How Companies with ERP Can Benefit From Process Mining
Enterprise Resource Planning (ERP) systems boast an impressive list of benefits for businesses who implement them. They streamline business operations, boost customer satisfaction, and keep a business’s most crucial data organized and safe to name a few. The expected outcome is faster business growth and greater ROI.
ERP is also known to be difficult to manage, and costly—a real headache to reach the benefits. In fact, around 50% of ERP implementations fail the first time around according to a Technology Evaluation Centers report.
Luckily, process mining can help to mitigate the challenges that come with implementing and managing an ERP. In this article we'll cover a few ways that process mining can be used in conjunction with ERP to optimize business growth and develop a flexible business strategy.
- ERP System Implementation and Data Migration
- Training Users on the New System
- Involve All Stakeholders in Process Improvement
- Creating Good ERP Habits
- A Process Improvement Example
ERP System Implementation and Data Migration
Whether you’re introducing an ERP into your company for the first time or migrating data from an old ERP system to a new one, the first steps are going to be the same: choose the team and key players involved; develop your strategy with well-defined objectives, goals, and risks; clean up and organize your data.
When it comes to your data, one of the most important aspects is reviewing your processes before you implement the new system.
This step is where businesses make the large and potentially costly assumption that they understand how their business processes work and ignoring the data. The result could be integrating the same inefficient processes into the new ERP system.
Those who do make the effort to understand and improve processes before the migration often run into issues with time. Traditional methods of mapping out process workflows via internal interviews will often take additional time to complete and rack up money along the way.
Process Mining gathers the data from your ERP database and automatically discovers business processes, showing the process workflow and deviations of your as-is process, and the resources involved. Full visibility into the end-to-end process eliminates the need to conduct interviews, saving time and money. You can immediately view each process activity and see its duration transition times, reworks, cost, and KPI alignment. Quick, data-backed process improvements can be made from these insights to ensure that your new ERP starts off with high-performing, streamlined processes from the get-go.
Training Users on the New System
After the new system has been set up, it’s time to train employees in the new skills they’ll need to use the software. There’s always a learning curve when changing to a new system. But leaving users’ competency of the new skills unchecked for too long will confirm to employees that they are performing activities correctly even if they aren’t and necessitate more effort later on to retrain employees that have to unlearn what they’ve been doing for months.
Process mining can provide insights into the process activities to see if users are performing activities as expected. Conformance checking compares actual process with the expected process, instantly showing where deviations are occurring, their cost and frequency, and the root cause.
You can use conformance checking every time you have to train users to use a new technology. Discovering unwanted process behavior a few weeks after training instead of months can save time, money and effort in the long run and keep compliance on target.
Involve All Stakeholders in Process Improvement
The first step of any process improvement initiative is to map out the end-to-end process and include all the various stakeholders. For example, in an O2C process the ERP, CRM, and the Shipment System will be included among the list of stakeholders. Thus, it’s essential to understand the flow of data to and from these systems and capture all resources, known and unknown, that are interacting with the systems.
Imagine relying on ERP analysis alone to identify and evaluate process variants across all the stakeholders involved by the process. Of course you can utilize the data within your ERP system to perform analyses but you have no way to identify the actual main path of the process along all the stakeholders.
The process model is at high risk of being assumed—assumed that the systems are being used correctly by the correct people—rather than discovered.
Then during the analysis phase of the process improvement, there’s no way to understand why process variants exist or who is involved. Essentially, you’re looking at the process from an ERP perspective rather than a holistic process-oriented one.
Now instead, imagine using process mining to gather data from an ERP system and from all other stakeholders involved to create a complete end-to-end process model and evaluate the discovered process variants from a process-oriented approach.
You may discover that some variants are creating a significantly higher output and excelling at KPIs. Frequent variants can point out areas for process standardization when a variant is executed to avoid a superfluous action or handle a common client exception.
Or you might find dozens of variants performed by the wrong resources which causes costly inefficiencies
Where ERP can only point out that variants exist, process mining identifies variants and gives deep-level insights that support accurate decisions-making.
Creating Good ERP Habits
Let’s take a step back and look at the bigger picture. ERP is one of the most business critical systems in an organization. It’s the center for all data connecting your key operational and business processes, many of which are cross-departmental.
And yet, too many IT organizations don’t give it the proper attention it deserves. Maybe they’ve made every upgrade available, unified all possible systems, trained every last employee. But it’s just not working—they aren’t receiving the benefits they were promised with ERP.
Introducing and maintaining good habits is essential in keeping your ERP system healthy and continuously increasing ROI. This is especially true when it comes to analyzing the processes involved. There’s a lot of emphasis on healthy habits for ERP implementation, but what about the day-to-day health of your ERP?
Processes are changing all the time. As the business grows, there needs to be a thorough review of how the processes are growing with it or failing to meet the demands of a changing organization.
Are you aware of when and how often your processes are changing?
Are there unexpected changes causing compliance issues or unnecessary reworks?
Here are some of the ways that process mining’s various capabilities can help your business maintain a healthy ERP system.
- Discover Your As-Is Process
Your as-is process could look completely different than what you expect. Relying on process mapping you did last year or even months ago won’t help you get a real look into how your processes are running today. Process mining uses current data to automatically show you how your process is running today.
Discover Business Rules
Business rules give transparency to process behavior. They help a business to function better through greater process control. Understanding the policies and regulations that shape customer experience can drive company decisions that create more agile processes.
The business rule miner is not a standard process mining capability available in all solutions. Choosing an advanced process mining solution with the business rule miner capability, like myInvenio Process Mining, means you can automatically find the logic behind the rules that guide process behavior and identify why a specific path is followed in a process based on the discovered business rules. Once discovered, rules can be formalized and even automated to cut costs and align with business strategy.
- Automate ERP Processes
One of ERP’s greatest benefits is the automation of core business processes. Adding additional RPA (Robotic Process Automation) to back-end processes further reduces costs while increasing productivity and accuracy. It’s easily scalable and can be ramped up or decreased according to business needs. RPA also produces its own data that can be analyzed to support quicker process improvement.
Process Mining supports RPA implementation by identifying the activities that are best suited for automation. It then deep dives into activity performance and cost to see how an activity will be affected once automated.
Companies forced to continue using legacy applications will find that RPA brings life back into processes whose ROI has dwindled and makes it easier to make upgrades when the time comes.
- Continuous Monitoring
It takes a lot of collaboration to organize stakeholder meetings and the participation of everyone involved in the process improvement for them to be effective. When they do happen, you have to depend on the accuracy and completeness of the group’s notes, perhaps biased, to understand if the process is performing as it should. Maybe that’s why these meetings happen so rarely and require a team of consultants to coordinate.
One of process mining’s biggest appeals is that it’s a continuous solution. After it analyzes the process and provides insights into process improvement, it continues to monitor your process to capture any new issues that arise.
Monitor after you add automation. Monitor after you make a system upgrade. Monitor after you onboard a new team that will interact with ERP. The more you monitor, the faster you’ll relieve the company of pain points and the faster you’ll get back on track to achieving business goals.
A Process Improvement Example
Take a look at what a typical process improvement project that uses myInvenio process mining to discover, analyze and improve a P2P process will look like:
myInvenio first pulls the process data from an ERP system to create the complete process streamline, showing all process activities and transitions, their frequencies and times.
With the process mapped, a deep-level analysis finds path variants, bottlenecks, conformance issues, and performs a root cause analysis.
myInvenio has specialized dashboards with insights that focus on the areas of P2P that have the biggest impact on the process like maverick buying, automation, and cash discount losses.
With myInvenio’s simulation process, what-if scenarios can be tested to define the best to-be process to implement change effectively.
After changes have taken effect, you can monitor process performance and determine if training was successful.
The key takeaway here is that getting ERP benefits don’t have to be touch-and-go. There’s plenty of potential sitting inside your ERP processes which need close attention and steady maintenance, and it’s our job to make sure that happens. Continuous process upkeep might sound like a tall order but doesn’t it have to be a burdensome task.
With process mining’s automatic process mapping and analysis, there couldn’t be a simpler way to get the insights you need to make impactful decision-making. Once you turn those insights into action, the benefits will start flowing and you’ll be on your way to unlocking new levels of potential in ERP that you haven’t reached before.
Stefano Pedrazzi has 15+ years of experience in the ICT and BPM field. He spent a significant part of his work life leading and managing Business Process Management and System Integration Projects for OT Consulting. Since 2017 he has been the VP of Sales & Marketing at myInvenio, helping his customers kick-start their Process Digital Transformation revolution using myInvenio’s process mining solution.