A study by Epicor, an enterprise resource planning (ERP) vendor, highlighted in a recent Information Week article, revealed that users are frustrated with inaccessible and inflexible ERP’s, and a large percentage of ERP users rate their systems as merely "basic" or "adequate." We understand and value the important role effective ERP technology can play in a firm’s success; however, it is clear that in many situations, ERP's are not the all-encompassing business solution they might have been promoted to be. So how do you decide which functions should be ERP driven and which solutions might benefit from a non-ERP solution? Ask yourself the following questions:
- Is the function considered outside of your business’ core competency, and is it something that distinguishes your business from the competition?
- Do you find it difficult to find resources (money, IT, priority) to install the functionality you need?
- Do the enhancements deliver a positive return on investment (ROI)?
If you answered “yes” to these three questions, that functionality may best be built outside your ERP. In working with businesses for more than 20 years, DataServ has found that several financial operations functions, such as accounts payable (AP) and accounts receivable (AR) processing, often times meet these criteria. You should consider building a solution outside of your ERP if you are looking to accomplish the following:
Enhancing collections performance on past due accounts – Using your ERP as the main process for resolving pesky AR issues may not be your best option. In many AR situations, clients require not just an invoice, but a proof of delivery (POD) and/or a packing slip before they will pay an invoice. Many ERP’s simply do not have a simple way for finance professionals to get at all of this information in a manner that is conducive to collector productivity. As an example, Sony Pictures Home Entertainment, winner of the 2014 Institute of Financial Operations AR Innovation Award, utilized a DataServ solution that gathered all transaction documentation (invoice, packing slip, and POD) and presented the data and images through a one-click link in their ERP. This information became so easily accessible that it could be reviewed with Sony’s customers while they were on the phone, and images of all the documents were then downloaded into a single PDF file and sent along with the relevant payment information. This approach led to significant improvements in collecting money from delinquent accounts. It was cheaper and faster for Sony to outsource this specialized activity.
Eliminating paper from your payment process – When it comes to AP, one of the keys to improvement is eliminating paper and automating the entire process. Having an AP automation solution that can provide you with all electronic data and images, regardless of how your suppliers submit invoices, is a capability not found in ERP’s.
Enhancing business value through greater focus on core capabilities – Over the last 20 years, we have seen a common scenario amongst our clients: They talk about automating financial operations, the project gets formally requested, and they set out to implement it through their ERP. However, all too often the automation project goes into the prioritization pool and ends up “number six on a list of five.” This can drag on for years! By using a third-party solution you can increase your ROI simply because you are operating outside the constraints of your internal resources to complete all of your automation opportunities.
Each of these goals can be accomplished by choosing a Software as a Service (SaaS) solution that addresses the issue. Our advice: Keep your internal IT experts focused on your core capabilities and improving the return on your ERP investment, and expand your ability to take advantage of more automation opportunities by smartly leveraging outside solutions.
You’ll get the best return out of your ERP investment if you use your ERP for what it does well and outsource the aspects it isn’t optimized for, like AP and AR automation. If you have any questions regarding these points, please send an email to info@DataServ.com.