Transformation of Corporate Accounting and Management Systems: How the New Technologies May Help

— Mikhail, can you tell us what an ERP solution is and what it is used for?
— Enterprise Resource Planning (ERP) is software that supports the planning, accounting, and analysis of information needed to make informed operational management decisions. In essence, ERP is a tool to manage all business processes and resources of the company with the use of a single database.
As a company grows, business processes that previously didn’t take much time to manage suddenly transform and begin to create and consume much more information. Additional administrative staff is needed to consolidate and analyze this data. Even with its help, however, it’s not possible to completely evade the fragmentation and inconsistencies in the data involved in various business processes. This is where the ERP solution comes into play. Although ERP systems have been around for a long time, customers’ requirements for such solutions and their role in the company’s IT ecosystem are changing.

— How do you understand that the company needs an ERP solution?
— It usually becomes clear at some point that although all the basic processes are automated, the efficiency of work doesn’t improve. It turns out that each process exists in a separate information system. In order to link them, employees manually enter data into each system, and then management manually collects duplicated data to analyze the performance of the entire company. This way of working ceases to be productive at a certain point. The main thing is to determine this point before it occurs — not when it is necessary to change the mechanisms of processes in the shortest possible time.

There is no magic tool that will tell you that a company needs to implement ERP. International experience, however, can provide you with four main reference points that signal the time to change something.
First — there isn’t enough data to make an informed management decision. If it’s outdated, incomplete, or incorrect, the decision will be flawed or unbalanced. Such a decision can lead to financial losses.

The second factor is that the data is ambivalent. This situation can arise if critical information is scattered among individual employees and departments. Data on the same objects of activity in various departments doesn’t match, data collection isn’t regulated, and the information is generated by employees with different roles and levels of access — and at different times. An ERP solution, configured in accordance with your business processes, can bring all the data together because all information will be created by employees in real-time within a single system. This means that the data you or anyone else in the company may need will always be accurate and relevant.\

The third factor is that your customers are dissatisfied with the service. If customers complain or switch to a competitor, you should think about the effectiveness of your work. It’s linked to the demand outweighing the supply, late deliveries, slow service, or just a general feeling that businesses don’t have the resources or time to take care of every customer. If your business is medium or large scale, an ERP system is able to turn dissatisfied customers into loyal ones: customers begin to feel the service improvement and accompany the business throughout all the changes.

Last but not least, you are using outdated systems. According to the Veeam 2020 Data Protection Trends Report, the main barrier to digital business transformation is legacy technology. If a company is still working with manual entry systems or paper documents, it’ll definitely be left out in the post-pandemic period. Alternatively, the company’s IT systems may be up-to-date but remain unintegrated. In this case, each department creates its own information «bunker», the data from which comes in dosed or incorrectly. If the integration of separate systems is extremely costly or impossible, you need to replace them with a single ERP system.

— Why is an ERP solution beneficial for business?
— Implementation of an ERP solution is regarded as an investment that should bring profit and strengthen the company’s leadership position in the market. Gartner predicts that by 2023, organizations that have successfully upgraded their ERP platforms will achieve at least a 40% improvement in efficiency at the IT level. This will have a positive impact on their business results. But no ERP manufacturer can guarantee that it will increase the company’s revenues because implementing an ERP solution is not just installing a program — first and foremost, it’s all about modernizing and restructuring processes. And therein lies the key difference between ERP solutions and local solutions for the automation of individual tasks. ERP is a holistic model of your business. Its productivity and efficiency depend on the structural quality of this model.

You can highlight the following advantages of modern ERP solutions for business: a single standardized business processes; complete transparency of management; 24/7 access; productivity of departments’ joint work; scalability. As an ERP solution is introduced into all company processes, the list of benefits can increase depending on their specifics.

— What is the payback period?
— According to the statistics cited by various analytical agencies, 41% of companies managed to recoup the cost of the ERP implementation within one or two years, 68% — within no more than four years.

— How can you supplement an ERP solution? Is it possible to integrate it with any other business efficiency tools?
— We’re seeing that recently, companies are moving away from finding a solution from a single vendor covering all of the company’s business processes. By virtue of technological advancements and integration capabilities, we can analyze products from different vendors, choose the best among its peers and combine it with other products to promote a culture of technology partnership. For instance, the efficiency of an ERP solution can be enhanced if it’s supplemented with the Industrial Internet of Things technologies based on the Winnum platform. The joint operation of these two types of solutions allows them to complement each other and produce a synergistic effect owing to the fact that the ERP receives objective and operational data from Winnum. The human factor is thus completely eliminated. Integrating Winnum solutions with an ERP system makes it possible not to overload it with a huge volume of «raw» data, preserving its productivity and, at the same time, providing the required information in real time.

— Tell us more about Winnum. How does this platform handle the mentioned tasks?
— Winnum is a Russian Industrial Internet of Things (IIoT) platform. Continuous, proactive, and real-time control, which it enables, is the basis for improving the efficiency of business processes. Winnum makes it possible to create a digital duplicate of the enterprise; perform interactive control and monitoring of equipment at all production sites; trace the dependence of the production results from the set technological parameters and the equipment’s operational modes; control the observance of technological discipline. No operators participate in the data collection, thus providing relevant data for the optimization of technological processes, reduction of production cycles, and increase in equipment utilization. In addition, it’s possible to monitor the personnel’s actions, the state of equipment, and reduce downtime by controlling critical situations.

Winnum is an important tool for the digitalization of the industry, which ensures the company’s competitiveness by enhancing its output and product quality, reducing operating costs, and using innovative business models. This includes the creation of a digital space, a single production ecosystem that integrates production equipment, product lifecycle systems, and safety systems. Thus, the application of the industrial internet of things technology in conjunction an with ERP system forms the basis for the creation of a digital enterprise with automated end-to-end processes.

Implementing the IIoT technology frees up people by providing better and more relevant data collection and analysis, which in turn changes the way the enterprise is managed. The use of IIoT, like ERP, facilitates the development and creation of new internal competencies for the company’s employees. And we’re not talking about system administrators here — this is about functional services in possession of the skills necessary to use IIoT tools to promptly complete their tasks. It’s akin to Excel skills, which at one point became mandatory for most employees of companies. Now, mastering them is no longer difficult.

— How is the Winnum software installed on users’ desktops? How long does it take to connect?
— You don’t need to install any software. All actions are performed in a browser on any computer within the enterprise’s network, including administration, viewing and editing of 3D and dynamic applications. For instance, it would take a week to implement Winnumin an industrial shop with 20-30 machines.

— And how is information security maintained when using Winnum and ERP?
— Winnum protects information through the physical separation of equipment and users, the presence of more than 35 software algorithms for data encryption and the control of unauthorized distortion of data, keys, and tags. Furthermore, the user and machine subnets are separated by a firewall, which controls and filters the network traffic.

An ERP system has the following aspects of security: network security, database security, security at the application server level, and information security on the client computer. Most modern ERP systems use role-based access control that allows users to perform only strictly defined transactions and gain access only to certain business objects. Decisions to grant access to a user are made on the basis of the functions they perform within the organization.

— What model of the ERP—Winnum interaction can be implemented on an actual production enterprise?
— Of course, a different model can be created for each specific enterprise, but in general — if we leave the features of specific enterprises unconsidered — the following structural scheme can be proposed: a digital twin created in Winnum displays the actual state of production. It can provide a simple visualization of the state of equipment, or visualize the material flows, personnel movements, and the status of production tasks. This information is objective, rapid, and has no risk of error because the human factor and manual data entry are eliminated. This data is fed into an ERP system in accordance with a certain routine. There, it serves as the basis for planning processes, allowing the formation of plans. In doing so, it takes into account the actual information regarding the state of the equipment, personnel, and stages of completion of the tasks that are already in production.

Such interaction models can be built for discrete or continuous production, taking into account different types of equipment.