Aberdeen: ERP Critical in Reducing Costs for Midsize Companies
September 18, 2008 // Published as a news service by IHS
Midsize companies are most concerned with reducing cost; however, top midsize companies, having already cut costs by an average of 21% - compared to 9% by industry average and only 1% by laggard companies - are less driven by the need to cut costs.
They also have turned their attention to using enterprise resource planning (ERP) to improve customer satisfaction, according to Aberdeen Group.
Standardized implementation of ERP and standardized business processes that support internal company collaboration will result in a better customer experience, Aberdeen said.
"The hallmark of a best-in-class implementation is standardization of both processes and master data such as charts of account, customers, suppliers and products," said Cindy Jutras, vice president and group director, Aberdeen.
"A majority (69%) of best-in-class companies have a standardized implementation of ERP across a potentially distributed and global environment. Whether this has resulted from developing and implementing standards up front or from a consolidation effort, this is a recommended state for any company," Jutras said.
Aberdeen said top companies enjoy improved performance, including:
- 22% reduction in inventory levels.
- 19% reduction in operational costs.
- 22% reduction in administrative costs.
- 95% complete and on-time shipments.
- 95% inventory accuracy.
The research offers details on how to improve business performance through ERP investment and implementation strategies.
Some of Aberdeen's recommended actions for improving performance include:
- Assign ERP ownership to the line of business executive that stands to gain the most benefit from the implementation.
- Standardize procedures and ERP implementations across the enterprise.
- Broaden and deepen the use of ERP.
- Extend ERP access to more users in the organization.
To obtain a complimentary copy of the 2008 ERP in the Mid-Market benchmark report, visit http://www.aberdeen.com/link/sponsor.asp?cid=5148.
Source: Aberdeen Group.