Simon Niesler looks at the rise of ERP 3.0 and explains why people are at the heart of the latest generation of business software
As manufacturing evolves at unprecedented levels, so, too, do the software systems behind them. While ERP solutions have brought data management and end-to-end views to enterprises for decades, some early systems lacked flexibility. Even the second-generation ERP solutions were sometimes complex, not doing enough to help boost workforce productivity. This is changing. Once again, ERP solutions are getting a make-over. This fresh approach, ERP 3.0, is focusing on empowering workforces, expediting tasks and supporting fast decision-making. Data-driven insights, powered by Artificial Intelligence (AI) are at the heart of this modern approach, and the potential impact on productivity is immense.
A glance to the past
It’s fair to say that ERP solutions in the past often received bad press. Traditional, early versions were typically expensive, inflexible, difficult to use and painful to implement. The next generation of ERP sought to address these shortfalls, bringing beautiful design and intuitive user experiences to desktops, flexibility enabled by Cloud apps and enhanced mobile accessibility, and the introduction of added intelligence via BI and AI.
But despite many industry players professing that the second generation of ERP solutions represented the pinnacle of an industry maturing, and a driver of increased profitability for manufacturers, research paint a different picture.
The Productivity Problem
Despite ERP investments undoubtedly delivering clear ROI, one major problem persists for manufacturers today. Productivity – that is measured by the amount of work produced per working hour – remains a huge problem across the world as many advanced economies’ rates remain at near historic lows.
While the precise cause of the fall isn’t clear, productivity is key to long term economic growth and higher living standards. A highly productive workforce is essential for operational efficiency, meeting customer demands, controlling costs, and maintaining margins in a highly competitive global market. Therefore, current productivity levels represent a conundrum which can’t be ignored.
The UK, for example, should in theory be reporting strong productivity, with strong engineering, high-tech and pharmaceutical industries investing in digitalisation to drive performance. The reality, however, is that productivity is falling with no signs of this trend reversing any time soon. Output per hour is set to rise just 0.2 per cent in 2019, compared with rates averaging more than two per cent in the decade preceding 2008.
Meet ERP 3.0
As leaders across the world look at ways in which to address the problem, they are faced with a limited number of options. In the absence of being able to acquire additional headcount – which is a luxury most simply cannot justify in the current climate – helping people to accomplish complex tasks quickly signifies the last hand in play in the quest for increased productivity. With this in mind, technology is evolving and ERP platforms are being developed with people and productivity at the centre of their design, a shift known as ERP 3.0.
The concept of people being at the centre of ERP might seem, on the surface, to be an oxymoron. However, for anyone who has ever thrown their hands up in the air in frustration at not being able to retrieve the document needed to unlock a bottleneck, respond to a supply chain query, source a spare part, or ensure a delivery is made on time and in full, it will certainly strike a chord. These small incidents add up, causing delays, impeding decisionmaking, and interfering with a collaborative, innovative company culture. Such kinks in workflows, whether on the shop floor or the back office, can no longer be tolerated.
The old adage that very best technology will fail in the hands of the wrong people proves itself time and time again. Of course, it is people, not systems, who are ultimately accountable for driving business value – whether that is through continuous improvement or company-wide digital transformation. Systems designed to maximise people’s potential and empower them are therefore destined to succeed.
ERP 3.0 embodies this ethos, and is about providing the tools to help people be the best they can be, empowering workforces, expediting tasks and supporting fast decision-making based on the very best, latest insights. Innovative functionality, like self-service reporting capabilities, user-defined workbenches, augmented analytics which suggest solutions, predictive science, and voice-responsive personal assistants, help drive this new approach.
To be clear, this shift is not just about making the user experience easier – this has already been addressed. This shift focuses on the complete picture of each employee, from a machine operator who needs to verify a recent spec change to a line of business manager who is planning crew assignments. Technology can help support informed decision-making, proactive intervention, creative-problem solving and cross-departmental data-sharing. This might be lowering entry barriers for people to take on more complex activities, automating processes or introducing AI to redistribute certain tasks, or indeed provide enhanced insights to empower the worker to increase performance.
Typically, when a manufacturer is asked about the biggest challenges they face, they’ll refer to people and skills gaps as the major threats facing them in the coming years. In fact, a recent survey by the British Chambers of Commerce reported that British manufacturers are facing the biggest shortage of skilled workers since 1989.
Traditionally this challenge is seen as distinct from technology, but ERP 3.0 aligns them, supporting the recruitment, retention and development of people across a number of aspects.
Of course, you’d be hard pushed to find a company marking out systems as a USP in a job advertisement. However, those who foster a culture which embraces modern thinking and systems which not only make tasks easier to complete, with more visibility and engagement, and less training, will inevitably boost satisfaction, resulting in the attraction and retention of a greater proportion of talent, and a more productive organisation.
Taking this a stage further, ERP 3.0 addresses the skills challenge through prioritising the development of people, ensuring that potential is recognised, skills are maximised and talent is deployed, or indeed redeployed, into the most suitable areas. Essentially skills are monitored and valued in a similar same way as a production line, optimising yield and reducing waste.
Power to the People
Ultimately if you can empower people to be more productive, organisations become more productive, and economies prosper as a result. Technology is the best tool we have in the quest to achieve this vision, and the latest incarnation of ERP stands to represent a genuine game changer. Welcome to the age of ERP 3.0.
Simon Niesler is Senior Vice President and General Manager for Western Europe at Infor. Infor is a global leader in business cloud software specialised by industry. With 17,300 employees and over 68,000 customers in more than 170 countries, Infor software is designed for progress. Infor customers include 19 of the top 20 aerospace companies, 19 of the top 20 automotive suppliers and 17 of the top 20 industrial distributors.