ERP modernization: Working toward a clean core

Enterprise resource planning (ERP) modernization is a huge undertaking. ERP environments are laden with customization that can increase technical debt and impede maintenance. Organizations need to achieve a clean core while delivering a consumer-grade experience that bridges various systems of record without missing a beat.

ERP environments are complex and always evolving. They’re messy and busy. They require many manual processes and span multiple, siloed systems. There’s no single source of truth, and visibility is often lacking. Plus, ERP systems aren’t known for providing exceptional user experiences—they’re designed for power users, not casual ones.

Customizations and extensions may seem like the right solutions to these and other ERP challenges, but they weigh organizations down. These add-ons are “stuck” to the ERP system. During maintenance or upgrades, each customization must be preserved or updated. Security patching is also tricky.

This all contributes to one dreaded thing: technical debt—the rework that comes from quick fixes or shortcuts. It’s what most organizations struggle with and want to avoid. Technical debt is the endless stream of menial tasks that burden IT teams and hamper business agility.

At ServiceNow, we’re working toward an ERP environment with a clean core—a system that’s manageable, easy to upgrade, and extensible to meet unique business needs. Users expect a seamless, consumer-grade experience where gaps across multiple systems of record are bridged without hiccups. We need an ERP system that supports that.

Aligning business priorities

Every organization is on a different journey. Yours might be focused on moving to a SaaS-centered model. Another business might prioritize user experience or composable architectures. Some organizations have initiatives to consolidate multiple ERP systems to save money and capture the benefits of standardization.

For us, it’s important to define what’s at stake. Our ERP system plays a key role in achieving business objectives. It’s linked to big-ticket items that are affected by our modernization efforts:

• Providing experiences to deliver outcomes
• Driving efficiency at scale
• Managing operating expense as a percentage of revenue
• Contributing strategic business value

By digitizing customer and vendor interactions, for example, we’ve maximized cash flow across the company. We’ve also saved hundreds of thousands of dollars by automating invoice processing for our accounts payable team.

Progress over time

ERP modernization happens piece by piece. We begin each ERP initiative by figuring out the business problem we’re trying to solve. Does the user experience meet expectations? Are we meeting key targets? Are there bottlenecks to eliminate? Which manual steps can we automate?

From there, we identify possible solutions. Then we build, automate, improve, rerun, and repeat.

Another great way to begin ERP modernization is with a discovery tool such as Gekkobrain (a ServiceNow company) or Celonis (a ServiceNow partner). Both offer process mining capabilities and real-time insights that can help identify areas of improvement that may not be obvious.

The secret sauce

ServiceNow uses its own products every day. Over time, we’ve found the Now Platform to be especially valuable for our ERP environment. Having one data model, one security model, and an architecture that supports the movement of work across the entire enterprise helps us keep our ERP environment clean and easy to maintain and update.

We use other ServiceNow products, such as App Engine and Process Optimization, to limit ERP customizations, automate routine processes, and add functionality—all while empowering employees, meeting our environmental, social, and governance (ESG) goals, and saving millions of dollars in operating costs.

Here are three key ways we’re modernizing our ERP environment, including a use case for each:

• Purpose-built apps – The pandemic stress-tested supply chain operations and accelerated our understanding of the inherent deficiencies within legacy systems. With Sourcing and Procurement Operations, we’ve automated processes for more streamlined purchasing and case management—and gained end-to-end visibility into procurement processes.
• Predefined workflows – With no unified way to interact with customers, accounts receivable (AR) was struggling to track and manage collections efficiently and cost-effectively. Our AR case management solution, built on the Now Platform using App Engine and Integration Hub, helped us improve productivity by 70% and reduce cycle time by about two days.
• Low-code development tools – With manual, email-based cost center management, we had no way to track approvals and were burning excessive time and resources. By creating an approval workflow and spend management dashboard with App Engine, we now have a digitized, audit-tracked process and faster cycle time.

ERP systems change as an organization evolves. ServiceNow is no exception. But with the right tools and strategies, we’re continuing to work toward a clean-core ERP environment and reaping measurable benefits along the way.

Find out more about ServiceNow and our ERP strategy in our Knowledge session, Now on Now: Maximize cash flow by digitizing AR/AP interactions. Registration is free.