In the previous piece on the Information System, we saw that, in an ERP change project, it is people who make the difference. We also promised to discuss how to select the right product and vendor. However, before addressing this, it is worth pausing to ask a simpler question: what is the real purpose of an ERP system?
More than a data archive
Many SMEs see their management software as a large archive: the place where orders, invoices and stock movements are recorded. While this view is logical, it is reductive.
The value of an ERP lies not in the data it holds, but in its ability to make that data flow. It gains value when it integrates data and operational processes into a coherent flow involving every business function: production, logistics, human resources, management control and finance. None is left out.
If one area remains isolated, relying on its own spreadsheet or separate
application, the flow is broken. It will then have to be pieced back together
manually, which takes longer and increases the risk of error.
The company’s nervous system
I like to think of the information system as the company’s nervous system. Data represents the signals travelling from one part of the organisation to another. People, with their expertise, act as centres that transform these signals into information and decisions.
However, a nervous system’s capability does not depend on the volume of signals it carries, but on the quality of the connections. Much like synapses, connections within a company strengthen and improve with use. When they are secure and verified, colleagues learn to trust data produced by another function, using it for decision-making without needing to double-check it every time.
This is why an ERP system must meet the needs of its daily users. And those needs do not stand still: they change with the market, customers and products. An information system that fails to adapt will end up describing a company that no longer exists. As we saw in the case described in the previous piece, the cost-centre structure was still tied to an obsolete production model.
Three factors that build integration
Integration is not something that can simply be purchased alongside the software licence. It is a complex process achieved over time through three key factors of business management.
The first is the coordination of all personnel. Each function feeds the system with data that will be used by others, so if the person entering the data does not understand its purpose or how it will be used, the connection will remain weak.
The second is the change management skill. The market demands new products, channels and metrics, and the information system must keep pace without becoming an obstacle.
The third is application compatibility. An ERP system rarely operates in isolation and must communicate with the other tools in use, in a secure and proven way.
A new connection is worth more than an additional data point
Let’s go back for a moment to the case from the previous piece. The richer product master data in the new ERP – costs, weight, volume, warehouse location – was not just an additional collection of information. It represented a new connection between the warehouse, logistics and management control. That connection generated transport savings of around €100,000 a year, which subsequently grew alongside the company’s revenue.
The value lay not in the data itself, but in the fact that someone could use it where it was needed.
This is one of the pieces of the Rubik’s cube dedicated to the Information System. An ERP system becomes a strategic asset when it stops being merely an archive and becomes the company’s nervous system: a network of reliable connections that grows alongside its people and the market.
In the next piece, we will look at how to assess the ERP system and vendor best suited to an SME, bearing in mind that while technical specifications are important, the relationship-building skills of the software provider’s consultants are even more so.
In the meantime, tell us: in your company, is the management software more of an archive or a nervous system?
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Kenning Consulting accompanies small and medium-sized businesses in building a growth plan supported by management control tools tailored to their development stage.