The old approach when it came to backend business systems was hulking enterprise resource planning solutions (ERP) that do everything but require lots of money, implementation time and customization. This approach is being replaced by a newer, fit-to-standard ERP methodology that instead prioritizes fast and affordable rollout based on standard best practices included by default.
To understand this new fit-to-standard approach and why both startups and existing businesses should be using it, we talked with industry veteran Ralph Hess, executive VP of sales and marketing for one of the leading ERP implementation providers, Navigator Business Solutions.
Executive VP of Sales and Marketing at Navigator Business Solutions
What is fit-to-standard, and why is this approach becoming the norm for ERP rollout?
Fit-to-standard is an evolution of the concept of relying on best practices for business processes instead of reinventing the wheel.
Most business processes are not unique. Accounting and payroll processes are not where businesses gain competitive advantage. So instead of a business designing processes from scratch and trying to shoehorn them into their ERP, instead of adding a lot of custom code that now must be maintained, the new approach adopted by market leader SAP and other ERP vendors is encouraging the use of standard processes that come predefined and default out of the box. This helps a business implement ERP faster and at less cost, improves operational efficiency because best practices are being used, and reduces the need for programming custom code in most cases.
How does fit-to-standard reduce ERP implementation times?
There’s no longer the scripting or programming to build the business process.
The way your grandfather used to do ERP implementation was creating a blueprint after understanding the business processes of each department, then coding or scripting these processes into the ERP. Fast forward to today with fit-to-standard, and the blueprint is already done. All the business processes already are in the system. So instead of defining and programming, now a business just discovers its needs and lightly configures the system instead.
You configure the system for different workflows, but there’s no longer the need for programming and customization in most cases. You can have different approvals or kinds of scenario handling inside of that business process. But at the end of the day, you’re just configuring standard processes that come default out of the box.
As you implement, of course you’re documenting any gaps. In the old days, reflexively you would program to fill those gaps. Today, however, you bring those gaps to a steering committee and ask if filling those gaps are worth the customization. Nine out of 10 times, the steering committee says no.
Where does the cloud play into this methodology shift?
Moving operations to the cloud is part of digital transformation, and software-as-a-service requires a little more standardization and a modular approach for faster innovation and greater connectivity with other systems.
The cloud encourages the fit-to-standard approach, which is why SAP began moving toward this model 20 years ago when they released SAP Business ByDesign. With the release of SAP GROW a few years ago, which is basically a public cloud version of its flagship S/4HANA ERP, SAP has shifted its whole paradigm toward this model.
Businesses really need a cloud mindset for the transformation they want when they put a new ERP in place. That’s why ERP implementation can’t be driven just by the CFO. The CEO also has to be onboard, because this is a culture shift: We’re moving to a fit-to-standard approach for streamlining and accelerating business growth.
So how do you get employees like Sally on payroll buying into this new way of operating?
Fit-to-standard needs to be coupled with organizational change management. That’s why the CEO and department heads must be involved. Communication needs to start at the executive level and make it clear that this is how the business is going to operate, and that the company is fully behind this as the way forward.
Beyond clear executive involvement, it needs to be done thoughtfully and not just jammed down people’s throats. There should be a good plan for training employees on these new processes and showing why the new processes will drive overall business success and ultimately make the lives of employees easier.
Sometimes there is an entrenched culture at some of these $400 million companies we work with, though, and a few individuals who just won’t get on board. It needs to be communicated that this is how the business is going to do things, and if the employee doesn’t agree they have the opportunity to be deployed elsewhere in the company. Because you can’t have a subject matter expert going around the system and operating outside of standard processes.
What is the standard process for handling non-standard processes or integrations?
Great question. There’s really three different ways that a company can go about it.
First, there’s out-of-the-box tools that come with SAP Grow that allow you to do things like add fields to a screen, rearrange a screen, and add some light logic to it. Basic customization like that. This comes out-of-the-box.
There’s another layer within an ERP such as SAP Grow where you can do a little bit of light coding that is contained within the user interface for deeper, more complex logic.
Then there is adaptability and extensibility. A modern ERP such as SAP Grow is modular and built on a clean core where the most of the higher-level functionality is added on top of the core system through APIs and hooks. Most business functions and applications hook into the ERP at this level, so functionality can be added or changed without needing to modify the ERP core.
So the third way is making customization on the application layer through a platform-as-a-service such as the SAP Business Technology Platform (BTP). We can develop or use premade applications in the BTP that sit outside the ERP but communicate with the ERP database in order to provide additional logic and functionality.
An example of this may be a customer portal. We could build a customer portal on the BTP that interacts with our SAP Grow system.
The advantage of using this modular approach is that when there is customization, it won’t break every time there’s a new ERP version release. If you develop something that’s integrating with the 2402 release, there’s a 99 percent chance that you don’t have to even review that code when the 2408 release comes out. This is the fit-to-standard approach for customization.
Along with this comes low code tools that make it much easier, such as SAP Build. It allows you to very easily create forms and just create applications without having to write code. Obviously you can still develop on top of the ERP using all those developer tools that you’re used to using such as C++. But often times you can just use the low-code capabilities, which itself is standardizing customization.
When is fit-to-standard not appropriate for a business?
There are certain businesses that have a degree of complexity and still require custom solutions and private cloud ERP.
For instance, a forklift manufacturer might have 19 different models and 17 different ways they can each be configured, with seven or eight parts in different locations that must be brought together during manufacture, and then have these forklifts consigned across a large dealer network. There’s a lot of complexity there, and that might require elements that can’t yet be met with public cloud ERP and a fit-to-standard approach.
What you have with the public cloud and the fit-to-standard approach is an ERP with 85 percent to 90 percent of the functionality that you can get with a more complex private cloud ERP implementation, however.
I was on a call yesterday with a business that thought it needed a custom solution. But once we worked through the business processes, we at Navigator Business Solutions found a way to do it in the public cloud with standard processes instead. It wasn’t actually that complex. We found a way to do it within a public cloud product in the fit-to-standard model.
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