Strategic Competitive Advantage with ICT and ERP

So how does one extract strategic value from these processes that can help create a competitive advantage?  One way this can be achieved is through the integration of these functions in a way that business insight and strategic analysis can be conducted on the resultant process outputs.  Using the accounts payable process example, being able to understand the relationship across the different creditors, their payment terms, and cash flows could result in a more strategic understanding and management of the procurement process through consolidated contract arrangements with vendors.  This can become a strategic competitive advantage when the business can manage minimum stock levels while maintaining or enhancing customer satisfaction with the delivery of services.

While the necessary levels of integration and consolidated data view can be achieved through a best of breed (or point solution) approach to the IT enterprise architecture, this is often a long and expensive road with significant total cost of ownership factors often not fully accounted for up front.  One should never under estimate the effort required in maintaining the technical plumbing between systems purchased from different vendors.  Many vendors provide reasonably robust methods of exposing elements of their system’s data for integration with down steam solutions however, patching and software upgrades always require additional time and effort across all of interconnected solutions.  A key strength of a well architected Enterprise Resource Planning (ERP) solution is that the inter‑process/inter‑functional plumbing is developed and maintained by the ERP vendor.  A considerable amount of the patch and upgrade testing of these interconnections are well tested by the vendor prior to any update being released. 

When point solutions are implemented, entire end-to-end business processes need to be designed across the different products and consolidated to enable any detailed strategic analysis on the resultant outputs.  In comparison, ERP providers often provide  end-to-end process solutions (developed over time from their different customer installations) which can be leveraged to provide an 80% solution fit removing much of the extended discussions geared towards creating highly customised solutions that often look more like the original business practices than streamlined best practices.

Too often, the strategic competitive advantage benefits of an integrated solution are not factored into the analysis presented in the business case justifying the choice or selection of a solution architecture.  Instead, the focus tends to be limited to efficiencies to be gained from individual processes.  This approach can result in discounting the business advantages that could be gained from an ERP solution.

Capitalising on the strengths of an ERP solution’s architecture means that more of the implementation project activities can be focused on process outputs and how these outputs could be used to drive strategic advantage for the business.  It also means that more time is available to determine the most appropriate solutions for delivering business outcomes for processes directly linked to creating a strategic competitive advantage and less time debating the merits of commodity processes.