In recent years, a system of engagement has been proposed as a replacement to the more traditional system of record. In this blog, we’ll explore each system and which is more valuable to manufacturers throughout the world.
System of Engagement: ” A system of engagement is a system which is used directly by employees for “sticky uses” – like email, collaboration systems, and new social networking and learning systems. They “engage” employees.”
System of Record: “A system of record or source system of record is a data management term for an information storage system that is the authoritative data source for a given data element or piece of information.”
System of Record vs. System of Engagement in Today’s World
Ok, so what’s the difference? In a traditional plant, there was likely only a system of record – the system that contained all of the data for the entire company. It was the single source of truth as many would say. But, as technology has evolved and provided more uses, the system of engagement has grown increasingly popular. So, many manufacturers, use both a system of record and a system of engagement(s).
If we’re being honest, the system of engagement is easiest to use and used most often in all industries, not just manufacturing. However, the system of record is typically the single source of truth within a company, and most often, it’s the ERP (or even Power BI or Tableau) where all data ends up living.
It probably sounds confusing, but stay tuned and we’ll explain exactly what we mean, and why often, you need both systems.
Why Do These Two Terms Exist?
Genuinely, we dislike these terms because, in our opinion, they were made up to make people feel better about buying different types of systems that have some duplicate functionality of their ERP. However, these systems likely fill the gaps that an ERP otherwise cannot.
And, these terms were likely made up by people who had spent thousands and thousands of dollars on an ERP system to find out that while it helps immensely, can’t do everything.
To justify the need for multiple systems and to avoid eliminating a very expensive ERP system, these two distinctions, a system of record vs. system of engagement, were created.
For example, SAP and Oracle are massive ERP providers, and, yes, they do have manufacturing productivity-like products within their systems, but they don’t work well or doing everything that is needed on the production floor. This creates the need for a product like Mingo to fill the gap an ERP cannot.
Even though a system like Mingo is needed, companies still use an ERP, Power BI, or Tableau, or if we’re being technical – the system of record, to be the single source of truth. At the end of the day, all systems of engagement feed data into the main pillar, the system of record.
The terms, frankly, are management bullshit. Sounds like a lot of fluff, right? It pretty much is because, at the end of the day, you need the tools to help you meet your goals and grow, whether that’s a system of engagement or a system of record. But, we digress. We’ll get into that bit further in the blog.
What’s the Difference Between a System of Record and a System of Engagement?
It’s very likely that when you’re looking for software, you’re not thinking in terms of a system of engagement versus a system of record. And even more likely, your company structure is going to look something like this.
The ERP is the system of record. It’s accounting, it’s HR, it’s literally all of the data you need to build the backbone of the company. All other systems are going to feed into this one system.
But, people on the factory floor don’t need to use the ERP on a daily basis to do their job. They don’t need to know about accounting data to make sure the product is sent to the customer on time. They can use a manufacturing productivity tool like Mingo that is more tailored to the production floor. With this, operators and plant managers alike can monitor production, be aware of problems happening on the floor, drive continuous improvement projects, and meet production goals. And, the software can handle the complexities of pushing or pulling the data out of the ERP.
The same example applies to your marketing team. For marketing people, they need a database of contacts, emails, social media, etc. to do their jobs. They’re pulling this data directly from the CRM. Then, it’s fed into the ERP system for the “bigger picture”.
At the end of this, all of the data from the “systems of engagement” are pushed into the ERP, Power BI, or Tableau platforms, or the “systems of record”. This is providing a “bigger picture” to the c-suite to make well-informed business decisions that take into account every individual department of the company.
Now, for a plot twist. The system of record could actually be a system of engagement for some people within the company. Think about how we mentioned accounting as being a part of that ERP system. They’re going to live in that ERP on a day-to-day basis. They do not need a specific software catered to their needs because it already exists.
All of these different pieces of software, to a certain extent, fall into the system of record and system of engagement categories, depending on who you are.
If I’m an accounting person, the ERP is the system of engagement for everyday use AND the system of record for the rest of the company. From a production management and scheduling perspective, the system of record and system of engagement is really Mingo. This is the single source of the truth for some pieces of data, for example, for all of the process data – temperature, vibration, historical data of plant performance.
But, the summarized information from Mingo has to move to the ERP so the rest of the work can be done such as inventory movements, job costs, and accounting.
So, you see how whether you have a system of record or system of engagement could be largely situational. There really isn’t a clear distinction. Depending on who you are, yes the system could be a system of engagement, or it could be a system of record.
It’s important to both have and use both types of systems. In fact, you absolutely should. At the end of the day, do these systems really need names that differentiate them when everyone needs software to help with their day-to-day activities AND a single source of truth?
In a traditional sense, the lines of these types of software are blurred.
What Do I Need to Use as a System of Record?
What’s even more eye-opening is that these days, the single source of the truth is something like Tableau or Power BI, not even the ERP system. We’ve kind of touched on this but didn’t really explain why this has changed in recent years.
Tableau and Power BI give companies the ability to pull data from ALL of the systems into a very accessible, straight forward format. It’s not as easy to see that all-encompassing view within an ERP system. For managers to be able to understand what’s going on in the company, this is very important.
For example, if you’re the CEO of a B2B company, you’re going to want insight into every area of the company to make informed business decisions. You’re going to want to know the trajectory of the sales pipeline, order fulfilled and backlogged, plant performance, payroll numbers, shipping, inventory levels, purchasing, and accounting.
If you didn’t have a system of engagements, you wouldn’t be able to compile any of this data, and if you didn’t have a system of record, well, you’d be looking at many different systems, including the ERP, to get the big picture. Power BI or Tableau makes possible the big picture view.
So, you see, it’s important to have both in manufacturing. Without one or the other, you’re either missing the drill-down data you need to make decisions within specific areas of the company such as production or marketing, or, you’re unable to see the big picture of how the company is performing as a whole.
Either way, you’re losing out on valuable data that will help you improve and grow.