Strategic Planning and ERP – What’s the Connection?
When it comes to strategic planning and ERP, what’s the connection?
Our team of independent ERP consultants regularly advises ERP project teams as they undergo ERP evaluation, selection and implementation.
Many project teams look to upgrade or select a new ERP system to obtain a single source of data, replace manual and stand-alone systems, as well as be in a better position to scale operations.
They often put the primary focus on technology. Yet the project deserves a broader view which involves strategic planning.
Thinking Strategic Planning and ERP
We’ve run across definitions of the term “strategic planning” as “a process of defining organization direction and making decisions on allocating its resources, including capital and people. It is often viewed as a process for determining where an organization is going over the next three to five years or more.”
Strategic planning enables an organization to answer the following questions:
- Who are we?
- What can we do?
- What are our strengths and weaknesses?
- Which critical issues must we respond to?
- What should our priorities be?
- Where should we allocate our resources?
- How do we want to grow?
- Where do we want to be in the future?
Strategic Planning and ERP in Action
As business improvement consultants, we hear the need for strategic planning often.
Most large organizations have a significant process of strategic planning where overall directions are given to the organization.
They need to do this since there are large amounts of resources at stake and many people and departments involved to manage these resources. However, few small organizations do strategic planning even though relative to their size, they too have large amounts of resources at stake and people involved to manage these resources.
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When considering strategic planning and ERP, the reason for this absence of a strategic plan is usually due to the fact that top management of the organization, or the ERP project team, is tactically oriented and involved with the day-to-day operations. Just getting through the near term is the only thing on their collective mind.
The problem with this is that within the organization, there is no overall plan that gives people direction as they make decisions, which means that different parts of the organization can be going in different directions at the same time. I
n small volumes, this is not such a problem, but as the company grows, it can become very chaotic, frustrating and problematic and can lead to failure due to the conflicting priorities that will exist.
A strategic planning process does not have to be long, time consuming and drawn out, but it should involve the key personnel of the organization.
With guidance from a facilitator familiar with the process, implementing a strategic planning process can be quick and simple and can be done without causing a major intrusion to operations. Benefits that can be realized include:
- Clearly defined business strategies and supporting objectives for growth
- Identified business strengths and weaknesses
- Quantified resource requirements and financial projections
- Integrated operational plans for each area of the business
- Clearly defined business performance measures
- A focus on achieving and building competitive advantages
Strategic Plans, ERP and Operations Plans
Strategic plans are very different from operational plans, especially when the goal is business process transformation.
Operational plans are tactical and are concerned with “today.” Strategic plans are concerned with “tomorrow” and are effective in coordinating the tactical activities so that the future growth of the organization is effective and under control.
Without some aspect of a strategic plan that is known to all, activities of the organization will be disjointed and counterproductive, even though everyone is doing what they think is best. Frustration will exist within the ranks and growth will be difficult, which can lead to the overall failure of the organization.
Strategic Planning and ERP – Final Thoughts
We’ve covered just a few thoughts about strategic planning and ERP.
With a well-conceived and communicated strategic plan, an owner or management team will likely get what they want in terms of organizational performance, but without one, they will most likely not get the desired performance and everyone in the organization will suffer to some extent.
Looking to plan? Contact Ultra for the best way to get started.
Jeff is the founder of Ultra Consultants, a well-known voice in the ERP consulting industry and an expert on ERP solutions for discrete and process manufacturers. Over the last 40-plus years, his companies have helped more than 2,000 organizations improve their business processes, select ERP software and implement advanced solutions.