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In a famous essay in 2011 Netscape founder and venture capitalist Marc Andreessen notoriously wrote about “Why Software is Eating the World.”  He was right.  Companies he identified including Amazon, Netflix, Spotify and others did just that – they used software to eat their industries.  Today, newer companies are repeating the feat, including Airbnb, Stripe, Uber and others.  All are digging in.

It is said that today, all companies are software companies.  Or they had better be.  Many have adopted software to maintain or extend their competitive dominance, even in industries as arcane as pizza to name just one, where Domino’s has achieved a dominant position thanks to its software focus.

A recent article co-written by hedge fund CEO Steven Cohen and venture capitalist Matthew Granade, both of Point72 Ventures, and writing in August in The Wall Street Journal’s Opinion section, begs the question: What’s next?  Their answer?  Models.

This new paradigm is defined as a shift from a world often dominated by software to one driven by ‘models,’ which power the key decisions in business processes, creating revenue streams and improved cost efficiencies.  It requires a mechanism (usually software-based) to collect data, processes to create the models from the data, the models themselves, and finally a mechanism to deliver or act upon the suggestions from those models.  To be specific, quoting the authors on the latest paradigm shift:

“These companies structure their business processes to put continuously learning models, built on ‘closed loop’ data, at the center of what they do.  When built right, they create a reinforcing cycle: Their products get better, allowing them to collect more data, which allows them to build better models, making their products better, and onward.  These are model-driven businesses… being created across a range of industries.”

While there is plenty of hype about big data and AI, the models, they state, “are the source of the real power behind these tools.”  They go on to say… “A model is a decision framework in which the logic is derived by algorithm from data, rather than explicitly programmed by a developer or implicitly conveyed via a person’s intuition.”

Get it?  It’s the data-driven model’s ability to learn from itself and its own mistakes – at a rate much faster than mere humans can do – that sets it apart as an increasingly rapid prototyping tool for building the better business.  Humans, it seems, need not apply.

A Chinese company called Tencent provides a brilliant example.  They have customer data across social media, payments, gaming, messaging, media and music, and information on hundreds of millions of people, all of which they put into the hands of thousands of data scientists in order to make their products better.

That unique data helps Tencent to power a model factory “that constantly improves user experience and increases profitability – attracting more users, further improving the models and profitability.”  That’s a model driven business.

Closer to home, Amazon used software to separate itself from physical competitors but it was their models that helped them pull away from other e-commerce companies, Cohen and Granade point out.  By 2013, over a third of Amazon’s online revenue came from its recommendations, the result of model-driven data usage, “and its models have never stopped improving,” as Bezos & Co. continue to find myriad ways to use machine-learning models.

The authors go on to extol the model-based leveraging changes now taking place across the business spectrum.  Key industries include agriculture, services and logistics.  The implications are vast, and Cohen and Granade sum it up by describing five key implications for the future of business … and we’ll cover those five in our concluding post.  Stay tuned…

 

 

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Do you need to redefine your information technology strategy?  Our friends at Panorama Consulting in a recent post point out several reasons you might, all of which we’ve found to be valid in our 30 years of helping guide client strategies.  They include:

 

  • You haven’t updated your technology in the last decade.
  • Your IT strategy is not aligned with your overall business strategy (a big one!)
  • You haven’t considered all your strategic options — It’s not just about ERP… What about smaller initiatives? What about Internet of Things (IOT), or Business Intelligence (BI) reporting?
  • You don’t have an action plan for replacing your enterprise and software technology.
  • Your IT strategy doesn’t meet your organization’s ROI thresholds (does your IT strategy fit the costs, tolerance of risk and benefit objectives of your firm?)

Following are six good guidelines for developing your strategy that any company should consider.

  1. Define your company’s overall strategy. You need a written document that summarizes the company vision and where you’re headed in terms of growth, product lines and transformation.
  2. Define IT’s role and purpose in your organization. Does your organization view IT as a commodity or as a competitive differentiator that provides unique value to your customers? This will determine whether your IT team will be in-house or out-sourced, and that in turn may answer further questions about where your tech resides and which type of solutions you consider, from on-premise to hosted.
  3. Assess your IT department’s competencies. A sophisticated IT department can handle a sophisticated ERP system. Less sophisticated IT departments may consider simpler, cloud-based solutions.
  4. Consider all your digital transformation options. There is a nearly bewildering array of options available to companies today. You can piece together best-of-breed solutions from multiple providers, or opt for a single-source solution. Aside from technology, you can transform your organization by reengineering your business processes or reimagining your business model.
  5. 5. Develop a long-term strategy. Some organizations rush into a short-term technology decision without considering the long-term impacts. An example is implementing a CRM system without first determining how well it fits into your overall back-end accounting system. Sounds like a small consideration, but in reality, it’s a deal-breaker.  Keep an eye always toward the long-term view.
  6. Consider the non-technical aspects of your digital strategy. Always keep the people and processes first in your thinking, and make sure the IT strategy serves the business strategy – and not the other way around.

Good tips all, all worth heeding.

In our prior post, we noted that companies need to order and reengineer their processes first, and then think about the software they’ll use to bake those into the company’s mode of operation.  Today we conclude that post by sharing 7 steps that we think make a lot of sense, as recently published in an article by Panorama Consulting entitled “7 Business Process Reengineering Tips For Competitive Advantage” which you can find here.  They said it well, so we’ll excerpt some of their comments below.

  1. Budget adequate time and resources. Business process reengineering takes time. In fact, it takes more time than the technical configuration, testing and implementation of ERP software. It probably took your organization years to adopt your current processes, so it will likely take some time to change those well-established processes. You should ensure sufficient time for defining, improving and implementing new business processes. Benchmarking against organizations of similar size and industry will help you set realistic expectations for your project.
  2. Define business requirements before selecting ERP software. Organizations often find that modern ERP systems are too flexible to simply start using out of the box. Even the simplest business processes have multiple workflow options. This complexity will slow down your project if your business processes aren’t well defined before the design and build phases of your implementation.
  3. Improve business processes before selecting ERP software. Just as you should define business requirements before software selection, you should also improve your processes as early as possible. This is also the time to consider whether your processes align with your long-term organizational strategy.
  4. Don’t treat all business processes equally. It’s easy to be overwhelmed by the number of business processes you need to document, analyze and improve. So start by focusing on just the processes that are competitive differentiators. These processes should drive your selection of ERP software and shouldn’t be constrained by software best practices, which may not be best practices for your unique operations.
  5. Integrate business process reengineering with change management. Resistance to change is one of the main reasons business transformation takes longer than expected. Ensuring employees understand and accept new processes is challenging because people naturally dislike change. Before training employees, you should identify the gaps between your current and future state, so employees understand new processes in the context of their day-to-day jobs.
  6. Integrate analytics into business processes. ERP vendors offer innovative solutions that leverage business intelligence and predictive analytics, often utilizing AI technologies. When defining your future state business processes, you should include processes for analyzing and acting on data. Chances are, most of your competitors don’t have a strategy for leveraging AI nor have they implemented this innovative technology.
  7. Measure results and make incremental improvements. Measuring post-implementation results helps you stay on track to realizing expected business benefits. Continually measuring incremental benefits realization allows you to make corrections as needed. Misalignment between business requirements and software functionality can deter benefits realization. Lack of employee buy-in can also create a roadblock.

Every company wants its business software (or ERP system) to support the way their underlying business works.  It only makes sense, and with today’s business systems, that capability is actually within reach.

We remember 20 or 30 years ago when merely implementing the “accounting” portion of a client’s business was a long and tedious undertaking, and usually subject to some pretty rigid software rules dependent on how your particular accounting software was written.  Then again, that wasn’t that big of a problem since by definition accounting systems should conform to generally accepted accounting principles – and those were generally incorporated, at least in basic form, in most systems.

But today, we’ve gone way, way beyond mere accounting.  Today’s ERP applications are comprised (or can be) of a broad range of applications affecting nearly all areas of the business.  These include human resources (beyond just payroll), most phases of production and process control, all the accounting of course, as well as webstore interaction, electronic data interchange with trading partners, bar-coded freight systems and complete warehouse management for picking, packing, license-plating, receiving, putaway and shipping.

In today’s world, the only way to ensure that your software is going to match your processes is to reengineer them before you do your software selection.  Job one is to optimize those processes – enlisting the aid of what is usually an outside process expert or lean consultant – to ensure that everything you’re doing in the business has been optimized for efficiency, removal of obstacles and redundancies, and shared internally to ensure that all parties can eventually have access to the same process ‘picture’ – and the same data silos — where required.

To do all that, you need to order your processes first, and then think about the software you’ll use to bake those into your company’s mode of operation.  As the folks at Panorama Consulting note in a recent article:

Business process reengineering also ensures your chosen ERP software aligns with your long-term organizational goals. ERP systems are a big investment, so they should support your processes for at least the next five to ten years.

Most importantly, business process reengineering helps you beat the competition by ensuring your ERP system enables differentiated, efficient business processes.

In our following post, we’ll share what they had to say about 7 process reengineering tips that are designed to give your company a competitive advantage.  Stay tuned…

 

A good post by a west coast NAV blogger provides steps for integrating your Dynamics NAV (in this case, 2018, though it should work basically the same for other versions) with Microsoft’s Excel spreadsheet.  The end result is a new, separate “Dynamics NAV” tab in the ribbon of your Excel application that links directly to NAV.

[Disclaimer: While some users may be able to handle this one on their own, feel free to contact us or your authorized NAV partner to installation assistance if it will make you feel safer.  Also note that this is specifically for NAV (in particular, though not exclusively, the 2018 version), and presumably not for the new Business Central.]

Step 1: Locate your installation file (that’s your NAV ‘setup’ file). The file location may vary depending on how and where your NAV is installed (you might be able to get help from your IT folks, or call us).

Step2:  Double-click the file name (setup.exe) and when asked “Do you want to allow this app to make changes to your device?” click the “Yes” box.

Step 3: From the Maintenance setup wizard, click “Add or remove components” which will open a box listing a lot of application parts under the heading “Customize the Installation.”

Step 4: From the listing, click the down arrow in the little box associated with “Microsoft Excel Add-In.”

Step 5: When the little down-arrow box opens, click “Run from my computer” and then click “Next.”

Step 6: You will see a screen of specified parameters and, assuming these are correct, click “Apply.”

Step 7: NAV will then run the function to enable the add-in and you should see a Microsoft Dynamics NAV information screen that says: “The modification of Microsoft Dynamics NAV has completed successfully.”

 

Again, while it’s pretty simple, we always suggest you have a knowledgeable NAV/tech support person available to you whenever making changes to your system.  Assuming all goes well, you’ll end up with a Dynamics NAV tab in the ribbon of your Excel for fast NAV access!

Our thanks to Encore Business blogger Eunice Gan who posted this tip/article, with screen shots here, originally.

 

In a recent report compilation the editors at Panorama Consulting Solutions listed what they considered to be four of the top manufacturing software solutions, as well as their prescription for the “ideal” manufacturing software system, from among the now over 200 solutions from which companies today have to choose.  Those top four included SAP, Oracle, Infor and Microsoft Dynamics.

Of the Dynamics 365 solution, Panorama writes…

Microsoft Dynamics solutions have a familiar user interface and suit organizations of all sizes. Microsoft Dynamics D365 Enterprise enables data and resource integration across various departments and locations. The solution has been redeveloped as a pure SaaS model, but also can be deployed on-premise or hosted in the cloud. In terms of field service functionality, Microsoft Dynamics employs IoT technology to improve response times and operational efficiency.

This October, Dynamics 365 for Sales will be enabled with artificial intelligence, which will give manufacturers better visibility into their supply chain. Dynamics D365 continues its reliance on a partner ecosystem to develop niche functionality. Partners are currently in the process of understanding niche IP development for the new version of Microsoft Dynamics.

As to that “ideal” manufacturing system?  Here’s some sage advice:

The ideal manufacturing solution should address the entire supply chain, from product inception to customer delivery. It should have functionality to track suppliers, materials, production costs, maintenance and customer relationships. Ultimately, it should increase operational efficiency and provide full visibility into manufacturing processes and business data. Transforming your manufacturing organization requires technology that drives efficiency and enables full supply chain visibility.

While it’s helpful to compare the strengths of various ERP systems, the best solution for your business depends on your unique needs and situation.

To their advice we would add:

Discuss your needs with a software reselling partner or consultant who knows the territory, one who specializes in the manufacturing sector, and is aware of the many nuances of production, scheduling, bills of material and the unique inventory requirements that attend to them.  Find a good consultant, determine whether you’re comfortable with their people and if they have a methodology for getting you to where you want to go.  Then, when you think you’re ready, talk to a couple of their references, make sure you are on the same page with respect to your unique project roadmap, and be willing to provide the full range of resources and staff commitment required to get the job done.

After all, you only want to do this once.

(You can find access to the full report beginning here.)

 

 

Labor Day was first celebrated in the United States in New York City in 1882.  It became a legal federal holiday in 1894.

It’s worth noting that in the late 1800s the average American worked 12 hour days and often seven day weeks to eke out a meager living.  Children as young as 5 years old worked in factories and mines.

Today we celebrate the 155 million men and women – including you – who are the American workforce.

It’s also known for being the “last” summer holiday before the start of a new school year, so do yourself a favor and take some time for a last summer hurrah – if you didn’t already do so over the long weekend just ended – and perhaps thank your lucky stars you are a 21st century worker, and not a 19th century one!

May all your labors never be in vain… from your friends at PSSI.