ENTERPRISE RESOURCE PLANNING MANAGEMENT

Enterprise Resource Planning (ERP) is an application that automates business processes, and provides insights and
internal controls, drawing on a central database that collects inputs from departments including accounting,
manufacturing, supply chain, sales, marketing and human resources (HR).
Once information is compiled in that central database, leaders gain cross-departmental visibility that empowers them
to analyze various scenarios, discover process improvements and generate major efficiency gains. That translates to
cost savings and better productivity as people spend less time digging for needed data.
ERP software that’s tailored to meet the needs of an individual business pays major dividends, making these systems a
critical tool for companies across industries and of all sizes. Many of the world’s best-known and most successful
firms have leaned on ERP for the last quarter century. Now, this software can be configured and priced to meet the
needs of all-size businesses.
Put simply, an ERP system helps unify people, processes and technology across an organization.

ENTERPRISE RESOURCE PLANNING

Introduction and Fundamentals

WHAT IS ENTERPRISE RESOURCE PLANNING?

• ERP is an application that automates business processes, and provides insights and internal controls, drawing
on a central database that collects inputs from departments including accounting, manufacturing, supply chain,
sales, marketing and human resources (HR).
• ERP systems tie together a multitude of business processes and enable the flow of data between them. By
collecting an organization’s shared transactional data from multiple sources, ERP systems eliminate data
duplication and provide data integrity with a single source of truth.

ERP FUNDAMENTALS
• ERP systems are designed around a single, defined data structure (schema) that typically has a common
database. This helps ensure that the information used across the enterprise is normalized and based on
common definitions and user experiences. These core constructs are then interconnected with business
processes driven by workflows across business departments (e.g.,) finance, human resources, engineering,
marketing, operations), connecting systems and the people who use them. Simply put, ERP is the vehicle for
integrating people, processes, and technologies across a modern enterprise.
• ERP also ensures that these data fields and attributes roll up to the correct account in the company’s general
ledger so that all costs are properly tracked and represented. 
• A key ERP principle is the central collection of data for wide distribution. Instead of several standalone
databases with an endless inventory of disconnected spreadsheets, ERP systems bring order to chaos so that
all users—from the CEO to accounts payable clerks—can create, store, and use the same data derived through
common processes.

WHY IS ERP IMPORTANT FOR BUSINESSES?

• ERP systems have become table stakes for businesses looking to use resources wisely. 
• An ERP is also an asset when it comes to planning and coordination. 
• ERP software improves communication and collaboration as well
• RP system also provides a host of reports and analytics that can be difference-makers for the business.
EXAMPLES OF SPECIFIC BUSINESS BENEFITS INCLUDE:
• Improved business insight from real-time information generated by reports
• Lower operational costs through streamlined business processes and best practices
• Enhanced collaboration from users sharing data in contracts, requisitions, and purchase orders
• Improved efficiency through a common user experience across many business functions and well-
defined business processes
• Consistent infrastructure from the back office to the front office, with all business activities having
the same look and feel
• Higher user-adoption rates from a common user experience and design
• Reduced risk through improved data integrity and financial controls
• Lower management and operational costs through uniform and integrated systems

HOW DOES AN ERP SYSTEM WORK?

• ERP systems work by using a defined, standard data structure. Information entered by one department is
immediately available to authorized users across the business.
• Data is then woven into business processes and workflows across departments. Leaders can see if one location
is doing significantly better at avoiding spoilage than a sister site a few towns over and work to figure out
why, while operations can make sure staffing levels align with traffic patterns. Finance can compare sales to
rents to help executives decide whether to consolidate.
• ERP systems deliver the most value when a company has modules for each major business function and
ensures timely, accurate data entry. And, the more stakeholders have access, the better.
• When a company uses business systems from multiple vendors, integrations are generally possible to make
data automatically flow into the ERP. This data can then be used throughout the ERP instance to benefit any
process or workflow.

How Can ERP Improve or Help a Business?

• It enables companies to identify areas of the business with room for improvement or opportunities for
expansion. User uptake is key: The more employees with access, the more likely teams will spot problems,
whether a spike in demand for a certain product, late shipments from a supplier or an impending cash flow
crunch. Employees can then proactively mitigate the issue to the extent possible.
• It can automate many error-prone tasks, like account reconciliations, customer billing and order processing,
and provide the information teams need to operate more efficiently.
• it can give both a 10,000-foot view of the company’s health and detailed insights into a specific process or
KPI by not only storing and organizing data, but identifying patterns and flagging anomalies that require
investigation. 
• Access to data from anywhere:  Employees no longer need to shuffle through piles of papers or files
scattered across a desktop.
• Information is always up-to-date: Because the ERP system is continually receiving information from
various departments, it’s updated immediately as inventory is pulled, a payment is posted or emails are sent to
customers.
• Business decisions based on the same data: There are no duplicate or conflicting sources of information,
and companies have the ability schedule and distribute dynamic reports automatically

Who Uses ERP?

• Advertising and digital media • IT services

• Apparel, footwear and accessories • Manufacturing
• Campus stores • Media and publishing
• Consulting • Nonprofit
• Education • Professional services
• Energy • Restaurants and hospitality
• Financial services • Retail
• Food and beverage • Software and technology
• Health and beauty • Transportation and logistics
• Healthcare and life sciences • Wholesale distribution

ROLES & USERS

• Finance/accounting:  With ERP, financial planning and analysis (FP&A) experts—whether a separate role or
part of the accounting department—can turn comprehensive financial data into forecasts and reports on
revenue, expenses and cash flow.
 • Supply chain:  Employees focused on operations, a group that includes purchasing agents, inventory
planners, warehouse managers and senior supply chain leaders, rely on the ERP system to ensure a smooth
and continuous flow of goods from supplier to customer. 
• Sales and marketing:  An ERP solution can increase the productivity of and drive better results for your sales
team by automating lead management and monitoring the interactions prospects have with your company. 
• Human resources:  The HR department tracks all employee information and broader workforce trends in the
ERP.

12 BENEFITS OF ERP SYSTEMS

1. Cost savings: By automating many simple, repetitive tasks, you minimize errors and the need to add employees at
the same rate as business growth. 
2. Workflow visibility: With all workflows and information in one place, employees with access to the system can
see the status of projects and the performance of different business functions relevant to their jobs. 
3. Reporting/analytics: Since an ERP is all-encompassing, it can help a business understand how a change or
problem with a process in one department affects the rest of the company.
4. Business insights/intelligence: Because ERPs can access data from across the company, these systems can uncover
impactful trends and provide extensive business
insights. 
5. Regulatory compliance & data security: Financial reporting standards and governmental and industry-specific
data security regulations change frequently, and an ERP can help your company stay safe and compliant. 
6. Risk management: Granular access control and defined approval workflows can strengthen financial controls and
reduce fraud. more-accurate data heads off mistakes that could lead to lost sales or fines. the ability to see the status of
the entire operation enables employees to quickly handle risks posed by business disruptions.
7. Data security:   Cloud ERP software, in particular, uses cutting-edge security protocols to ensure your company
doesn’t fall victim to a damaging attack.
8. Collaboration:  ERP solutions make it easy to share information. It knocks down walls between departments by
giving employees appropriate access to data on related business functions.
9. Scalability: Cloud systems in particular adapt to minor and major operational changes even as the amount of data
the organization captures and demand for access increase.
10. Flexibility:  The system gives administrators the ability to build out company-specific workflows and create
automatic reports important to different departments and executives.
11. Customization: While most companies find that modern ERPs support their businesses “out of the box,” some
firms need to add to the extensive built-in functionality
12. Customer & partner management:  An ERP can strengthen a company’s partner and customer relationships.

6 DISADVANTAGES OF ERP SYSTEMS

1. System cost: Because they were expensive to purchase, implement and maintain, early ERP systems were
accessible only to large companies.
2. Need for training:  Anyone who will use the software—that is, ideally, most or all of your employees—requires
some level of training.
3. Data conversion costs: the need to convert some data can lead to unexpected costs and delays.
4. Complexity: An ERP system is loaded with features, and that can be daunting to your workforce. 
5. Maintenance: In the past, maintenance was a large expense that deterred lower-revenue businesses from adopting
ERP.
6. Doesn’t solve process and policy issues: If you have error-prone or inefficient processes, an ERP won’t
necessarily fix them, even though it may increase accuracy

5 KEY FEATURES OF ERP SYSTEMS

1. Common database: Many of an ERP’s advantages stem from a common database that allows organizations to
centralize information from numerous departments.
2. Consistent UX/UI: Modules for inventory management, HR and finance all have the same look and feel and shared
functionality. This increases the software’s adoption rate and can make it easier for staff to move between
departments.
3. Business process integration: An ERP must be able to support and integrate the processes that make your business
successful, whether related to accounting, supply chain or marketing. 
4. Automation: Another basic feature of ERP software is the ability to automate repetitive tasks like payroll,
invoicing, order processing and reporting. 
5. Data analysis:  When you can mix and match data from just about any part of your business into insightful reports,
you uncover areas that are performing exceptionally well and those that are failing to meet expectations. 

HISTORY OF ERP DEVELOPMENT

The development of ERP arose as a need to ensure that there is ease in managing the business. It started with
traditional communication models. With the development of the computers, better communication models, networking
and internet services were established. It’s on this platform that the development of ERP has happened.
In the advent of internet use, various communication models have developed. They include social media sites as well
as marketing platforms. The creation of applications with capabilities to support this kind of communication enhances
these platforms. The ERP is a solution that works in a similar way, but its tailoring applies to a specific business
allowing connectivity to its clients, suppliers and its various departments.
Every relevant business should adopt an effective ERP solution. This will not only enhance its productivity but will
greatly reduce the operational costs of the business. It’s evident that a number of multinational organizations are
embracing this solution.

BUSINESS PROCESSES IN ERP (ENTERPRISE RESOURCE

PLANNING)

WHAT IS ERP?
• ERP is an acronym that stands for enterprise resource planning (ERP). It’s a business process management
software that manages and integrates a company’s financials, supply chain, operations, commerce, reporting,
manufacturing, and human resource activities. 

What is business process?

• A Business process is a set of Tasks or activities That produce desired Outcomes.
Every process is triggered by some event, such as receiving a customer Order or recognizing the need to
increase inventory.

BUSINESS PROCESSES IN ERP

ERP Business Processes
• A business process can be thought of as a collection of activities happening in an enterprise during the day-to-
day functioning.
Through these business processes, enterprises achieve their objectives.

Important Business processes which occur in a typical manufacturing company

 PROCUREMENT PROCESS (BUY). Procurement business process includes all activities of buying the
raw materials to make products. Procurement can also include purchase of consumables, equipment and asset
 PRODUCTION PROCESS (MAKE). Production or making process includes all activities or events to
produce products in an enterprise.
 FULLFILMENT PROCESS (SELL). Selling or fulfillment process includes all activities of creating sales
orders, sales invoices and delivering products to customers.
 FINANCIAL ACCOUNTING PROCESS. Financial Accounting process includes all activities to manage
accounts payable, accounts receivable, assets and G/L accounts in an enterprise.

The selling business process in detail.

BUSINESS PROCESSES
• ACTIVITY 1- CREATE SALES ORDER- the selling business process starts with receiving a sales order
from a customer. For this business process, the first activity is creation of sales order.

• ACTIVITY 2- The next activity is the preparation of delivery note for the orders which are ready to be
shipped. Delivery notes include details of material to be dispatched.
• ACTIVITY 3- Shipping goods - The next activity is creating sales invoices. Sales invoices are created for
orders which are shipped. Depending on the shipping periods and other considerations, sales invoices are sent
to customers.
• ACTIVITY 4- CREATE SALES INVOICE (BILL TO CUSTOMER) – The next activity is creating sales
invoices. Sales invoices are created for orders which are shipped. Depending on the shipping periods and
other considerations, sales invoices are sent to customers.
• ACTIVITY 5- CREATE - CREATE RECEIPT PAYMENT FROM THE CUSTOMER- Customer makes the
Payment against the order after the finished goods are received and this activity is handled by the accounting
department.

TYPICAL ERP BUSINESS PROCESSES

CLOSELY RELATED TO BUYING, AND MAKING, AND SELLING ARE FOUR PROCESSES USED TO
DESIGN, PLAN, STORE, AND SERVICE PRODUCTS. ONCE AGAIN, ORGANIZATIONS USE SPECIFIC
TERMS FOR THESE PROCESSES.

 THE LIFECYCLE DATA MANAGEMENT (DESIGN) - supports the design and development of products
from the initial product idea stage through the discontinuation of the product.
 THE ASSET MANAGEMENT AND CUSTOMER SERVICE PROCESSES (SERVICE) – are used to
maintain internal assets such as machinery and to deliver after-sales customer service such as repairs.
 THE MATERIAL PLANNING PROCESS (PLAN) – uses historical data and sales forecasts to plan which
materials will be procured and produced and in what quantities.
 THE INVENTORY AND WAREHOUSE MANAGEMENT (IWM) PROCESS (STORE)- is used to
store and track the materials.

TWO SUPPORT AND PROCESSES ARE RELATED TO PEOPLE AND PROJECTS.

 HUMAN CAPITAL MANAGEMENT (HCM) PROCESSES – (people) focus on the people within the
organization and include functions such as recruiting, hiring, training, and benefits management.
 PROJECT MANAGEMENT PROCESSES (PROJECTS) – are used to plan and execute large projects
such as the construction of a new factory or the production of complex products such as airplanes.
THESE PROCESSES HAVE AN IMPACT ON AN ORGANIZATIONS FINANCE. THIS BRINGS US TO
THE LAST TWO PROCESSES, WHICH TRACK THE FINANCIAL IMPACTS OF PROCESSES.

 FINANCIAL ACCOUNTING (FI) PROCESSES (TRACK EXTERNAL) – track the financial impacts of
process steps with the goal of meeting legal reporting requirements – for example, the internal revenue service
(irs) or the securities and exchange commission (sec).
 MANAGEMENT ACCOUNTING OR CONTROLLING (CO) PROCESSES (TRACK EXTERNAL) –
focus on internal reporting to manage costs and revenues.

SOFTWARE SELECTION AND CONSIDERATION

PURCHASING CONSIDERATION

1. USABILITY REQUIREMENTS. Most people say they want to easy to use software, but what us easy to
use for one is not always for another.
Usability requirements for all department and users should be a part of the ERP selection preparation process.
2. SOFTWARE & BUSINESSS EVOLUTION. The beauty of the cloud model is that it allows for the
evolution of the product.
It’s important to consider the inevitable software evolution and your ERP.
Along with the software evolving, other business changes are inevitable from the time you purchase an ERP,
implement it, and use it. Regulations will change can your ERP evolve with you?
3. TOTAL COST OF OWNERSHIP. Cost is almost always a factor when making a buying decision. But just
as it is with other large purchases that you will have for a while, you need to look at your ERP purchase as an
investment in your company's future. You need to look at total cost of ownership before deciding on the right
price

SELECTION PROCESS

1. Establish
2. Decide your budget and requirements
3. Educating the workforce and deciding the features of erp
4. Deciding whether to implement on cloud or on-premise
5. Know what your peers use
6. Shortlisting and contacting
7. Inspection and site visits
8. Schedule a demo
9. Talk to references
10. Choose, negotiate and implement

SELECTION CRITERIA

1. FUNCTIONALITY AND EASE OF USE

 Requirements Gathering
 Consider Business Process Automation
 Examine End-Users
 Plan for Centralization
2. VENDOR VIABILITY
 Company Credibility
 Product Viability
 Scalability
3. TECHNOLOGY
 Customization
 Requirements
 Value
4. COST
There are a few areas to consider when it comes to the price of your ERP software.
• Return on Investment -the (ROI) of a new ERP can be measured in a few ways:
Are there are specific areas of the business where cost savings can be achieved through new technology?
 Are there technology costs that can be reduced through the new ERP?
What is the long-term ROI?
What capabilities will new ERP software enable? Other areas to consider when it comes to the cost of ERP software:
Total Cost of Ownership (TCO) There are direct and indirect costs to be factored in during your ERP selection
process.

Below are some of the key costs to evaluate:

-Software licensing
-Software modules and overall footprint
-Hardware (if needed)
-Cloud hosting
-Implementation
-Supporting software
-Maintenance, training, and on-going support

Pricing Model – Software Licensing

Most ERP software today is offered as a monthly subscription, Software as a Service (SaaS) licensing model.
Implementation Cost
An ERP implementation partner will provide a detailed statement of work that outlines cost, scope of the project, key
deliverables, important milestones, and the client’s business requirements. Implementation consulting is usually billed
by the hour, at a rate agreed upon before the project begins.

5. SUPPORT AND TRAINING. Support and training are the pieces of the pie that get a system up and running
and functional at all times. A comprehensive training plan typically includes access to training videos or
documentation, an online knowledgebase or user community and options for in-person training.
Comprehensive support typically includes access to a call center as well as various online resources. Factors
to consider while reviewing support and training:
- Needs of the End-Users
- Pricing

6. INDUSTRY EXPERTISE. Industry expertise essentially refers to a vendor’s ability to cater to your specific
needs. Does the nature of your business require a specialized platform?
-While not necessarily industry-specific, some ERP solutions are optimized to perform best in industries such
as manufacturing and distribution.

7. IMPLEMENTATION. Implementation is vital to getting your new ERP system up and running. A brief
overview of what a successful installation plan requires:

 Ideal Software: Find the right solution with Lean Selection or another methodology.  Plan: Gather an
implementation team and structure an installation plan. Also, allocate and perform project management
duties.
 Transfer Data: Perform in-depth data reviews to diminish repetitive information. Your company
information is the foundation of any ERP system unless you’re starting from scratch.
 Train Users: Access and distribute training materials to the designated end-users.
 Conduct System Tests and Launch: Perform program tests to ensure the solution has a suitable interface
and performs all of your desired features effectively before and when you go live.
 Post-Launch Duties: Analyze ROI, study employee performance, monitor client satisfaction and
measure other company KPIs to gauge the software’s results over time.

ADVANTAGES OF CUSTOM SOFTWARE

1. Tailor-made solution
2. Return on investment
3. Security concerns
4. Flexibility
5. Compatibility
6. Easy to operate
7. Long-term risk
8. Improved software support
9. Competitive advantage
DISADVANTAGES OF USING CUSTOM SOFTWARE

 High Investment
-a huge investment is required to develop a custom-built software.
-it may pay in the long run, but the initial investment may be a little overwhelming for some organizations
especially for medical and clinical research institutions.
 Time Involved
-Apart from investment in terms of money, a huge time investment is required to complete the software
development process.
-While off-the-shelf solutions will give benefits quickly, it may take months or years to actually get the
custom software delivered. And it takes a lot of work even before coding, since you need to start deciding
which features will be useful for your business.

DECIDING BETWEEN CUSTOM SOFTWARE AND OFF-THE- SHELF SOFTWARE

Choose custom software when:

 You need highly customized software that suits your business needs and gives you a competitive advantage
and off-the-shelf software may not fit the bill.
 You need it to be compatible with other systems, flexible to include any changes that you may need.
 You work with highly sensitive data and security is a concern.
 You are looking to increase your efficiency by automating repetitive tasks, as well as efficiency in the
processes obtained through custom software will significantly improve your productivity.
 You can afford the cost of the software and ROI goes in favor of custom software due to a productivity
improvement and reduced labor requirement.
 You can devote time to custom software development.

Choose commercial off-the-shelf software when:

 Investments are too high or ROI is not in favor of custom software.
 You are a very small organization and there are no plans or opportunities to scale-up.
 No integration requirements or security concerns.
 You are in a hurry.

Custom software may be easily borne by larger or medium-sized businesses. They may also benefit hugely from small
efficiency increases in the process which may lead to large cost savings as labor requirement is reduced.
A small company which is planning to expand its footprints may also benefit from custom development as needs for
highly efficient processes and a quick turnaround would lead to higher cost savings.
They can also benefit from scalability and flexibility offered by the custom software.

The best option depends on the circumstances your organization is in.

Advantages of custom software are numerous and they also provide you better control on how you want to run your
business and changes that you may need later on, but the decision has to be taken after carefully evaluating the
benefits that you will derive both in short-term and long-term.

CHANGE MANAGEMENT
 Change management is the systematic approach which deals with the transition or transformation of different
organizational objectives, processes, core values, or technologies.
 From a project manager’s point of view: Change management is the process that is used to get approval for
changes to the scope, timeline, or budget of a project.
 From an Infrastructure Professional’s point of view: change management is the process for approving, testing,
and installing a new piece of equipment, a cloud instance, or a new release of an application.

Types of Change Management

1. Individual
a. Exceptional Change Management
b. Incremental Change Management
 c. Pendulum Change Management
d. Paradigm Change Management

2. Organizational
a. Evolutionary Change Management
b. Revolutionary Change Management
c. Directed Change Management

1. INDIVIDUAL CHANGE MANAGEMENT

a. Exceptional Change Management. In ‘exceptional change management’ an individual practices
an isolated event in their life, it causes a difference, it may be necessary, but it does not spill over into
other parts of their life, so the impact is accordingly limited.
b. Incremental Change Management. Incremental change refers to a fairly common
change experience for many people. Often unseen at first, there is a persistent, continuous
introduction of factors and ‘uniqueness’ that it may result in the complete reinstatement of a previous
state with a new one, but the insidious nature of the change means that defenses to secure the old way
are never triggered.
c. Pendulum Change Management. This type of change management followed by an individual, when
there is a turn, often sudden, from one state to another. This ‘pendulum change’ can cause a human
being to adopt quite an extreme point of view that can be the diametrical opposite to what was held to
before.
d. Paradigm Change Management. The fourth type is the one most usually considered as being
‘appropriate’ change and is called a ‘paradigm change’. This takes place when information, tasks and
behaviors are re-integrated and lead to the development of a new gestalt that is a new ideology and
value policy. It is regarded as the ‘gold standards‘ for individual change because when the value
policies of an individual are changed, the change is fully internalized and future performance and
approaches can be predicted with some efficiency.

2. ORGANIZATIONAL CHANGE MANAGEMENT

a. Evolution Change Management. Evolution change management experienced by organizations by far
is evolutionary change. Evolutionary change has been around since organizations of people appeared.
It is evolutionary because it arises through the process of natural selection: it is necessary when
modest variations in performance, tiny adjustments in response by people and groups take place in
a changing environment.
b. Revolutionary Change Management. Revolutionary change is the change by instruction. You will
often see this type of change in reaction to a leadership change or an emergency. As examples: a new
CIO comes in and reorganizes the department, or the IT department fails an examination.
c. Directed Change Management. This type of change management was uncommon in the early 20th
century but it has become increasingly common in organisations over the past 70 years. We consider
it as ‘directed’, ‘organized’, or ‘managed’ change because it is formed to achieve a specific
purpose.
d. Directed Change Management
There are three types of directed change management:
a. Developmental Change Management
b. Transformational Change Management
c. Transitional Change Management

PRINCIPLES OF CHANGE MANAGEMENT

 Successful change management depends on four core principles:
1. Understand Change.
2. Plan Change.
3. Implement Change.
4. Communication Change.

1. UNDERSTAND CHANGE
To strongly promote the benefits of the change, you need to figure out them yourself. So, think about:
 Why do you need to change? What are your key objectives?
 What will the benefits of the change be to the organization?
 How will it affect people positively?
 How will it affect how people work?
  What will people need to do to manage the change successfully?

2. PLAN CHANGE
You’ll need to consider:
 Sponsorship: How will you secure, undertake and use high-level encouragement and sponsorship of
the change?
 Involvement: Who is best positioned to help you design and execute the change? For example, will
you need outside expertise? Or can you use domestic resources?
 Support: Change is most efficient when you can win support from people across the business. How
do you plan to achieve this?
 Impact: Finally, think about what success should look like. How will you predict and assess the
impact of the change that you need to make? What goals do you need to achieve?

3. IMPLEMENT CHANGE
The following steps can help you implement change positively:
 Ensure that everyone involved in the changes understands what needs to happen – and what it means
for them.
 Agree to the success criteria of your changes and make sure that they’re regularly measured and
recorded.
 Map and identify all the key stakeholders that will be involved in the change and set their level of
involvement.
 Identify any training needs that must be discussed in order to implement the change.
 Hire “change agents,” who’ll help to put the new practices into place – and who can act as role
models for the fresh approaches.
 Change people’s habits, so that the new practices become the norm.
 Clarify that everyone is supported throughout the change process.

4. COMMUNICATE CHANGE
 Communication is a very important component of change management. The change that you want to
achieve has to be clear and appropriate, so people understand what you want them to do and why they
need to do it. But you have to set the right mode so that you get the emotional reaction you’re
expecting for.

 The ADKAR Change Management Model is a useful tool that you can use to help communicate your change.
It describes five things you should try in your communications:
• Awareness of the need for change.
• Desire to take part in and support it.
• Knowledge of how to change.
• Ability to change.
• Reinforcement to sustain the change in the long session.

Importance Of Change Management

 Ease the Pressure and Create a Simple Process
 Maintain Your Organization’s Time and Resources
 Create a More Versatile and Innovative Workplace

DIGITAL TRANSFORMATION
What is digital transformation?
• Digital transformation is the incorporation of computer-based technologies into an organization's products,
processes and strategies. Organizations undertake digital transformation to better engage and serve their
workforce and customers and thus improve their ability to compete.
• Often large in scope, a digital transformation initiative can require an examination and reinvention of all
facets of an organization, from supply chains and workflows, to employee skill sets and org charts, to
customer interactions and value proposition to stakeholders.
• Successful digital transformations yield ongoing business benefits: Digital technologies and processes enable
organizations to adeptly respond to customer demands in the present and as demands evolve. Digital
transformation also builds the infrastructure and skills required for taking advantage of fast-evolving
technologies that could confer a competitive advantage.
 • A digital transformation strategy positions organizations to survive and thrive in a future where technology is
the key economic driver.

What are digital transformation drivers?

Technology's ability to rapidly collect, generate, analyze and transmit data is the principal driver of digital
transformation. Artificial intelligence (AI), cloud computing, mobile technologies, social media platforms and next-
generation technologies, such as the internet of things (IoT), edge computing and robotic process automation (RPA),
have dramatically changed how quickly we get information.

The application of these technologies in the marketplace by digital leaders like Amazon, Airbnb, Uber and others has
changed the kinds of products and services people expect. For example, consumers expect companies to respond
quickly, as well as to provide products and services tailored to their needs. They have also have come to expect
intuitive, easy-to-use interfaces, and they generally prefer digital interactions that can happen anytime from any
device.

The same technologies affecting the consumer market are also are transforming workplaces by, for example,
automating business processes that, until recently, were done manually; enabling work-from-anywhere environments;
providing insights into ever-growing stores of customer data; and providing tools that facilitate collaboration among
local and far-flung workforces.

What are the goals of digital transformation?

Digital transformation enables an organization to better serve its principal stakeholders: customers, employees,
partners and shareholders. The integration of computer-based digital technologies in business operations helps
organizations do the following:
• increase speed to market with new products and services;
• increase employee productivity;
• increase responsiveness to customer requests;
• gain more insight into individual customers to better anticipate and personalize products and services; and
• improve customer service, especially in providing more intuitive and more engaging customer experiences.

What are digital transformation technologies?

Technology drives both the need for digital transformation and supports the digitization of an organization. Although
no single application or technology enables transformation, several digital transformation technologies are critical to
digitalization:

1. Cloud computing, which gives an organization quicker access to its software, new functionalities and
updates, along with data storage, from anywhere at all times;
2. Commoditized information technology, which gives an organization the ability to focus investment dollars
and people resources on the IT customizations that differentiate it in the marketplace;
3. Mobile platforms, which enable work to happen wherever and whenever;
4. Machine learning and AI, which, when fueled by comprehensive data programs, provide organizations with
insights for faster, more accurate decisions around sales, marketing, product development and other strategic
areas;
5. Automation, such as RPA, which deploys bots that can handle mundane, repetitive tasks faster and more
accurately than humans who are then freed from such tasks to pursue higher-value work; and
6. additional emerging transformational technologies that help organizations to move faster, work more
efficiently, and create new products and services, including the following:
• blockchain
• augmented reality (AR) and virtual reality (VR)
• social media
• IoT
• edge computing
 1. Process Transformation
 From data, analytics, APIs, and machine learning to other technologies, much focus within the
corporate environment has been on new ways to reinvent business processes to lower costs, improve
quality, or reduce cycle times. Examples of successful process transformation include companies like
Domino's Pizza, where today customers can order from any device. They've entirely reimagined the
food ordering process. This innovation has helped them to overtake their rival Pizza Hut concerning
sales.
 Other companies have implemented robotic process automation to simplify their back-office
processes, including legal and accounting as examples. Process transformation can create tremendous
value in a company.

2. Business Model Transformation

 Process transformation focuses on finite areas of the business. Business model transformations aim at
the foundational building blocks of how value is delivered in a specific industry. In essence,
companies are using digital transformation to change traditional business models. Examples of this
type of reinvention of the business model include Netflix's redesign of video distribution and Apple's
reinvention of music delivery: iTunes.

3. Domain Transformation
 A prominent example of how domain transformation works is the online mega-retailer, Amazon. It
marched into a new market domain with the launch of Amazon Web Services (AWS) and is currently
the largest cloud computing/infrastructure service in a formerly owned field by giants such as IBM
and Microsoft. AWS is a clear example of how new technologies redefine products and services,
blurring industry boundaries and creating entirely new sets of non-traditional competitors. Domain
transformation currently offers one of the most significant opportunities for company growth.

4. Cultural/Organizational Transformation
 A redefining of organization mindsets, processes, talent, and capabilities for the digital world is
always needed to achieve long-term digital transformation for any industry. The most successful
corporations recognize digital transformation requires a flexible workflow, a decentralized decision-
making process, a bias toward testing and learning, and a greater reliance on different business
ecosystems.
 One of the best examples of this cultural/organizational transformation is the consumer credit agency
Experian. It was able to change its organization by instilling collaboration and agile development into
its workflows. Additionally, it spearheaded a fundamental shift in employee focus from equipment to
data throughout the company.

What are the three approaches to digital transformation?

1. Wait for proof of digital success

 This first approach will help organizations focused on empirical results. The difficulty with this
approach is the tremendous risk of remaining idle until your digital transformation catches on. It
provides competitors with a distinct advantage if their digital success happens faster than it does for
your company. Since most organizations have a mixture of digital and non-digital solutions, this first
approach is usually the first choice for most companies.
2. Develop an all-inclusive digital strategy
 This approach focuses on getting the strategy as complete as possible from the start. It requires a
robust long-term plan. The all-inclusive digital transformation strategy focuses on changing the
culture and rapidly implementing innovation. It is usually quite an expensive approach with many
dangers. Businesses with great patience and an appetite for risk need only apply.
3. Incremental delivery of digital skill
 This approach focuses on delivering benefits as a company moves toward a potential changing digital
destination after identifying an initial target and route. But as the organization progresses, lessons
learned and new inputs are considered, thereby changing the digital goal and sometimes the path to
the destination. Therefore, this approach concentrates on delivering a solid yet malleable strategy that
can evolve with industry changes throughout its lifetime.