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Posts Tagged ‘Aberdeen Research’

aberdeen logoAberdeen Research recently released a report entitled “Roll With The Punches: Select Flexible ERP and Be Prepared for Business Challenges.”  In it, they highlight key benefits they have documented in organizations deploying what they call “flexible” ERP systems.  Among the highlights…

  • “Best-in-Class” organizations are 83% more likely to have an ERP solution that can be quickly tailored to reflect business change.
  • Those organizations in turn are 59% more likely to be able to monitor regulatory compliance.
  • They are 3 times as likely to be able to tailor interfaces to reflect user preferences.
  • And they saw a 15% improvement in operational costs as a result of their solution.

Flexible here denotes a system that is “easily tailored to reflect business change.”  The concepts of customizable and modifiable come into play, along with the built-in flexibility accorded by today’s more modern ERP systems, which include features like drill-downs, dashboards and business intelligence, and triggers or alerts.

The firm looked at key reasons that companies replace their systems.  The two big ones:

  • Obsolete technology foundation or infrastructure of their current system
  • Lack of features

Aberdeen went on to list the ratios of improvement in operations that were seen by firms who implemented new systems, and their results are notable.  According to a table from their August, 2014 research results, they include the following results when companies deployed such “flexible” systems:

  • 45% improvement in inventory turns
  • 24% change in stock to sales ratio
  • 15% change in operational costs
  • 13% improvement in administrative costs
  • 20% improvement in complete and on-time delivery
  • 14% improvement in inventory levels
  • 16% improvement in internal schedule compliance
  • 19% improvement in cycle time of key business processes

As organizations grow, Aberdeen concludes, it is necessary to change their technology as well.  As they note in conclusion: “ERP is the key technology used to support an organization.  Ultimately, flexible ERP creates a flexible organization that can take on any new challenges.”

You can download a copy of the full Aberdeen report here.

 

 

 

 

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We introduced Business Intelligence (BI) in our prior post, noting the growing demand on the part of company managers to have the ability to quickly and easily drill down into company data for better, more strategic (and ad hoc) decision-making.

One of the best tools, made available by today’s more modern ERP systems, involves drilldown.  All too often, clients we see possess the ability to drill down into their data, but lack the training or diligence to pursue it.  That’s a shame, because with drilldowns – essentially, the ability to use your mouse and a few keystrokes to penetrate and display crucial accounting and inventory data on your own – you can do a host of useful things, like…

  • A call center manager might be able to understand what products drove call volume to an all-time high.
  • A warehouse manager at a distribution firm might better understand the reasons behind a rash of recent late shipments.
  • A CFO could get a better handle on which service areas are responsible for higher than average costs, and why.
  • A parts service manager could see new trends in part sales, and gear up (or down) accordingly.

The list of samples is endless.  And it’s all available due to an ability to be ‘agile’ in the pursuit of data that can lead to better decisions.

In their recent report on Agile Analytics, the researchers at Aberdeen summarized their findings with four Key Takeaways, which we note below:

  • Automate and standardize business intelligence wherever possible.  Time is scarce, and users are often harried.  Simplify their jobs by automating the most commonly needed tasks, reports and information.  Make the data easy to get to.  This ultimately frees up scarce IT resources for more challenging work.
  • Democratize analytics.  Involve users in the creation and dissemination of data at every step of the way.  Allow them to review and select presentation tools if possible.  Give them a role in the analysis.
  • Let business users take care of the “last mile.”  Allow users to customize the presentation of the final information they seek.  Tailor the dashboards.  Ensure that the right data is available to the right folks. 
  • Make interactive visualization pervasive.  For some BI needs, a static report view is fine.  But in most cases, getting dashboards into the hands of the most users serves a company’s best strategic purposes.  As Aberdeen Research’s David White, author of the study referenced here says, “It provides a shorter path to needed information and shortens the time to decision.”

 

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In this and future posts we’ll look at some topics of interest to our ERP clients including:

* Business Intelligence & BI Tools (next two posts)

* What you need to know about PCI compliance

* A Primer on “Dimensions” – a powerful feature of Microsoft Dynamics NAV software

First… Business Intelligence, from highlights of a report by Aberdeen Research.

Business intelligence, or “agile analytics” continues to be a hot topic in business today.  Studies show that the demand for BI today is shifting to one driven not so much by an increasing volume of data, but by an increasing demand for information.  In other words, it’s business executives, not necessarily the IT folks, who are demanding more and better data and information to drive their business decisions.

The idea behind the term “agile BI” refers to the ability to get at information quickly, at any time, anywhere.  This goes to the idea of ad hoc inquiries, queries, dashboards and drilldowns, as opposed to the ‘old’ model of static reporting.

Moreover, today’s business mangers want to be able to do this for themselves.  Again, it speaks to speed, quickness, and agility of information.  You want to know today’s shipping numbers today… you want to be able to parse sales by salesperson and territory quickly… you want to know which products are moving quickly, and which are not, and you want to be able to do it yourself.

Often, the reporting for the management team still needs to be formalized and standardized (this is where reports do still matter).  In these cases, recommendations include:

  • Identifying source data, the location and quality of that data, and ensuring it’s ’clean’.
  • Integrate the data, ensuring it’s stored where it needs to be.  This typically means that the data should be inside the ERP system.
  • Reports, charts and dashboards should be used to make common data available across the organization, in common and readily usable formats.

By making data available to many… by using formats usable by various levels of staff… by ensuring that peers within the business framework are actively involved in the discussion about what data is needed, and how it is presented… companies are able to make more timely, more accurate and better informed decisions – often from the bottom up instead of the top down.  The result is more timely and better tuned performance.  You’re asking the right questions – and getting the right answers – in a timely manner, which can then be acted upon commonly by all interested parties.

We’ll continue this discussion in the second half of our post.  Stay tuned…

 

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According to research done recently by Aberdeen Group, over half of all SMBs (small to midsize businesses) believe they are “too small” for Enterprise Resource Planning (ERP) software.  A third say they have been getting along just fine without it.

Ironically — or perhaps not — companies who do utilize an ERP system:

  • Ended up with better operating margin growth over the past two years (about 20% better growth in those margins) than those who did not have ERP
  • Had more accurate inventory (about 10% better) that those who did not
  • Could now make faster decisions (about 80% faster) that those who did not
  • Cut their cycle times from completion of service to invoicing by 33% compared to those who did not utilize ERP
  • Retained more clients that non-ERP users

While those who utilized ERP the past two years reported modestly better results standardizing, streamlining and improving the efficiency of their business processes, they reported dramatically improved visibility into their business – about double that of those without ERP.

This, of course, has a direct bearing on strategic action, and those who could take advantage of their information systems proved to have a giant leg up on those who did not.  Those who had ERP systems were more than twice as likely to have the ability to do demand planning and forecasting. 

In the end, even those who did not implement ERP particularly well still saw improvements in inventory turns and reduction… reductions in operating and administrative costs… and improvements in on-time delivery.  And those who put some real effort into their ERP implementations, i.e., those who did them well, simply saw dramatic improvements in all these areas.

There appears to be a direct correlation between firms who want to grow and those who deploy ERP – with the latter supporting the former to a very large, clear and proven degree.

ERP adopters end up being able to support the growth they seek, become easier to do business with, improve operational performance by nearly every measure gauged, and satisfy the pressures in the long run to reduce costs.

In ERP, it would appear, there are two kinds of companies: those who manage by spreadsheets, desktop applications, homegrown aps and (frequently old) accounting systems… and those who have adopted modern ERP systems.

Aberdeen’s research puts a very fine point on the improvement performances attained by the latter.

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In our previous four posts, we’ve looked at what Aberdeen Research has learned by surveying wholesalers and distributors about their use of ERP in the management and operation of their firms.  In our series, we’ve highlighted key pressures on these firms, key decision drivers, strategic actions these firms are taking, and in our most recent post, trends that show how companies are best utilizing ERP today.

In today’s fifth and final post on the topic, we briefly reprise Aberdeen’s “Key Findings and Recommended Actions”. 

Aberdeen reveals two brief conclusion sets – one for “Followers” (defined earlier as the bottom two-thirds in terms of operational performance in four key areas) and one for “Leaders” (the top third).  Their conclusions…

“Follower” Steps to a Successful ERP Strategy include:

  • Provide decision makers with automatic notifications.  “Managing to exceptions only is not necessarily a good idea.”  Immediate notification about key events and conditions allows for proactive management.  Leaders are 85% more likely to do this!
  • Continuously improve.  It simply leads to better performance.
  • Plan and forecast demand.  Leaders are 1.5 times more likely to have this ability, and Followers need to attain this capability.  Errors here lead to missed opportunities or increased costs, and distribution, as an industry, is particularly susceptible to miscalculations here.

“Leader” Steps to a Successful ERP Strategy include:

  • Enable mobile access to ERP.  It’s a 24/7, web-enabled, mobile business environment.  Make agile decisions, combat adverse events and grab strategic opportunities by giving decision-makers all-the-time access to information.
  • Measure returns on investment.  More firms are beginning to do it, and Leaders gain profit advantage by doing so.  Fine-tune your ERP by recognizing its flaws, and build improvements in.  The cost-savings over time will pay for it.
  • Look to wholesale and distribution specific modules and extensions of ERP.  Requirements planning, warehousing and forecasting capabilities optimized for distribution enable managers to gain further operational control and greater visibility over their business – and to capture the profits that follow.

We hope you’ve profited from this series of posts.  ERP today is a critical strategic tool for any SMB in the distribution business.  Neglect the lessons of either the Followers or the Leaders cited in this series at your own peril. 

Any way you slice it: ERP systems today are one of the best – and most mission-critical – investments any firm can make. 

And one final time, to give credit where due: You can access the full report here for free (according toAberdeen, “a $399 value”)

DO YOU HAVE questions or comments about ERP in the distribution environment?  Drop us your comments and questions below… we’ll be sure to respond.  And thank you for your attention!

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While Aberdeen Research’s latest report on the current state of the wholesale and distribution sector’s use of ERP to improve performance contains lots more data, we’ll close out this five-part series with just two more posts.

Readers of the full report will find all sorts of compelling and corroborating evidence that proves that ERP systems, when fully implemented, maintained and utilized, provide significant, measurable strategic leverages to the firms that use them.

A few key takeaways from Aberdeen’s report…

  • REAL-TIME visibility into operations and transactions is becoming increasingly important in today’s business as a competitive driver – better info leads to better analysis which leads to better managerial execution… all of which leads to better profits, and a top survival strategy.

 

  • Access to technology – 24/7, from any place at any time – is the new normal.  Users and decision makers increasingly demand access to their systems from mobile devices, via web browsers, from any laptop or desktop computer… and they increasingly use aids like triggers and alerts to manage exceptions, processes and events.  It will only increase.

 

  • Measurement leads to optimization.  Fewer than half ofAberdeen’s surveyed organizations are currently doing this.  But those that do are able to identify where their ERP is lacking – and optimize it further.

In our next and final post in this series, we’ll look at whatAberdeenitself concluded were its key findings and recommendations…

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In two previous posts in this series – here and here – we noted that so-called “Leaders” in the distribution/wholesaler business sector outperform “Followers” according to a recent survey by Aberdeen Research, and in doing so are better utilizing their ERP systems.  While there’s no certainty of causality here (Do Leaders outperform because they better utilize their systems?… Are they more inclined to better use their systems because they are already performance Leaders?…) – some observations either way are in order.

According to Aberdeen’s research results earlier this year…

“In response to these pressures [business pressures cited in our previous two posts] wholesalers and distributors are enacting a series of strategic actions to improve their organizations’ performance…”  Those strategic actions include:

  • Standardizing business processes
    • Cited by over 60% of all firms
  • Streamlining and accelerating processes to improve efficiency and productivity
    • Cited by over 50% of all firms
  • Providing visibility to business processes across functions and departments
    • Cited by over 40% of all firms
  • Modernizing technology infrastructure and applications
    • Cited by over 30% of all firms

“Leaders” in performance in the distribution / wholesale sector use their ERP systems to help them make serious inroads in business standardization.  In particular, companies are standardizing enterprise-wide procedures for procurement, cash collection and financial reporting, as well as order management, delivery & fulfillment, and demand planning and forecasting.

The ability of these firms to do demand planning based on data within their ERP systems means “Leader” firms are “avoiding expensive holding costs and never missing out on times of high demand because they do not have enough product on the shelf.

Most tellingly, Aberdeen reports: “Leaders are 48% more likely than Followers to have this capability in place, which has led to higher revenues and profits.”

A word to the wise…

 

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