ERP: A New Age of Innovation
Practicing What We Preach: Using Cloud-based Services to Deliver...
The Changing Pace of Traditional Business
Modernize Your Business With Cloud ERP
Thank you for Subscribing to CIO Applications Weekly Brief
Building A Future-Proof ERP Platform
By Jorge Frausto, SVP – Enterprise Systems, GE Power
Cloud computing is the future of ERP. Not only can it cut the cost of running the infrastructure significantly, it can also help drive the standardization agenda, which is so critical in making an ERP roll out successful. Within GE Power, we look at ERPs and Cloud technology by categorizing ERP into three buckets: small, medium, and large. For our small and medium sized ERPs, we are incorporating the Cloud SaaS platform. For the first time in GE, we will have one smaller sized manufacturing and engineering site migrating to the Cloud SaaS platform in April 2017. Based upon the learnings from this pilot, we will be rolling this solution out for our medium-size manufacturing sites. For our large-scale ERP, we are taking a hybrid approach where we have the ERP by itself on premise while having some of our pillar platforms (e.g., commercial, procurement, etc.) on the cloud. This serves two purposes: in a smaller to mid-size environment, it gives us the opportunity to learn and experiment with SaaS solutions, while in the larger scale ERP environment; it sets the path toward SaaS by having the peripheral applications on the cloud.
Big Data Analytics: Shaping ERP
Big data and analytics are really significant in the current scenario. Early on, our focus concentrated on rolling out ERPs first and then worrying about reporting, data and analytics at a later point in time. Now data and analytics are continuously shaping the way we roll out ERPs. Most of the ERP software comes with built in reporting tools. We can leverage those tools for operational reporting purposes. However, throughout the entire ERP ecosystem we have several pillar applications like PLM, Services and Repair, and Commercial that interface with the ERP. These applications, along with the ERP, come together to form what we term as the ‘digital thread’ for an enterprise. We leverage big data and analytics platforms to harness this digital thread across all pillar applications. By doing this, we form a semantic data layer that is consistent across all pillar applications, which is key to GE becoming a digital industrial leader. At the project’s conclusion, we will not measure the success of ERP on simply the schedule and budget. These are just table stakes. Success for GE Power’s ERP depends on how we enable and drive this digital thread to increase productivity, which can then translate into optimized working capital and incremental business revenue.
Step Toward Innovation
ERP is a business initiative; it is not an IT project. ERP must enable inherent business transformation and it must be aimed at enabling outcomes. GE Power has made a strategic decision to operate a single SAP instance supporting 40,000 global users across our three largest business units. This will be the single largest ERP within GE; approximately 40 percent of GE Power’s overall operating profit will be processed through this platform. We have adopted a two phased ERP strategy to enable this within GE Power. This allows us to think about ERPs a bit differently. Phase 1is focused on implementing the enterprise platform by leveraging the principles of agile methodology and eliminating waste in our existing processes and drive productivity.
ERP must enable inherent business transformation and it must be aimed at enabling outcomes
As a result, we can automate the product lifecycle while maintaining the install base information (the transactional records for every piece of equipment that gets shipped and serviced) and records on every employee involved in the production process. Phase 2 is focused on laying the broad foundations of the SAP platform to drive future innovation and growth. In this phase, we will be leveraging the GE-developed Predix cloud-based platform to realize the concept of digital thread, utilize big data and analytics, and build the digital enterprise of the future. When Phase 2 is completed, we will be able to drive better inventory optimization, predict the status of our assets, understand the failure modes of our equipment, and manage the cost of quality much more precisely. In short, GE Power is not taking the traditional waterfall approach to ERP implementation, starting with foundation first then growth. Instead, we are running a true agile methodology to accelerate business value and learn as we grow.
Technologies for the Future
With ERP deployments, user experience has always been a challenge (and rightfully so).The focus for ERP now needs to be on driving a rich user experience with customized personas of roles being performed. Digital-savvy employees entering the workforce do not want complex manuals and training guides to use our systems. Rather, they want their digital work experience to be no different than their social life or personal use of technology. As a result, we are investing in social platforms to drive collaboration across common functions to solve problems much faster, and we are also embracing mobility. We are experimenting with how to eliminate the human key board interface with technologies such as holo lens to bring in 3D visualization to our processes and voice activation to complete transaction entries.
Changing Role of CIOs
The role of the CIO has dramatically changed. The IT organization is one of the few functions in a modern global business environment that has a holistic view of the entire business and can connect nearly all functions. The lines are now being blurred between CDO/CIO/CMOs, and this is a good thing. CEO’s recognize that leveraging digital capability can help drive out cost, increase revenue, and directly impact share price. At GE, our supply chain leaders now talk regularly to our CIOs internally as they make decisions on purchasing intelligent machines that can be connected to our digital brilliant manufacturing suite of applications for performing predictive analytics. Our products are now being manufactured keeping software and data in mind. We are leading the charge of the new digital industrial world. Within GE Power, our equipment powers approximately 1/3of the overall world’s electricity needs, so there is tremendous opportunity to continue driving a new digital industrial future. We are working towards a digital world where we can digitize our assets to drive more optimization and value for our end customers.
Using Technology to Curb ERP Cost
ERPs should be focused on achieving or supporting business outcomes. The outcomes should justify the cost. Within GE Power there are multiple ways we are looking at optimizing the overall cost of our ERP program. We are leveraging bots to digitize all our regression testing needs. We work horizontally to leverage a single team across GE to manage data conversions, testing and to develop our integrations. Within GE we have built digital hubs, which provide these services to all our different business units so we can get the benefit from the economies of scale. We are also building a DevOps model to make ourselves accountable for the ERP software that we roll out. We are experimenting with collaborative tools to optimize the cost of change management. There are a few levers that we are exercising to optimize our ERP costs but at the end the business outcomes should justify the investment.
Reaping Out ERP Value
ERP is not a one-time event; it is an ongoing culture of continuous improvement. Mining transactional data from ERP and operations data provides business insights with opportunity to drive revenue growth or cost out opportunities. For example, equipment monitoring in the field provides insights into predicting equipment failure, service outages. This equipment insight with ERP transactional data can help determine the appropriate stocking levels of critical parts and avoid stock outs. The net impact is avoided downtime for a customer who needs parts for a power plant urgently (as an example). GE is building capability to transform ourselves and our customers into digital industrial companies, and having a single view of global operations helps drive out cost in the supply chain. We can identify quality issues in the manufacturing process, compare this across geographies and can determine if the issue is related to product design, varying manufacturing process, or even human error. The possibilities for ERP driving improvement are nearly endless.