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By: iNECTA
April 30, 2018

How Siloed Systems Negatively affect Your Business

 

siloed-systems

Using ERP to Solve Your Enterprise Pain Points

In this series of blog posts, we will focus on identifying the most frequent pain points enterprises face with their existing software system deployments and how an ERP solution can help alleviate them.

Pain Point #1: Siloed Systems

Siloed (also referred to as disconnected) systems are a natural progression of a software systems deployment within a growing enterprise. Most organizations follow a very traditional path of first deploying an accounting system such as QuickBooks, Sage, or Microsoft Dynamics GP to manage their enterprise financials. These financial management systems also frequently provide support for mission critical back-office operations like purchasing, invoicing, payroll, and reporting on key metrics across the business.

When the organization starts to mature, there is a natural progression towards supporting other aspects of the business through additional software systems. Depending on the business model, this could involve completely different systems to support one or many of the following business processes:

  • Customer Relationship Management (CRM)– manage customer relationships, sales pipelines, lead generation, and marketing support
  • Inventory Management– manage inventory levels, integrated with purchasing and sales operations
  • Materials Resource Planning (MRP)– manage manufacturing processes, including materials and labor costing
  • Project Management -manage internal projects, tasks, resources, and timelines

Deploying additional best-in-class systems to manage critical business processes as an enterprise grows is a logical step forward in the maturity of an organization but can have some unintended consequences if not done with a full enterprise solution in mind.

If left unaddressed for too long, an enterprise operating with siloed systems can lead to massive inefficiencies, redundancies, and cost overruns trying to manage such disparate systems. Below are the most frequent challenges faced by enterprises operating in a siloed systems environment:

Reporting

Lack of centralized reporting is the single biggest drawback from a siloed software systems approach. With enterprise data distributed and stored throughout multiple systems and data warehouses, it becomes extremely difficult to centralize and normalize the data into one coherent dashboard view of the Key Performance Indicators (KPIs) executives require to understand the overall health of the organization. Even if data can be aggregated amongst all of the systems, it is frequently so time-consuming and inaccurate that by the time it reaches an executive’s desk it is outdated and ineffective. 

User Access and Security

Managing multiple siloed systems also requires managing enterprise users separately in each of those systems. With no centralized user or role management in place, the addition or removal of an employee from the organization becomes a time-consuming and error prone process. For example, imagine an organization that deploys all of the systems described above (Accounting, CRM, Inventory Management, MRP, PM) as separate, siloed systems. Now imagine a new Sales Manager is hired on to the organization. Instead of creating the user in one centralized management tool and assigning an existing role to that user, a login and role association must be created in five separate systems:

  1. Added as a new Employeein Accounting
  2. Added and assigned a Sales Managerrole in CRM
  3. Added and assigned a Reporting role (read-only) in Inventory Management
  4. Added and assigned a Reportingrole (read-only) in MRP
  5. Added and assigned a Project Managerrole in PM

If the same organization plans on adding 10-15 new employees a quarter (and lose 2-3 to retention), it becomes a clear administrative burden and overall security risk for managing a distributed user access and control process across the enterprise.  

Training

Using the same example above, consider the training requirements for onboarding new employees into the organization. Apart from the accounting system, each of the systems require that the Sales Manager is properly trained in the following:

  • User Interface (UI)– How to navigate the software system, access specific user functions, enter data, and avoid erroneous input.
  • Organizational Workflows – Each business manages its unique workflow slightly differently, and it is vital users are trained appropriately to avoid errors in the system
  • Best Practices– In addition to software vendor documentation and training, enterprises frequently must manage a separate set of internal best practices for how to interact with software systems
  • Support – Different systems have different support and services contracts associated with them, depending on the contract. Some systems provide full 24x7 phone support, while others rely on Wiki pages and forum support. Users must be clearly trained on how to access support for the system they need assistance with.

Training is another example where deploying multiple systems puts an increased administrative and support burden on the organization, since every system exists disconnected from the others.

The Solution: ERP

If siloed systems increasingly put a burden on an enterprise as it grows, how can this be prevented? The answer is: Enterprise Resource Planning (ERP) systems. ERPs centralize all enterprise operations into one consolidated reporting and management system capable of delivering the same features and capabilities as multiple siloed systems.

Over the last 10 years, the one drawback to deploying an ERP system has been the lack of availability of a comprehensive cloud-based ERP system. Enterprises typically had to decide between a cloud-based siloed approach or an “on-premise” ERP system with large up-front infrastructure costs.

To address this massive hurdle to deployment, in April of 2018 Microsoft announced the launch of Dynamics 365 Microsoft Business Central, a full cloud-based end-to-end ERP capability across purchasing, sales, operations, finance, and customer service. This new platform delivers business without silos, while offering the flexibility and access of a cloud-based solution.

 

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