How ERP Modernization Drives Innovation & Business Growth

In this article, learn about how ERP modernization is about so much more than replacing an old system with a new one.

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    Modernizing ERP systems is essential for helping orgs keep pace with ever-evolving tech, customer demands, and industry standards. 

    More than that, it actively drives innovation and business growth at every level.

    Below, we take a closer look at some of the key growth and innovation benefits this underlying technology can provide:

    Use Data and AI to Fuel Growth

    According to Oracle, cloud ERPs support data-driven decisions, strategies, and innovation by providing a single platform where users can analyze data in context with the bigger picture. 

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    Most modern ERPs now include pretty sophisticated AI and automation capabilities right out of the box that allow you to explore data from multiple angles. Think – predictive forecasting, scenario planning, process mining, and more.

    AI enables predictive analysis, process optimization, and enhances human decision-making capabilities. It can provide guidance  – suggesting potential actions, surfacing opportunities, and raising the alert on issues that require human intervention. 

    That said, you can start using data to fuel growth immediately after establishing end-to-end visibility.

    Digital marketing and advertising agency Basis Technologies used NetSuite OneWorld to replace their existing system – an entry-level QuickBooks system supplemented by analog Excel sheets – after it became clear that data and visibility issues were severely limiting growth. 

    Initially, NetSuite helped the company build customized reports and implement tighter controls to support audits and improve vendor management, billing, and invoicing strategies. 

    After seven years on the platform, Basis increased customer capacity by 15-fold and grew revenue by 350%, while also cutting financial close times in half. 

    Later, OneWorld helped the agency make their first acquisition – an advertising software company – and set them up to fuel long-term growth through future acquisitions. More recently, the company added an Adaptive Planning integration to their stack, which delivers relevant financial data to employees to better support them in their roles. 

    Optimize Operating Models 

    Companies face mounting pressure to diversify and digitize revenue streams, optimize operating models, and reimagine finance as a dynamic, value-generating function.

    As such, financial leaders are focusing more on using technology to explore new business models, support strategic transactions, and invest in future business growth and long-term stability.

    According to data published in the MS ebook, Emerging Trends for the Futurist CFO, a growing number of financial leaders consider adding digital capabilities to existing products to be a top strategic priority. Nearly half that same group said they view the “exploding digital economy” as a high-growth business opportunity. 

    Technology, of course, is critical for unlocking whatever new capabilities these CFOs might have in mind. And, since ERP is the foundation for DX, it only follows that more orgs are looking for platforms that make it easier for them to explore and implement new business models that reflect an ever-evolving market.

    For example, professional services firm, Backstop, replaced their manual, home-grown billing and time-tracking solutions with NetSuite OpenAir, a comprehensive project management platform that provides end-to-end visibility and control across the entire project portfolio. 

    Before switching to NetSuite, Backstop’s manual processes prevented them from taking on larger consulting jobs, while poor visibility and no historical record of past projects made forecasting and estimation nearly impossible.

    Now, managers can use real-time reports to track billable and non-billable hours against metrics like project profitability, customer retention, and consultant productivity. 

    Backlog reports allow project managers to prioritize pending projects to maximize profitability and optimize utilization rates. Managers can also use built-in billing rules to manage large, complex projects with multiple billing rates/models. 

    They can also evaluate different billing models to identify the most profitable option and use that information to negotiate terms with prospective clients. Eventually, the firm leveraged those insights to triple their margins — using targeted process automation to increase consultant efficiency.

    Vendors are rolling out increasingly sophisticated AI tools – predictive risk management, automated fraud detection, etc.

    Microsoft just introduced a new xP&A solution that leverages the power of the Microsoft Cloud and data platform to deliver customizable data experiences to finance teams via Power BI, Teams, and Excel.

    This tool gives CFOs extended, AI-driven planning capabilities that enable them to use natural language to ask specific questions and use answers to drive innovation, anticipate risk, and guide their organization toward short- and long-term goals.

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    Enhance the Customer Experience 

    Cloud ERPs have long enabled companies to drive CX improvements at every level:

    All channels and touchpoints. Backend processes and projects. Product planning and production. The list goes on.

    But, despite their best efforts, orgs struggled to orchestrate experiences that truly felt “personal,” “frictionless,” or even just “consistent.” 

    This generation’s ERPs are designed with a more holistic approach in mind. Tighter integration allows orgs to use their data to design processes that connect employee actions directly to customer outcomes.

    They can coordinate connected journeys that span an entire (customer) lifetime – with sales, service, and marketing teams working together to drive positive (and consistent experiences).

    Or – they might use customer insights to build and train relevant chatbot experiences, self-serve portals, and personalized journeys that directly address a specific need or pain point.

    On the backend, orgs might use intelligent warehousing solutions, demand forecasting, and automation to meet expectations re: on-time deliveries or equipment performance. 

    This white paper from Configit laid out another scenario combining the ERP, customer insights, and product lifecycle management (PLM) systems to develop collaborative product strategies where customers drive new business models, products, and services.

    All of these improvements contribute to a faster, smoother, and, ideally, more human experience. Whether that means building more relevant products, providing better service, or removing friction within routine interactions.

    Use Compliance as an Asset

    When you think of “regulatory compliance” you’re probably imagining lots of paperwork and  bureaucratic red tape, not “growth” or “innovation.” 

    According to a Deloitte Insights report, regulation can actually be an enabler for innovation. In it, experts acknowledge the tension between protecting customers, communities, and the environment, while at the same time, encouraging growth and innovation.

    Regulations can support innovation by setting clear expectations regarding risks – and what safeguards need to be in place in order to mitigate them – and avoid the legal challenges, fines, and reputational fallout that happens when non-compliance goes wrong. 

    With changing regulations and standards in various industries, a modern ERP system is critical for ensuring that your company always stays compliant. 

    In the (very recent) past, strict regulations prevented many organizations from moving core operations to the cloud – particularly those operating in industries with complex regulatory environments like healthcare, finance, or public utilities. 

    Today’s ERPs enable organizations in all industries to use compliance as an asset – something that protects their business and helps them move faster. 

    Companies can implement adaptive compliance policies across their entire network, use built-in reporting to find and fix vulnerabilities, and design automated flows that enforce rules on their own. Orgs can also move faster on strategic decisions, app deployments, and custom solutions for clients – with full confidence that they can trust their data and protect customers & assets. 

    Optimize Costs 

    No matter what, ERP updates are always expensive. But, working from a composable platform that allows you to approach transformation incrementally, on an ongoing basis, is a lot more cost-effective than it used to be – and, done right, it also stands to deliver bigger returns.

    Traditionally, ERP modernization involved swapping one massive legacy system for another monolithic stack with better features and more computing power. In this scenario, the strategy is driven by the system  – with IT strategies driven by the platform’s requirements, rather than the needs of the business.

    According to McKinsey, taking a product and platform approach can help orgs manage costs and improve long-term outcomes. This approach moves away from that all-or-nothing ERP mentality, and instead focuses on modernizing the individual modules within your ecosystem to achieve specific goals.

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    ERP modernization can save you a ton of money. By improving efficiencies, reducing errors, decreasing downtime, and eliminating the need for multiple disparate systems, you’ll spend less on overhead, hardware, maintenance, upgrades, and IT labor.

    You’ll also gain access to real-time financial information – revenue, cash flow, expenses, etc.

    This allows you to ID areas where you’re overspending or investing in the wrong things, allowing you to make decisions that directly impact the bottom line. 

    From there, extra cash can then be used to support training and development initiatives, tech upgrades, and innovation (i.e. money can be used to develop new products and services that customers actually want). 

    Final Thoughts

    ERP modernization is about so much more than replacing an old system with a new one. It’s about equipping your entire org with the tools and insights it needs to compete and thrive in today’s fast-paced tech-driven world.

    For more than 30 years, Velosio has helped clients overcome challenges and drive growth through expert guidance and tailored ERP solutions. 

    ERPs have  come a long way since our early days — forcing us to embrace change, build adaptive strategies, and develop rapid deployment models and standard best practices to help clients do the same — but faster. 

    Get in touch to learn more about  our solutions, services, and how we approach ERP modernization. 

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