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ERP: Single Source of Truth

Do you remember the times in your company, when in order to get the report you needed to access, compare and merge data from 3-5 different systems? Then in order to get the ratios and conclusions you asked your controller to perform the calculations and then revised it several times? This work was much far from value data management, taking much time and efforts to control the overall business situation.

                In reality, many companies are still multi-sourced, using decentralized data sources and systems. This practice is not only old-fashioned but also unbeneficial for operational and strategic development of the company. Nobody is able to track day-by-day performance and change opportunities dealing with multiple sources of accounting and management data.

                Digitization of economy and arising operational needs of many companies influenced on appearance of the most effective solution to integrate the fragmented information in one data source called Enterprise Resource Planning system (ERP) [this link directs to “Choose a New ERP System]. Integration of all accounting and operational management data in one data source much simplified managers’ decision making and strategic planning.   

                Experience of companies which choose ERP-systems shows that convincing reasons for a new ERP system may include:

  • The use of multiple points of input with duplicated effort in the existing system
  • The inability of the existing system to support business needs
  • The requirement of extensive resources for maintenance and support
  • The consideration of company to reconfigure its business process
  • The growth of the company and subsequent incompatibility of several informational systems
  • The inability of managers to respond easily to questions or information requested by key customers or suppliers

Especially in today’s smart digital “internet of things” economy, when the company actually may use a lot of data about its customers, competitors, suppliers for the operational improvement, ERP became a needed “must”. In a smart business, all activities are configured using software so that decisions affecting them can be automated. ERP is a necessary fundamental database on which a company may build its complementary data-driven processes. ERP is not an innovation anymore rather a “must have” fundamental business software.

   The successful businesses use data from one authorized source. In 2000-2005 one of the most ERP-boosting factors was the multiple cases when divisional branches of the companies showed their profitability, though the company as a whole was in a loss. With dozens of different management and accounting systems, it was very hard to track the effectiveness of cost allocations and to find the bottleneck in the processes.

Especially in the planning process it is very important to have the “pre-agreed” set of numbers presented in a uniform way. It gives you the context for making choices. Also, consider how much time you should spend in order to get different “raw data” from different sources for the consequent analysis and decision-making. The price is too high for such decentralization.

Successful companies prove that ERP-systems together with intensive employees training and corporate evidence-driven culture [this link directs to “Little Big Data”] led to a significant decrease in the number of regular reports generated and re-orientation of business thinking from “how much sold” to “how better to sell”. ERP makes corporate data easily accessed and synthesized, and managers may be concentrated on the pro-active decision making.

Single source of accounting and management information generates cost savings and significant time savings. But the greater benefit is helping management focus on strategic objectives for profit growth and increasing shareholders value.   

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