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Any “digital transformation,” as the consultants at Panorama Consulting like to call things like ERP implementations, can seem daunting, a thing best put off ‘until tomorrow’ when, apparently, it will be… easier?  A recent article by Panorama makes a few points however that are worth noting, and that may get you off the starting line to your own internal project efforts and transformation.  We’ll meld their comments and our experience into today’s post.

For starters they point out, think about your ERP effort at a grass roots level.  You can start simply enough by having a few of your own people map out their current business processes, while thinking about the potential improvements they might want to see in a future state.  We always start our clients’ ERP projects with just such an effort.  Clients are usually too busy to do it for themselves, or perhaps too close to the subject to properly critique it, or lacking in the higher level business analysis skills that can help shape the best outcomes.  But at the very least, you can get your team thinking about how you do things today, and how you could better do them tomorrow, with less overlap and redundancy, and better information sharing and collaboration.

As you gather and review your grass roots analysis results, begin thinking about your overarching project goals.  Instead of starting with no sense of direction, think about the long-term goals business goals that underlie your IT, ERP or digital transformation project.  Be sure everyone understands the same goals, and how each of their individual parts in the process will contribute in the end to a more profitable, focused and leaner company.  Be careful not to get too distracted by the technology, and keep your purpose business-focused: that’s how you’ll succeed with customers and grow your own business.

Defining your business processes and requirements is the logical outcome of the actions and discussion we just noted.  It’s getting your ducks in a row.  It can take some time and outside help may be required (to learn what works and what doesn’t, best practices, etc.).  When you are ready to commence your actual ERP initiative, you’ll be equipped with the necessary data, thinking and step-outlines necessary to give your project its full forward momentum.

If you do all the above, you’ll be well prepared for the final step of hiring your outside consultant or reseller or implementer.  The process will go quicker and more smoothly if you’ve already given serious consideration to your business goals, your processes and workflows, and to your newly imagined future state.  It will help you more quickly and accurately match up process needs with software flows (and vice-versa), and save you time and money getting to the point where you’re ready to actually install and implement.

If it all sounds easy, well then, just remember that all along, your employees still have their regular jobs to do!  Be realistic in your expectations, fair in your judgments and remain focused on the planned business outcomes.  If you orient your resources consistently toward giving your people the tools they need and staying focused on the project’s business goals, you’ll fall into the small but highly desirable category of those who actually succeeded in their ERP implementations.

… “123456”.  And that’s a problem, according to Security Keeper, Inc.  For years, tech firms have been trying to limit the damage hackers can do by cracking conventional passwords.  They’ve tried two-factor authentication for Gmail, iris scanning, fingerprint ID… and yet phishing and scamming schemes not only persist, they become larger, more audacious, more widespread and more costly.

Our firm has witnessed more than one of our ERP clients compromised by ransomware in the last year.  And while weak passwords aren’t necessarily the only way in to networks, they don’t help.  A product manager at Yahoo! once put it succinctly: “Our vision is to kill passwords completely.”  This was noted in a recent article on computer security in Bloomberg Businessweek (June 2017).  “In the future we’ll look back on this time and laugh that we were required to create a 10-character code” with mixed case, numbers and symbols, according to Yahoo’s Dylan Casey, VP of Product Management.  And the day can’t come soon enough for most of us.

To move in that direction, new ideas are emerging.  Yahoo lets email users unlock their accounts solely through a push notice sent to their smartphones, no password required.  Others are following similar “smartphone-as-skeleton-key” approaches, or are expanding the use of biometrics as unique identifiers, in lieu of passwords.  Samsung is about to allow Galaxy S8 owners authorize mobile payments (in the U.K. for now) utilizing the phone’s iris scanner.  Microsoft and Lloyds Banking are experimenting with allowing users access to online accounts using a webcam photo of their face.

Microsoft also offers fingerprint authentication via smartphone, with plans soon for desktops and laptops.  According to Alex Simons of Microsoft, “You’ll be able to take your phone, walk up to your Windows 10 PC and just user your thumbprint to log in.”  Barclay’s bank is experimenting with identify verification over the phone using vocal records.

While none of these security measures is perfect (you can fool the S8’s facial recognition for example by holding up a photo of the right person’s face), still… they’re big steps in the right direction.  As in all things tech, it’s only a matter of time.

Michela Menting, a security researcher at ABI Research still believes it will be tough to get those last holdouts from using their 123456 though “until we have embedded devices in ourselves that can act as that password.”  Scary thought.  Welcome to the future.

But we’ll close with this factoid from USA Today: 37% of Americans keep a piece of paper with all of their passwords somewhere they deem safe.  (Want to bet it’s more than that?)

 

In our prior post we noted the key premise of ERP: that’s it’s a strategic investment in your business – just like those machines on the shop floor, or the key employees on your management team.  We also noted that it’s scary to many folks, who in turn wait way too long to make a change or upgrade, because sometimes the costs of efficiencies to be gained can be difficult to calculate, whereas the cost of the system itself is very clear – and of course, always too much.

Today we’ll comment on three points made by Panorama Consulting in a recewnt article intended to answer the question: “What can you do to get ahead and accurately weigh the implementation costs versus the cost of inefficiency if you don’t implement?”

  1. Quantify the costs of inefficiency. Your current processes are likely to be some combination of old, outdated, inefficient, broken, redundant or ripe for opportunity for improvement.  Your customers, your employees and your bottom line are all feeling these costs.  The question is: when are you going to start tracking, calculating and accounting for them?

 While you can hire an outside consultant to do this for you, do you really need or want to?  No.  You can do this yourself by time studies that honestly seek to calculate the very real dollar costs associated with each key process in your system.  At the very least, do a day’s worth of route or process tracking to get a baseline for what it costs today.  You’ve got to start somewhere.  Be sure to factor in all necessary labor, overhead and machine costs.  Don’t fudge – it’s your money you’ll be investing and saving after all.

Identify waste at its source by defining the true costs of these processes now while identifying areas where you even think automation could curb those costs.  You should be able to calculate potential decreased labor costs across a time unit of value (i.e., an hour, a day, a run or a shift).

 

  1. Have a clear vision of what your ERP implementation can and should do for your organization. The fact that your old legacy accounting/ERP system is old is probably true, but it’s not reason enough by itself for action.  You must define what you want in the next system – i.e., increased inventory returns, faster customer responsiveness, fewer shipping errors, increased sales throughput, reduced labor costs or shorter cycle times.  There are too many to list, but you know – or should know – which ones matter most to you.  You can’t identify the cost of these inefficiencies capably until you’ve identified, categorized and measured or calculated them.

 

  1. Define how your organization will achieve those benefits. Panorama consultants note thatNumbers in a business case are meaningless without clear and tangible steps on how to achieve them. In order to fully ‘operationalize’ these potential business benefits, your team will need to outline the steps and owners of the steps to realizing those benefits.”  They give examples like determining which process changes and software modules will fulfill a stated goal, such as x% of improved inventory returns… or how a certain process change might reduce your production cycle times.  You get the idea.  You have to ask a lot of questions… question a lot of processes, and process a lot of data and results.

But if you do, eventually patterns will arise and insights will be realized.  You’ll begin to see the inefficiencies and waste and learn to calculate them at least in gross terms.  (Now here by the way is where an experienced business process or lean consultant can really help make a difference.)

The point is: the costs are there, they are evident when you dedicate the time to look, they are very real and, in our experience over many years, they are very significant.

 

Your ERP investment can pay for itself ten times over – but you’ll never know it if you don’t start counting the ways: the inefficiencies, the improvement opportunities, the competitive advantages, the costs and workflow reductions… all of it.

 

Deciding finally to upgrade your old accounting system into a modern ERP system is never an easy decision.  All too often, we’ve seen that nebulous fear cause many a client to wait too long.  Usually, it takes the sunsetting (i.e., discontinuation) and total loss of support for their current product – with maybe a touch of hardware obsolescence and crumbling network infrastructure thrown in – before they’ll finally bite the bullet.

We think that’s because it’s hard to quantify the cost savings and efficiencies that will be gained against the much more plainly understood “cost” of the system.

All too often our constant reiterating wail to clients that ERP is a strategic investment in your business – just like a machine on the plant floor – falls on deaf ears much like the baying of the coyotes outside my windows on an Indiana night.

Just this week a client told us that they are not spending any more money on software for the rest of this year.  That’s like saying I’m not spending any more on oil and maintenance for our equipment.  The difference?  Most businesses have difficulty appreciating that – done right – the improvements to processes and business alike that result from a strategically used ERP system can save five, ten or even 100 times their costs in wasted or redundant labor and other inefficiencies.

Except of course: We’ve always done it this way…

You can’t blame them really.  Most folks are coming off “accounting” systems built in the 80s or 90s that mostly documented business ‘transactions’ and not much more when it comes to process improvement.  It’s a stretch for them to appreciate that ERP is just the tool we use to codify and standardize business process improvements.  It’s not about the software, per se, it’s about the improvements to processes and the reduction in costs that ultimately flow through it, once processes have been realigned and the software is configured to accept them.

It’s hard for clients to wrap their heads around this, when all they know is what’s worked in the past: build better widgets, and increasingly more of them, as cheaply as possible, and all good blessings will flow.

The idea that wide swaths of a business might be “leaned out” through the implementation of improved processes woven into an extensive enterprise management system that makes those changes ‘stick’ takes some education and some getting used to.  And it takes an investment in the foundation (like working a little compost into the garden dirt) before the changes can begin to grow and bear fruit.  In other words, it can be a leap of faith.

So in the post that follows, we’ll take a high-level look at three steps to weighing the costs of implementation against the cost of continued inefficiency.  Stay tuned…

Each year Panorama Consulting of Colorado releases the results of its annual ERP survey.  This year they analyzed the findings from ERP implementation at 342 firms across the U.S. and a variety of industries.

From those surveys, the authors saw five of what they called ‘important headlines’ emerge.  A couple of their real-world findings run strongly counter to today’s conventional wisdom.

  1. Project cost and duration have decreased since last year. We always take this one with a grain of salt because the devil is truly in the details in terms of project sizes, scope, industry, etc.  Panorama notes that projects this year were notably smaller than in years past, and that money spent on implementation “does not necessarily mean that long-term costs and overall return on investment improved in parallel. We see many organizations that are willing to step over a dollar to pick up a dime, so to speak, by cutting implementation costs without realizing that it creates more problems later on.”
  2. A counterintuitive trend is emerging. A year ago, cloud implementations appear to have plateaued according to Panorama.  In the past year, the survey showed a 21% decrease in cloud-based ERP adoptions.   Meanwhile, on-premise implementations increased by 11%.  “Perceived risk of data loss” was the concern cited by over 70% of respondents.  And among cloud-only adoptions, the overwhelming majority expressed preference for private or “single-tenant” solutions over multi-tenant solutions.
  3. 88% of survey respondents reported some level of customization of their systems. The vast majority still make changes to source code in order to customize their ERP experience.  They make efforts to manage these efforts closely for cost overruns, but in the end… what’s the point of an ERP system if you can’t have “your way”?
  4. The respondents who reported “being satisfied” with their ERP implementations, a somewhat subjective measure, increased from 13% to a whopping 70%. Actual ‘benefits realization’ also improved, with more firms realizing benefits within six months, and fewer taking more than two years to recoup some benefit.  Says Panorama: “more organizations are realizing a positive return on investment compared to years past.”
  5. Organizations are investing more in organizational change management and business process reengineering. Lack of business process reengineering is often cited as the number one reason for ERP failure.  Companies appear to be learning the lesson.  This year, 84% expressed “moderate or intense focus” on organizational change management and 93% said they “they improved some or all of their business processes,” a significant increase.  We’ve long considered that the first priority in any roadmap to an ERP system – so we’re happy to see the advice taking hold in so many more firms, and the lessons being learned.

Recently the editors of Computerworld laid out a nice overview of all the new features in Microsoft’s Excel 2016 – a cheat sheet of sorts in giving readers a quick summary of What’s New for 2016.

These new features are available to users of both the standalone Excel version and the one incorporated into their newer Office 365 suite subscription.  We’ll provide the link to the full article at the end of this post, so you can review it yourself.  Meanwhile, a quick summary:

  • The Tell Me feature makes Excel simpler to use by letting you tell Excel what you want to do – say, create a Pivot Table – and get instant direction with shortcuts on doing what you requested, so you can start building that table right away.
  • Smart Lookup lets you do research online in the background while you’re working on your sheet. It uses Bing to do a web search on words at places like Wikipedia, and lets you “define” words or further “explore” as well.
  • New chart types:
    • Histograms – for statistical analysis
    • Waterfalls – for showing running financial totals, say from gross revs to net income
    • Hierarchical Treemaps – to help find patterns in data
    • Sunbursts – for showing graphical relationships between categories and their sub (and sub-sub-) categories
    • Pareto (80/20) – a “sorted histogram” that shows both bars and lines to better display cumulative totals of percentages (you could see, say, primary machine “downtime reasons” at a glance)
    • Box & Whisper – for deeper drilldowns than a histogram to see frequencies within data sets.
  • Improved Collaboration for users of the online version (only). A better way to share spreadsheets and see who has made what changes and when.  You can do some “simpler sharing” with the desktop version, with some limitations, to allow changes by more than one user at a time.
  • Quick Analysis is a new feature that lets you quickly highlight select cells and then click a little lightning bolt icon to perform instant analysis (for Greater Than purposes, numerical averages, or a chart on the fly).
  • Forecast Sheet lets you build forecasts based on historical data if you are working with time-based historical data in your worksheets.
  • Get & Define (formerly Power Query) is a BI tool that lets you import, combine and shape data from a variety of local and cloud sources.
  • 3D Maps allow you to plot geographic and other information on a map. You’ll need of course suitable data and to prepare it for 3D Maps.

As a bonus, Computerworld provides a nifty 2016 Ribbon Reference Guide and 2016 listing of Keyboard Shortcuts at their site as well.  You’ll find it all here: http://www.computerworld.com/article/3193992/desktop-apps/excel-2016-cheat-sheet.html?cid=cw_nlt_computerworld_microsoft_2017-05-16

 

Randall Schaefer is an APICS CPIM (retired) consultant who recently published an article entitled “Cycle Counting Is Not a Guessing Game” for APICS Magazine.  In it, he describes a few scenarios that lead to common errors in cycle counts, such as only counting negative on-hand balances, counting after a production run when quantities are likely to be low, or counting only when the MRP system says to order more inventory.

Schaefer then reminds readers of “the right way to count” which we’ve reprised from his article below.

Since cycle counting is critical to effective inventory management, and hence to reliable MRP (material requirements planning), we thought it would be useful to remind readers of those key principles.  As he notes, commitment to the principles ensures accurate counts of inventory.

  • First, items must be counted at a predetermined frequency
  • Second, cycle counts should be performed more frequently for high-value or fast-moving items than low-value or slow-moving items.
  • Third, the primary purpose of cycle counting is to identify items in error in order to trigger research, identification and elimination of the causes.
  • Fourth, there are two types of cycle counts:

The first is a parts-based system, which counts every location on record to get a total. This is then compared to the stated inventory.  If a part ends up in a location not on record, it is effectively lost forever.

The second type of cycle count is location-based.  Here, every storage location is visited when its turn comes up.  The parts found are counted and compared with the inventory records.  This method eventually finds parts lost to the parts-based system.  As Schaefer points out, “the experienced supply chain management professional understands that world-class cycle counting requires both.