100923_84.jpg    Inspired in Michael Porter’s Works.

ERP has become a commodity. Companies want to be world class in most cases just buying a software package with best practices on it. With this common thinking is hard to see companies with a distinctive strategy.  An ERP called world class is not enough to set companies apart from the pack. To be profitable we need to have income (a product in the market) operating at a lower cost, by commanding a premium price, or by doing both. Cost can be achieved by operating effectively. Operating effectively means doing the same things as your competitors, but doing them better with better technologies for example. If everyone goes to school with vanilla uniform is very difficult to get the sexiest girl according to Nash (remember “Beautiful Mind,” please). Common standards, benefit companies achieving good procedures with much less investment than was required years ago. The legal framework is a plus into a standard ERP. So, for mediocre companies, yes, to have a standard ERP with word class best practices is an advantage. This is not enough though to have a profitable company in the long run or with a sound strategy, which is the same. The Internet speeds up the exchange of real-time information, it enables improvements throughout the entire value chain, across almost every company and industry.  This is something that well used supports the strategy we choose. Real-time (when necessary) business intelligence software is a good tool to enhance our ERP, then. Living in the Internet era, once a company establishes a new best practice, its rivals tend to copy it quickly; either with the software house distribution or with information across the net. Best practice competition eventually leads to better competition, with many companies doing the same things in the same ways. 263905_15.jpgStrategy goes far beyond the pursuit of best practices, so does profitability. It involves the configuration of a tailored value chain that enables a company to offer unique value. Packaged software applications were hard to customize, and companies are often forced to change the way they conducted activities in order to conform to the “best practices” embedded in the software. To gain these advantages, however, companies need to stop their rush to adopt generic; “out-of-the-box” packaged applications and instead tailors their deployment of Internet technology to their particular strategies. Although it remains more difficult to customize packaged applications, the very difficulty of the task contributes to the sustainability of the resulting competitive advantage. To do so, first, it must start with the right goal: long-term return on investment. Second, a real value proposition, or set of benefits, different from those that competitors offer with (third) a distinctive value chain, choosing (forth) the required trade-offs, without trying to be all things to all customers, which almost guarantees that a company will lack any advantage. Finally, a superior thinking on how all these elements fit together in a long-term direction.