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Panorama Consulting does a nice job of summing up their view of the key questions companies should ask themselves before embarking on an ERP implementation.  We would concur with virtually all of them.  While a different ten could be just as valid, these are a good starting point for ensuring your implementation team has asked the right ‘big questions’ before the hard work begins.  We’ll reprise them here today from an original posting they did here, adding a few comments from our own experience as well.

 

  1. Do you have the right team? You want the A Team, freed up when necessary to put serious attention to the new plans.  Add to that your vendor team implementation lead consultant, and project managers from both teams.  They should be in on all key planning meetings.
  2. What will the project’s org chart look like? Project roles need to be clearly defined.  Include project management, the core team, functional and technical resources, and key managers who will be involved in the business process analysis.
  3. What will the total cost of ownership (TCO) of the project be? Remember that project estimates are just that – estimates.  Leave margin for error for things not considered, discussed or discovered initially.  Don’t forget hardware, lost productivity or hidden costs beyond your vendor’s purview.
  4. What is the business case (cost justification)? There is always a projected ROI (Return on Investment), or you wouldn’t be doing the project, right?  Beyond the immediate exigencies, be sure you’ve identified the long-term cost benefits – they are often huge, and easily can justify a project.  Establish benchmarks or metrics early on, while understanding that it may take longer to reach them than originally projected (it’s the nature of the beast).  Each company will have its own business case, but yours should be widely shared and understood.
  5. What is your overarching implementation plan? Be sure you’ve worked out things like data migrations (there may be more than one), conference room pilots, necessary modifications and a user training schedule with your vendor.
  6. How will you handle third-party or external program integration? ERP systems don’t typically handle every single aspect of your business – and even if they could, that doesn’t mean that their approach would be your best choice.  Third party applications enable users to choose among best-of-breed solutions to narrower project requirements like shipping modes, EDI, e-commerce and other needs.
  7. What organizational change management strategies and tactics will you deploy? Roles, processes and sometimes even people will change, post-implementation.  Make sure you’ve thought about that ahead of time, so a clear transition strategy can be embraced.
  8. What project governance and controls will you put in place? Poor project management can, as Panorama notes, run a project off the rails.  Be clear ahead of time about who makes what decisions, how they will be made, what controls you will have in place and what issues or decisions will need to be made by the project steering committee.
  9. What milestones will you use to evaluate progress? Take time to evaluate your project at regular intervals, and identify key project criteria that you will compare to with each one.  Don’t be afraid to pull the cord to temporarily stop a project when things go off-track mid-course.
  10. How will you define success? Or as we like to say: What does ‘done’ look like?  This might be the hardest one of all, since continuous improvement – and ERP is simply a tool for continuous improvement – is never ‘done.’  It might be as vague as being better off than before, or as concrete as adherence to a fixed ROI figure.  Each company is unique.  Just be certain in the early going to have some frank internal discussions about what the right success metrics will be for your unique project, and its corresponding investment.

 

I.T. Trends in 2017

In the third annual “Business IT Trends Annual Report,” with trends supported by findings by Gartner and International Data Corp. (IDC), analysts researched IT budgets across a variety of industries in a survey of businesses large and small.  Some key findings included:

  • Over a third of survey respondents reported spending about equal to that in 2016, and 37% reported an increase in 2017 over the previous year. On average, all industries planned to spend more on IT in 2017.
  • One-third plan to invest in technology “across the board.” 28% said they’ll invest in “hardware, software and cloud technologies.”
  • The highest growth rate was in health care, followed closely by manufacturing and finance.
  • To no one’s surprise, on the hardware side, desktops, laptops, servers and Wi-Fi were the most popular areas of expenditure.
  • Security, operating systems and backup ranked high in software.
  • Close on their heels, productivity and database software expenditures were quoted by one in four respondents.
  • Over 60% are spending on hardware and the same figure is spending on software. About 40% were spending on ‘cloud.’

Overall IT spending trends were up in 2017, and the authors suggested that the amounts varied between those who simply wanted to “stay up to date” versus those who “rely on technology as a core component of their service and view it as an asset rather than a necessary fixed cost.”

Reported expenditure amounts in the small business sector appear to have ranged from “under $10,000” to over $200,000 (the two highest dollar-class categories, respectively).  About one in ten reported they simply “did not know.”

 

In our prior post we noted tech writer Greg Ip’s recent comments in an article in The Wall Street Journal, pointing out the little-known fact that automation today is actually creating more jobs than it is displacing.  We noted in particular the retail and banking sectors which, counterintuitively, have employed technology for their own gains, but in the process actually created greater hiring of people, due to the increased productivity that such automation has created.  Let’s continue to illustrate…

James Besson, an economist at Boston University created an early desktop publishing program in 1983 that great simplified typesetting and graphical design.  When Sears purchased his program, it eventually laid off 100 employees, and Mr. Besson worried about those job losses.

But it turns out customers used his software to expand the number of variety of their publications.  Supermarket chain A&P used it to publish dozens of versions of circulars in Atlanta with different promotions for different neighborhoods.  Mr. Besson learned that while typesetting jobs fell by about 100,000 in the 1980s, the number of designers eventually quadrupled to more than 800,000, making up for the losses many times over.

Of course, the disruption was still devastating to those whose jobs were lost.  The people displaced by automation – then as now – are rarely the same people employed in the new industries made possible by the new automation.  But over time, the net effect has been shown to be consistently positive.

Today, retail is the largest industry being displaced.  Yet evidence is beginning to show that e-commerce has probably added to overall employment.  While over the past decade about 140,000 jobs have been sliced from brick-and-mortar displacements, according to think tank Progressive Policy Institute, about 126,000 have been added in the e-commerce space.  However, that fails to count warehouse and fulfillment job gains, which have increased by 274,000 jobs during the same period.  And, they note, those jobs pay about 30% better than the ones they displaced.

As the WSJ’s Ip points out, this begs the question: “If online retailers, based on sales per employee, are much more productive than regular retailers, how can they on net add to total retail employment?  And how can they both pay more and keep prices low?”

Ip says the answer is complicated, but it comes down to this: E-commerce doesn’t just sell the same product as a store did at a lower price.  It “enables customers to peruse a vast array of products and select precisely the one they want and have it delivered in a day or two, saving the time, cost and inconvenience of visiting multiple stores.”  It’s estimated that saves the average adult about 15 minutes a week and uncovered the hidden demand for shopping from home.

None of this adds to price.  It simply results in people consuming more retail services, once adjusted for improved quality, than before.  Then, the e-commerce suppliers spur demand by using their greater efficiencies to absorb more of the delivery costs.  Amazon uses the margin it earns on goods to build and operate the logistics centers needed to profitably serve customers – and those centers are creating ever more jobs than they displace.  The day when Amazon will need fewer humans appears far off.  In fact, last month Amazon in a one-day nationwide job blitz accepted 100,000 applications and has already made 40,000 job offers.

The e-commerce boom is as real as the brick-and-mortar decline.  But the job displacements are turning out not to be doom and gloom, as the new jobs prove greater in number and pay than those displaced.

Just as it’s been happening for at least 500 years.

For all the fears about lost jobs and the sea changes occurring in manufacturing and retail as the Internet changes everything in its path, it’s worth noting that each successive transition in society’s economic underpinnings – be it farming or steam engine, industrial revolution or information – eventually disrupts everything around it and then, inevitably, produces more opportunities, different challenges and, ultimately, more (and newer) jobs.  The Wall Street Journal’s tech writer Greg Ip points this out in a recent article.

Ip points out that as Amazon grows (and a few others), tens of thousands lose their jobs in retail.  Stores close across the community, state, country, and world.  But then again, to cite one of Ip’s examples, workers in former textile towns like Fall River, MA, find new beginnings.  There, Amazon planned to hire 500 workers for a new fulfillment center last year.  Already employment there has soared to 2,000.  And workers there are earning more than at previous retail jobs.

The demise of brick-and-mortar has been accompanied it seems by the less well-publicized boom in e-commerce that has actually created more jobs in the U.S. than traditional stores have cut.  And those jobs, it turns out, pay better because workers there, augmented by the latest in software and hardware technology, are so much more productive.

Throughout history automation often creates more jobs – and better-paying ones –than those it displaces.  Ip points out the critical reason, a point often lost in all the bad press and noise:

“Companies don’t use automation simply to produce the same thing more cheaply.  Instead, they find ways to offer entirely new, improved products.  As customers flock to these new offerings, companies have to hire more people.”

The underlying angst over job displacements goes back 500 years as each successive new generation of revolutionary technology displaces the former, along with its adherents and workers.  It is interesting to note that in 1589 Queen Elizabeth I refused to grant the inventor of a mechanical knitting machine a patent for fear of putting knitters out of business.  More recently, in the 1930s economist John Maynard Keynes warned of tech unemployment due to the modern ability to economize the use of labor faster than new users for labor could be found.

These fears have repeatedly proven baseless.  When ATMs first appeared in the 1970s it was thought to lead to fewer branches and fewer staff.  Wells, Fargo itself predicted as much for the new cost-cutting technology initiative.  And indeed, the average branch used one-third fewer workers by 2004.  But… ATMs made it so much cheaper to operate a branch that banks ended up opening 43% more branches!  The result: today, banks employ more tellers than they did in 1980 and those jobs have expanded into more interesting roles that ATMs can’t duplicate today, like “relationship banking.”

We are in a watershed period for technology, with its pace increasing steadily.  This is scary stuff.  People are rightly concerned.  But if the past is prologue to the future – and it often is – there will once again be silver linings.

This topic is, we think, important enough to extend into a follow-up post, which we’ll do in our next one. Stay tuned…

Recently, Qualcomm Inc., a leading supplier of mobile-device chips announced its Spectra imaging system, which (according to the Wall Street Journal, 8-21-17) “can extract depth information from objects including faces.”  In other words, your password will soon – finally! – be replaced by an image of your face.  It’s about time, eh?

The company plans to use the technology soon in its next line of mobile processors, and around the same time, Apple may soon, it is rumored, offer a similar feature on the iPhone.  Might facial recognition finally be the password replacement technology we’ve longed for?

The technology differs a bit from that used in security cameras around the world.  Your phone or laptop camera, after all, don’t need to spot you in a crowd, it just needs to distinguish one face – yours – and it can do it very well, since you’re likely to be only a foot or two away.  Its structured light technology is said to splay tiny infrared dots across an image of your face (or other target) and, by reading distortions, capture incredibly detailed and accurate information.  And because of its use of infrared technology, it can work in the dark.

Apple has not confirmed any of this yet, according to the Journal, but it does appear to have the necessary patents, technology and, perhaps, inclination – say at the unveiling of the 10th anniversary iPhone.

Best of all, Qualcomm has indicated that its Spectra chip with facial-depth recognition capabilities will be available for future versions of Android phones.  While previous versions of the Samsung phone could be ‘fooled’ by holding up an image of another person’s face, the Spectra chip boasts of having the added capability of “live-ness detection,” thus making it less likely to be fooled, even with a 3-D printed mask.

You’ll teach your phone the same way you do with thumbprint recognition today, and images will be securely stored on the device itself, not in the cloud.

Eventually, supply chains being what they are, the technology will trickle down into less expensive devices, with the potential to actually become “mundane” one day according to the CEO of biometrics company Tascent.  That’s a good thing, as the improved simplicity and security that come from being able merely to look at our devices is likely to curb our otherwise bad password habits through which we all too often put our finances and personal information security at risk.

 

 

 

 

It doesn’t get much clearer than that.  When the world’s leading information technology research company says in effect “be very careful” it might be time to pay attention.

In fact, it was last year when the giant research firm warned those considering “post-modern ERP” that they will not be immune to the “traditional ERP headaches of higher costs, greater complexity and failed integration by 2018.”

The “Achilles Hill,” suggests Gartner, will be the lack of a cloud application integration strategy and related skills.

Carol Hardcastle, Gartner research vice president, said in a statement: “This new environment promises more business agility, but only if the increased complexity is recognized and addressed. Twenty five or more years after ERP solutions entered the applications market, many ERP projects are still compromised in time, cost and more insidiously in business outcomes.”

These so-called post-modern ERP solutions are simply not the “Nirvana” that their cloud publishers want buyers to think they are.  What’s lacking is integration of all the parts, not to mention the skills to pull them altogether.

On-premise providers have had years, decades even, to launch all the necessary software ERP components to comprise a completely integrated suite of applications.  Even those who haven’t will usually have ecosystems of third party providers to provide the key components of those applications, things like accounting, workflows, production management, kitting, manufacturing, planning, purchasing, warehouse management or CRM.

Simply throwing software up onto a cloud service provider does not automatically make these things happen.  Even top tier players in the space we happen to work and live in – the small to midsize business – have mostly only managed to cobble together partial or incomplete ERP cloud versions of their systems, often lacking the full-featured capabilities of their earth-bound brethren.

An article in the UK’s “The Register” (byline: ‘Biting the hand that feeds IT’) noted last year, “Nobody was singled out by Gartner, but it’s been the iPad toting, cloud-friendly sales and executive classes who have driven uptake of business software providers such as Salesforce, side-lining the more considered counsel of those in IT who could have taken a more measured approach.  However, according to Gartner, vendors are also guilty, putting self-interest ahead of their customers.”

Ms. Hardcastle concludes… “The blame for this does not lie solely with end-user organizations that lack the experience and expertise to avoid many of the pitfalls. System integrators and ERP vendors have to be accountable to their customers in this respect.”

The solution, as always, includes the important precepts: Starting with a solid ERP plan… having full management buy-in… analyzing your processes before your begin… aligning people, processes and systems… planning your integrations carefully… and keeping your eyes on the big prize – that is, what you need to do to take your company to the level you dreamed and planned for in the first place.

A dream, Gartner Research might well add, that may not yet include any clouds.

A Notable Anniversary

Tomorrow, the company I started out of a spare bedroom in 1987 celebrates something of a milestone: 30 years in business.  We’ll spare you the “long, strange trip…” metaphors, but you have to admit: that’s a long time to do anything — let alone the same thing.  Yet, here we are.  Any business that makes it 30 years has some bumps and bruises, and a few stories to tell.  Here’s a bit of ours…

Starting out as one guy in a back room, I bootstrapped a little software firm that came to be known as “PMI.”  Within a few years we were adding customers in need of custom software, spreadsheets and accounting applications, while also adding a motley crew of smart, energetic people to satisfy those (very patient) customers.  We did good work and over the years won industry awards and business accolades – even the Small Business of the Year.  We earned national software awards like “Killer VAR” (we’re a Value-Added Reseller for accounting and manufacturing software solutions), “Technology Pacesetter” (many times), and a “Family Values in Business Award” (for being ‘a company that never refused an employee a day off for any reason’).

We grew for 20 years until one day I thought it might be time to move on – maybe even retire –when a case of misplaced trust and questionable judgment led me to turn the business over to a few key employees who proved utterly unfit to run it.  (You can read a quick synopsis of that story here, first published in 2009 in a post on ‘integrity’.)

The sale was a disaster, economically and emotionally.  Within a few months my successors had nearly destroyed the company and threw in the towel.  I came racing back from the Caribbean to pick up what pieces remained.  I still remember that first day back in April ’07 as I gathered together the handful of my earliest co-workers – the ones who had remained loyal and would meet with me that morning.  There were some glum faces in that room as I explained how we’d been bled and left for dead.  Over the next few months we started sifting through the wreckage to see what we could rescue of our little outfit.

But here’s where it gets good.  Out of the ashes of that disaster arose PMI’s successor “PSSI” (yes, we did briefly consider naming it “Phoenix Software”) which I’ve had the privilege to lead for the past 10 years – so, 30 altogether.  Of course, on the heels of that 2007 debacle came the Great Recession, when business mostly just froze up.  We worked hard scrambling around for enough work to keep our team afloat.  That rebuild – these last ten years – has really defined us.

Today, all those awards noted earlier don’t mean that much.  Don’t get me wrong – they were very cool to receive in their time.  We felt honored, and more than a little proud.  They were mileposts on the road to what became a pretty successful business.  The little idea that started in a back room of my house in 1987 turned into a nearly $3M enterprise with over 25 employees at its peak.  People did good work, they got rewarded for it (often handsomely) and we all felt a part of something that was growing fast, a leader in the tech sector.

But it’s those glum faces in that room ten years ago – the ones that stuck it out with me all these years – those guys are the reason we’re here today, and therein lies the deeper meaning of our thirtieth.

In that first month back, I told the team that I wasn’t even sure how I was going to make payroll at month-end.  They mostly nodded, shrugged it off and went about their business.  But here’s the thing: not one person, all that dark cold month, ever once asked about their paycheck.  Not once. They just did the work, trusted in our mission, and at the end of the month trusted the money would somehow be there.  It was.  After that, we just kept putting one foot forward after the other…  a day, a week, a month at a time.

That team is still with me today (you know who you are), and they’re the real reason we are able to celebrate 30 years in business today.  Like most small business owners, I owe everything to those employees and customers.

I guess in the end, sometimes you just persevere because, honestly, you don’t know what the hell else to do.