Your ERP Business Strategy during COVID-19

Since the COVID-19 was discovered at the end of 2019, businesses went through an environment that had been constantly changing. And it lasted much longer than one would have expected.  So, what should be your business strategy with ERP during COVID?

This article discusses the strategy that companies can adopt through the use of Enterprise Resource Planning (ERP) during this challenging time.

Companies will act differently based on the position that they are in although some may have a combination of these positions:

Companies with Immediate Need to Adjust to the New Normal

The following new normal during COVID-19 impact the supply and demand sides of business operations:

• Quarantine of infected employees causes a shortage of resources
• Social distancing and work-from-home make it challenging to perform work that used to be done at the workplace
• Lockdown makes it difficult to access customer orders through traditional face-to-face contacts
• Travel Restriction and government policy to protect the employment of locals reduced the supply of foreign talents
• Disruption in supply chain causing unpredictable supply and increasing cost

Adopting to COVID-19 Supply-Side Restrictions

Companies that were in a healthy cash flow situation but facing a shortage of human resources due to the quarantine, lockdown and work-from-home policy may want to take the following actions as their business strategy with ERP during COVID:

• Explore cloud solutions. This can be either as in new Cloud ERP or enhancing their existing ERP to allow remote working.
• Some businesses may face a sudden surge in business demand (e.g. Online businesses, Supply Chain related companies, medical material and devices, healthcare, etc.) and look for solutions to improve their capability to handle them. This can be done through the implementation of new ERP or enhancing their existing ERP solutions.

Adopting to COVID-19 Demand Side Restrictions

Due to social distancing and lockdown, customers may not be able to place orders through face-to-face contact. The ability to conduct B2C and B2B business becomes crucial. This can either be done through implementing new ERP with e-Commerce capability, but it is more likely that companies will work on projects to integrate their ERP to the e-Commerce platform that they selected.

Keys to ERP Implementation in the COVID-19 New Normal

For companies with immediate needs to adjust to the new normal, there are a few keys that they should be aware of when they are looking at ERP solutions:

1. Avoid implementation that will take a long time to go live. Companies with existing ERP solutions should look at extending their existing solution first unless their existing ERP cannot extend the capabilities that they need.
2. For companies without ERP, look for ERPs that can be implemented faster. As a benchmark, the implementation should be less than 4 months for non-manufacturing companies and less than 6 months for manufacturing and project-based companies. Companies often have to balance between functionalities, speed of implementation, and usability.

Forward-Looking Companies Planning for Future Improvement

As their business strategy with ERP during COVID, some companies may try to use this period to invest in solutions and training to improve their business capability in anticipation of the recovery. Besides ERP, they may explore areas such as Industrial 4.0, IoT, and e-commerce. They may do this either through self-funding or making use of the government grants for ERP projects.
These companies can take a more comprehensive approach in selecting and implementing ERP solutions that can meet their current and future needs.

Companies Looking to Reduce Existing ERP Running Costs

Some companies may need to find ways to reduce their running costs of ERP. Companies currently using expensive Tier-one ERP solutions may want to look for tier 2 ERP that can deliver the required performance at lower running costs.

Companies with Reduced Business Activities and Deteriorating Cash Flow Situation

These companies will be in survival mode. If they are already running ERP, they should look into reducing the running cost. In the extreme situation, it may be necessary to consider stopping the use of ERP or even just using cheaper accounting solutions if their business activities have been reduced to the level that they can be handled without running ERP.
They can also consider re-negotiating support contracts during contract renewal.
If these companies do not have existing ERP, they should not look into ERP but rather focus on working out a plan to strengthen their cash flow or funding. ERP is a mid to long-term solution and cannot save a company if they are already in survival mode.

Conclusion

Different Companies should adopt different strategies. Their implementation should be quick and should avoid long dragging implementation. But whichever strategy that companies adopt, they should be very clear of the long-term consequences and have a plan to deal with them if necessary.

Learn More about the author, Raymond Yap, and how we can help you.

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