Within any company, there are bound to be organizational silos. Whether your company has data silos or cultural silos, implementing ERP software may be one of the best ways to break through these isolating barriers. In fact, many companies pursue ERP projects to better integrate siloed functions like customer service, production, accounting and sales.
Silos often are created when different departments and job sites use different technology and processes for inputting and analyzing data. This inconsistency creates silos of non-standardized, unreliable data.
However, implementing an integrated ERP system enables shared data from any department to be immediately synchronized across all departments and locations. For example, if the sales department signs a contract to sell 500 units, ERP software can communicate this to manufacturing ensuring inventory can be checked and the job can be scheduled.
Silos are not just a problem in terms of data, but they can also slow down an ERP project. If your company is siloed, then different departments, workgroups and locations likely will struggle with key activities, like outlining business benefits that make sense for the whole company.
Therefore, it is essential to begin breaking down organizational siloes before ERP selection. While ERP software will help further break down silos, the foundation you lay during business process management is critical.
Following are three tips for beginning to break down organizational silos:
1. Standardize Your Processes
Your company’s different locations will have different business processes, some of which will need to be standardized. Other processes should be localized to fit the needs of each separate entity.
Striking the right balance between standardized and localized processes is crucial when a company wants to maintain its competitive advantage, which may differ slightly depending on the geographic location.
In general, though, standardization is beneficial for many business processes, especially financial processes.
2. Integrate Your Processes
We recommend an approach to business process management, called value stream mapping. This approach helps our clients depict the interaction between functions and eliminate non-value-added processes.
When improving your processes, you should involve employees from across departments to gain an understanding of the upstream and downstream inter-dependencies between processes.
3. Ensure Employee Buy-in
Employees are more likely to adopt processes that eliminate silos when they understand how these processes benefit them personally and the company overall.
Therefore, it is important to communicate to employees the value of cross-departmental collaboration. This ERP communication should be informed by a comprehensive organizational change management plan
So, How can you ensure you’re gaining competitive advantage from your ERP software? The answer is business process re-engineering.
Business process re-engineering is most effective when conducted before ERP selection. This ensures you don’t blindly adopt an ERP vendor’s industry best practices but only adopt them where they improve your competitive advantage.
In many cases, industry best practices may decrease your competitive advantage because your competitors who’ve implemented a similar system may be using the same best practices.
While improving your processes, it’s important to look for inefficiencies in your customer- and revenue-related business processes to identify opportunities to improve your competitive advantage.
Once you’ve documented your future state and gathered your ERP requirements, you can begin contacting ERP vendors. Our approach when helping clients evaluate vendors, we ensure clients have clear goals and priorities, so they know what to look for in a system.
For example, if you know that customer experience transformation is a priority, they’ll know to focus on ERP's CRM and advanced demand planning functionality.
If you’re hoping to improve your competitive advantage through ERP software, then it’s important to focus on CRM functionality and other functionality related to the customer experience. In fact, competitive advantage is a high-level business benefit that is typically achieved through more specific business benefits, like improving the customer experience.