How can an SAP initiative make an organization Smarter, Faster and Leaner?
Over the last thirty years, ERP software has become very broad and deep in terms of functionality and capability. However, no matter what bells and whistles an ERP has, fundamentally it adds value by doing two things: 1. improving automation of manual processes and 2. creating transparency vertically and horizontally within an organization. Although both sound generic and high-level, all other ERP capabilities fit into one (or both) of them.
Smarter – Making
better decisions (and fewer mistakes)
If I asked how you knew if you made a good or bad decision, you’d probably use the quality of the outcome as a gauge. Decisions leading to a desirable or an undesirable outcome are usually viewed as good and bad, respectively.
The problem with this line of reasoning? There are many cases where making a bad decision yields a positive outcome, and vice versa.
Think of a driver who runs a red light in heavy traffic and crosses the intersection unharmed. Was it a good decision? No, it was not. But the outcome was positive. Conversely, if the driver decided to stop abruptly in order to avoid running the red light (good decision) but was rear ended in the process (bad outcome), does the think his decision was good or bad?
Because we seek a positive outcome as opposed to simply making a good decision, we need to analyze the elements that influence the outcome.
First, a decision doesn’t directly lead to an outcome; it leads to action. Clearly a good decision and good execution have a material impact on outcome. But there’s a third element: uncertainty, which can result from lack of information or just luck.
Uncertainty creates the statistical probability that good decisions and skilled actions can result in negative outcomes, and vice versa. Please note that high quality of the decisions and high skill of actions increase the probability that the outcome will be favourable. But as long as the chance of a negative outcome isn’t zero, even a low probability sometimes yields a negative result, despite our best efforts.
So where can ERP make a difference in the quality of outcomes? It can:
- Improve decision-making (Smarter).
- Automate certain actions to ensure consistency in execution and eliminate errors.
- Reduce uncertainty by providing end-to-end transparency.
When asked, most business stakeholders would say that having better data, better information and better knowledge help individuals to make better decisions and take better actions. But what does that mean, and what’s the difference between data, information and knowledge? To answer those questions, let’s look at the taxonomy of data.
Uncertainty creates the statistical probability that good decisions and skilled actions can result in negative outcomes, and vice versa.
Pre-Configured Solutions and Planning
Businesses are often faced with many questions, often those being what are the risks to the organization? How do they make themselves profitable? In this video, learn about the importance of decision making and analysis on areas that will be more impactful.