
The changing role of the CIO
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, CIO's
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 CIO's 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) http://www.huffingtonpost.com/daniel-burrus/todays-cio-the-chief-inno_b_3989501.html
(2) http://www.v3.co.uk/v3-uk/news/2322642/cios-must-prepare-for-two-tier-it-management-as-third-era-of-computing-dawns

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 CIO's 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 CEO's 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 CIO's 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) http://www.gartner.com/newsroom/id/2603623
(6) Gartner, CEO and Senior Executive Survey 2013: CFO Focus Turns to Growth, p. 1

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 CIO's 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, www.sageerpx3.com

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. 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) http://www.idc.com/getdoc.jsp?containerId=241279
(9) http://www.enterpriseappstoday.com/erp/top-8-erp-trends-for-2014.html
(10) http://www.enterpriseappstoday.com/erp/top-erp-trend-usability-says-nucleus-research.html

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, CIO's 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. 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 CIO's 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 CIO's 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 CIO's 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) http://blogs.gartner.com/mark_raskino/2013/10/24/the-return-of-strategically-inventive-it-leadership-at-last/

10. www.sageERP.co.za
Sage ERP Africa,
Sage Technology Park,
102 Western Service Road,
Gallo Manor 2191
Telephone: +27 11 304 2000