GAP Analysis in ERP Implementation

As a company grows and faces new challenges, a continuous evaluation must be done on the current work processes and IT solutions so as to analyze whether they can address these challenges. Performing a periodic gap analysis in ERP implementation helps assess the direction in which a company is headed. Moreover, it can also determine whether the company is equipped with the right kind of tools to get there.

Some of the common issues that companies normally need to look into are:

• Streamlining day to day operations so as to improve productivity and profitability
• Recognize the need for collaborating with business partners
• Generate more insights for decision making
• Meeting regulatory requirements
• Adapting and scaling the business

Most companies rely on a combination of manual and automated workflows, legacy applications, and databases to run their business. These systems may serve their purpose for quite some time, but will eventually run out of options for scalability leading to productivity gaps. In today’s highly competitive markets, inefficient systems can seriously affect the productivity, profitability, and growth of a business.

Dealing with separate systems can become a hindrance to growth and profitability. At the same time, companies can benefit from ERP systems to help define best practices, optimize workflows and achieve a better view over the various business processes.

By automating business processes, companies benefit from the increased accuracy, accelerated data flow and streamlining of day to day activities. This, in turn, gives the staff more time to focus on areas that require personalized attention.

The Need for GAP Analysis in ERP Implementation

Considering the rapidly evolving ERP market and ever-changing needs of companies, it is very essential that gap analysis is done on a frequent basis. This can assess the relevance of legacy systems and ascertain whether the organization’s demands have outrun the capabilities of these systems. GAP analysis helps in providing precise analytical data to compare the costs involved in an upgrade versus the value addition that the upgrade brings in.

Performing the GAP Analysis

GAP analysis is the technique of listing out the steps to be taken for a company to move from its current state of operations to a desired future state. The analysis begins with highlighting the company’s current situation, listing factors to achieve the objectives, and also planning out the key steps to put into effect for bridging the gap between the current situation and the desired future state.

Besides, undertaking an ERP implementation also imply conforming to common market forces and regulatory requirements. The following checklist will help analyze whether the existing system meets your unique business requirements. In addition, this will also guide you determine whether to enlist the services of a consulting organization to perform a detailed evaluation for accurately assessing the value that a state of the art ERP system would bring about.  

Does your organization need to comply with government regulations?

Many companies in various industries must comply with various regulations constituted by the government. Some of these regulations include:

• Sarbanes-Oxley Act for all public companies
• OSHA Hazard Communication Standard
• ANSI
• European Union REACH (Registration, Evaluation, Authorisation, and Restriction of Chemicals) legislation for chemical companies
• The Bioterrorism Act
• HACCP (Hazard Analysis and Critical Control Points) for food and beverage producers

Most companies find that managing these government regulations are burdensome and costly. The higher costs are attributed to the fact that many of these are managed manually. Moreover, manual compliance processes not only increase the cost but also leads to inaccuracies and time delays.

Do you need to streamline your operations to improve productivity and profitability?

In today’s competitive world, organizations need to continuously improve their processes and streamline their operations to reduce costs and increase productivity. Manual systems can be time-consuming and slow down the business processes due to rekey of information into multiple systems. Furthermore, to add to the trouble, there are a lot of inaccuracies as well.

Do you need to enhance your decision-making capabilities?

With the increasingly competitive market, it is essential that your company has all the required info to guide you in making the right strategic decisions. When data is spread across various systems and spreadsheets, it becomes increasingly difficult and time-consuming to create reports that are needed to support key decisions.

Do you need to collaborate with partners?

As your company grows and the market conditions fluctuate, it may become unavoidable to not team with partners in various industries across different geographical locations. During such collaborations, effective and hassle-free communication becomes vital to meet customer expectations, maintain loyalty and remain profitable at the same time.

Does your processes and systems scale with your business?

Scalable systems are an absolute necessity considering the competitive markets that thrive today. You will need technology solutions that not only cover your present needs but also accommodate the growth of your business in the future.

Are you planning to grow your business globally?

If the answer is yes, then you will definitely need systems that address the following:

• Global currencies
• Multiple Languages
• Global regulatory specifications

The Output of GAP Analysis

• The GAP analysis will give a complete overview of the system
• It will inform the organization or business, how much value the ERP system will precisely bring into the various business processes
• At times, it may also lead to the conclusion that the implementation of an ERP isn’t needed for the organization when analyzing the value being added

Conclusion

Modern day companies face adverse competition due to rapid market shifts. In the midst of new technological innovations, the adoption of an ERP system is a big step for the growth of a company and its productivity as well. GAP analysis remains an indispensable part of this entire process and companies should focus on it more and give the importance that it deserves. The value adds by giving you a detailed retrospective of your business processes and the current systems are much more than the costs involved in the same.