New business models require Modern ERP
Modern ERP and new ways of financial management
New business models also include new forms of monetization and therefore new capabilities of your finance and operations software. For example, the company embraces the servitization trend and moves from the delivery of products (and maintenance) to the delivery of services. This is currently happening in many former pure manufacturing companies. Especially when introducing a subscription model, this asks for new ways of financial management.
- What do new service areas mean for the company in terms of monetization?
- How does planning and forecasting need to adapt in a subscription world?
- What does the conversion of the cash flow from one-off payments to (smaller) monthly payments mean?
Closely related to these questions are new requirements for the depiction of recurring revenue, the correct recognition of revenue, etc. Traditional ERP systems are often not capable of these kinds of scenarios. We see that the call for more flexibility in product management and offer design is a trigger for ERP modernization.
Make better, data-driven decisions
To respond to market needs and to customer expectations, companies need to be able steer quickly and to make swift, data-driven decision
Management teams need more and better insights in different areas – for example, into the profitability of a new service under different scenarios. Decision makers need to look forward, but also see the big picture. This requires BI in combination with AI. When implementing a new ERP-system, your data and reporting needs should be considered from the beginning, so the intelligence is built-in from the start. This way data can be unlocked easily, rather than building intelligence solutions on top of your application later.
Gartner’s pace-layered application strategy
When challenging a customer’s ERP system, the Gartner's Pace-Layered Application Strategy is very useful. This system describes the method for classifying, selecting, and managing applications with the aim of supporting change, differentiation, and innovation.
Gartner states that there are different layers of software applications in an organization, which you recognize by the characteristics related to the speed of adaptation and change. Part of our approach is to 'map' the existing application landscape on this model. It often becomes immediately clear why there is insufficient flexibility and speed in innovation. We see that business processes that are now 'stuck' in the bottom layer can be better accommodated in the systems of differentiation or the systems of innovation. In this way the ERP often becomes much lighter and your organization a lot more agile.
"For our customers, this model quickly provides insight into why they are stuck with their current
landscape. The current ERP landscape often turns out to be far too heavy and too slow."
Gain insights to create a light and agile landscape
We then undress this to a large extent by investing all kinds of business processes outside the ERP application. This makes the basis lighter and therefore more flexible. By the way, Microsoft cloud platform offers a full stack of applications to help companies stimulate collaboration, flexibility and innovation, ensuring a stable and efficient base.
The result: one central (eco)system for all finance subareas
In our opinion, the decision that is made for a new ERP should not be based on a tool, but on an ecosystem. Instead of many special systems, we see a central system for the central processes in finance and controlling; supplemented by a few, deliberately selected special providers. This provides the basis for generating new insights reliably and quickly.