Enterprise Resource Planning Should be About Mission, Not Just Systems
Enterprise Resource Planning (ERP) is a hot topic in the field of nonprofit operations. Business systems need to run at maximum efficiency. We also need robust system integration to help nonprofit organizations to adapt to rapidly changing economic conditions (funding) and demand for services (programs and activities). However, ERP focus is too often centered on business systems by themselves when attention should be focused on mission and purpose.
Our rapidly changing world has caused disruption on everything from operating systems, governance, and the demand for programs and services, to the basic question of how-to bring value and purpose to the table. As a result of this new reality, nonprofits are learning to embrace transformation, start new initiatives, question processes of the past, and take chances.
ERP can be a smart strategy and development tool if a mission emphasis is included.
ERP is often broadly defined as “the ability to deliver an integrated suite of business applications. ERP tools share a common process and data model, covering broad and deep operational end-to-end processes, such as those found in finance, HR, distribution, manufacturing, service and the supply chain.”
However, I believe this definition is overly focused on processes and not the reason why we have these processes.
Brittney Gordon, CPA, Senior Business Development Manager for Alliance, works frequently with nonprofit organizations on ERP optimization and ERP/third-party application vendor selections as part of Alliance’s Financial Systems Advisory practice. She recently shared with us her working definition of ERP as the main “guts” of a business from a systems perspective:
“[I]t is a single system that enables and integrates all of the core processes needed to run a business enterprise. It manages the day-to-day business activities and enables the flow of data between a multitude of business processes, connecting every aspect of an enterprise in a single source of truth for business data.”
Gordon stressed that she prefers this definition because “it conveys the message that the ERP is integral to the business. When we talk about ERP, we put it in the context of the systems environment overall – all of the tools and systems that work in tandem with people and processes to help an organization achieve its mission.”
There are two key takeaways from Gordon’s statements:
First, the business of nonprofits is mission. Gordon’s statements make it clear that ERP and mission are connected and drive the truth/purpose for acquiring, integrating, and using data. This data provides vital information to assist senior management and the Board with making critical decisions that facilitate advancing mission and delivering services. Efficient systems by themselves will not guarantee success. Efficient systems that also include a core purpose of advancing mission will help move the needle in a positive direction.
Second, Gordon’s statements underscore the importance of making sure that mission impact is part of all messaging and communications, thus becoming a natural part of strategy and planning. Nonprofits should emphasize that for every system change and integration strategy considered, mission impact must be included in planning, discussions, and documentation.
For example, asking the following questions in these common situations involving ERP will help you to keep a focus on mission:
When making system changes to automate some manual processes (driven by a desire to cut labor costs and relieve pressure on declining budgets), what is the impact on customer relationship management (CRM), delivery of services, and quality of care?
When implementing systems for a hybrid virtual environment, how can different departments within an organization “talk” to each other more effectively, heighten sharing of information, and promote a better allocation of limited resources?
When outsourcing financial systems, how will these systems be balanced with the need to perform internal financial assessments and program performance analysis?
Planning Tip – To enhance ERP, a broad operational bandwidth is essential. Avoid assigning ERP to a single project manager or vesting too much responsibility in a single organizational department. Apply a team or task force approach that is diverse in people and skill sets, including representatives from as many organizational departments as possible.
Finally, the development of ERP strategies should include impact assessments and surveys from service recipients, members, donors, volunteers, and other users of the new integrated systems. This feedback will help you gauge effectiveness and performance while ensuring that mission and purpose remains a key consideration.
