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Archive for the ‘General ERP Articles’ Category

pssi_mfgIn our prior post we shared some of the results of a survey done last year by Crowe-Horwath with the American Metal Market that provided some worthwhile insights into the results of IT and ERP initiatives occurring among manufacturers these days.  In that post (found here) we covered plans for expansion, their thoughts on the importance of tech in their businesses, the top factors driving their IT budgets, their top concerns, where they look for new profitability and what sorts of items comprised their budgets.

Today we’ll look at their responses to questions about IT and ERP projects themselves.  Among these:

  • 35% upgraded an ERP system in the past 3 years and 20% implemented a new one.
  • When asked about current and planned IT projects…
    • 28% were planning ERP upgrades to existing ERP systems, and
    • 20% planned to implement a new ERP system
    • CRM and BI (business intelligence) initiatives also ranked as high priorities
  • As to cloud, or SaaS (Software as a Service), half of all respondents had no cloud solutions in any area of the business, and the most cloud-centric task among companies who had any cloud initiatives was for email (24%).
  • Most companies used a combination of both internal and external resources when implementing their major IT projects.
    • Training and ongoing support were the two key areas where external resources outweighed the use of internal resources.
  • When queried about their satisfaction with their ERP systems, the survey concluded that: “In general, respondents are satisfied because they had a new or recently updated system. Generally, respondents are unsatisfied because of outdated technology. Those in the middle have some dissatisfaction due to missing functionality or problems with implementation.”
  • 37% responded that they wanted or planned to move to a new ERP system (another 19% had already done so recently).
  • One important conclusion: 36% of respondents standardized business practices across locations to integrate process improvements into ERP implementation. About 40% engaged in a detailed process analysis or value stream mapping.
  • Companies are upgrading in large numbers today to “modern” ERP systems, and so it’s no surprise that among key findings were that “the most important issues when selecting new enterprise technology solutions were user interface and familiarity, total cost of ownership, and industry-specific functionality.”
  • As to their implementation partners and vendors, they indicated that Technical and Industry expertise were the two most important qualities sought.
  • When asked what were the most important new ERP requirements to meet the needs of changing workforce demographics, end-user reporting tools and a modern user-interface were ranked numbers one and two.

Today’s manufacturers are clearly looking to modern solutions, with feature-rich but usable interfaces that can be distributed broadly across a company.  Even more importantly, they’re realizing the importance of processes and people – well-analyzed in advance of any technology initiatives – to ensure that their tech applications and initiatives are being driven to serve the business purpose first, and not the other way around.

We couldn’t agree more.

 

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pssi_mfgIt’s always worthwhile hearing what the customers have to say about their technology goals and ambitions, so we’re happy to share results of a recent Crowe-Horwath survey of manufacturers (specifically, metals producers, though the results seem representative of manufacturers in general from what we’ve seen).  The 2016 survey was conducted in collaboration with the American Metal Market to examine the role of information technology and enterprise resource planning (ERP) systems in the global metals industry, and covered over 200 companies in the $50M to $1B markets, including producers, processors and some Tier 1 and 2 automotive suppliers.  As such, we feel the results are probably fairly representative of discrete manufacturers overall.

We think the questions and answers gleaned from their analysis will be informative and interesting to anyone involved in the manufacturing sector.  Among their key findings:

  • Plans for international expansion in the next five years are down about 10%, while plans for new downstream capabilities are up by the same percent, year over year. Almost 30% planned on domestic expansion and over 40% were considering M&A activities.
  • 75% of respondents said that technology was important or very important to their business strategy in the next 3-5 years. And yet, about half did not have a roadmap “that linked technology investments to business results.”
  • The top business factors driving today’s IT budgets were:
    • Customer service (51%)
    • Outdated technology (44%)
    • Outgrown their technology (33%)
    • New production capabilities or requirements (30%)
  • Data privacy and cybersecurity were cited as the number one IT business risk, followed by (among others) “obsolescence” and “losing business because systems can’t keep up.”
  • When asked where companies look for new profitability, 46% start with process improvement, 35% with Notably, and thankfully, only 19% cited technology first – a good indication that companies are learning the importance of analyzing their processes before seeking ways to improve them via technology.
  • Asked to rank the components of their IT budgets from greatest cost to lowest, they were:
    • Software (36%)
    • Hardware (25%)
    • Internal resources (22%)

In our concluding post we’ll look at the types of projects manufacturers are planning to engage in (or already have), along with their thoughts on ERP satisfaction and working with their vendor-partners.  Stay tuned…

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time_riskIn a recent post from Panorama Consulting, CEO Eric Kimberling – using the article title “Five Reasons Executives Say “No” to ERP Implementations (and How to Overcome the Resistance)” – points out some of the common pitfalls of ERP implementations.  Today we’ll blend his comments with ours, based on three decades’ of implementations on our part, and about half that much from Mr. Kimberling’s firm as well.  Together, we’ve seen a few things…

  1. They are worried that the project will take too long and cost too much. And he’s right.  Most projects, as notated in both annual surveys and real-world experience of implementers such as them and us, run long and go over budget.  There are several reasons for this, most all having to do with the fact that the projects involve humans.  Strong project controls and limits can help.  But in the end, no one can predict all the nuances and twists and turns and unexpected glitches and changes of heart and new things learned… that all occur along the way.  The key to managing this lies deeply in the partnership, agreement and underlying trust and confidence between the client team and the implementation team.  Communication is key.
  2. They are afraid of the project disrupting their daily operations. Statistics confirm this happens in about half of all projects.  We’ve experienced it ourselves in at least some parts of implementations.  We find that a thorough “quote-to-cash” testing scenario prior to going live – while usually easier said than done – can mitigate most of this risk.  It takes time, effort and investment, but it is possible to predict and correct most potential errors, albeit not all of them.  We recently did an implementation that by all measures was really successful – except, there were too many snafus in shipping, where more testing should have been done, earlier.  Live and learn.  Won’t happen again.
  3. Their own people are the real sources of resistance. This varies by company.  We always remind clients that while their employees are busy up to the ears in the final pre-go-live stages of implementation, they still have a regular job!  Be careful what you ask of your team.  Invest in thorough training of the users.  Have a realistic timetable (noting that projects nearly always take longer than predicted).  Be ready to hire temps to handle parts of their ‘regular jobs’ when needed.  Conduct frequent, regular, well-announced project meetings.  Involve all your stakeholders.  Communicate freely and openly about project goals and tasks.  Make your users central to your process analysis and organizational change management.  And listen to them.
  4. They don’t have the budget to pay for the initiative. Within some limits, the more detailed the pre-project spec, the more accurate the budget.  But, there are  You need a working relationship with a provider who can give you their best good-faith estimate as to cost and time.  Some items can be quoted accurately and/or on a fixed price basis, but many (i.e., exact amount of training required, change orders, sudden exposure of previously unknown processes or issues) cannot.  Here we like Panorama’s advice: “Define a realistic business case that captures not only the project costs, but also the potential benefits that your company is currently missing out on.”
  5. They are concerned that the new ERP system will not improve their business. No one’s interested in an investment with no return.  ROI matters most to execs.  To ensure your goals are met, begin  A process analysis can usually uncover numerous areas of redundancy, inefficiencies, recommended process changes, technology touch-points and advantages… the list goes on and on.  Quantify, and then monetize these.  Whether you use time studies or back of the napkin calculations, you can pretty quickly – if you’re honest and complete in your analysis – come to a fair calculation of all the cost savings inherent in an IT project, especially ERP.  Take the time to do the calculations.  Then recognize (and keep reminding yourself) that once you’re up and running, those cost-savings will repeat themselves year after year after year…

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digital-transformA recent post by our friends at Panorama suggests there are some myths about “digital transformation” – the process of transforming a company into a 21st century digital enterprise worthy of a quick recap today.  They make 4 points of distinction that companies should heed in the process of their continuous improvement and digital initiatives.

  1. Myth: digital transformation is the same thing as an ERP implementation. Their first point is that digital transformation is not ERP – at least, not ERP alone.  They do not assume a single off-the-shelf ERP solution.  Rather, they are open to best-of-breed, or sometimes hybrid, solutions.  Rarely is one company’s base ERP offering sufficient to serve the complete needs of a company.  We ourselves have found that with any of the variety of ERP solutions we’ve sold over the years, it’s still necessary and useful to utilize that software’s companion, third-party options to extend the reach and capabilities of the core system into areas often better handled by vertical subject matter experts.  Moreover, notes Panorama, ERP solutions are often about incremental improvements.  A digital transformation often requires “a more revolutionary approach to operational and organizational change.”
  1. Myth: your digital transformation software needs to be provided by one ERP vendor. As implied above, a digital transformation opens doors to all manner of new thoughts, processes, ideas and technologies.  So ERP may come from one source, your e-commerce from a second and your warehouse management from a third.  There’s no harm in that if all can be well-integrated.  And that requires people and process analysis, before anyone touches much software or hardware, we might add.
  2. Myth: digital transformations should be run by the IT department. Most enterprise software initiatives must be viewed first as a business project, and then as a “computer” or “IT” project.  We always remind prospective clients: ERP (and by extension, digital transformation, is first and foremost a strategic business investment.  Business and executive involvement here are more important than ever.
  3. Myth: digital transformations are best for every organization. Not always, Panorama points out.  Sometimes, incremental, slow change is best.  They note that… “The key is to identify what type of project you want this to be, and then ensure that you have alignment in how you allocated resources, focus and measures of success for the project.”

Whether yours is an ERP project, a true digital transformation, or something in between, begin with a clear definition of the what the project is, and the pace of change the organization believes it can support.  These will often dictate the steps that should – or should not – be taken after.

 

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top-tenWe first posted the results of an interesting survey done by the accounting firm Deloitte about five years ago, but it’s time for a reprise.

In their study, conducted across a broad range of people who bought business management software systems a few years back, Deloitte undertook to see how experiences varied between inexperienced (first-time) and experienced (or ‘second-time’) buyers.

Asked to rank the importance of critical purchase factors, each group ranked their concerns as follows…

First- Time Buyers

  1. Price of the software
  2. Ease of implementation
  3. Ease of use
  4. Ability to fit business
  5. Functionality
  6. Ability to work with existing hardware
  7. Growth potential
  8. Level of support provided by reseller
  9. Quality of documentation
  10. Developer’s track record of performance

Now let’s look at what the more seasoned buyers had to say in their rankings:

Second- Time Buyers

  1. Level of support provided by reseller
  2. Developer’s track record of performance
  3. Ability to Fit Business
  4. Growth potential
  5. Price of Software
  6. Quality of documentation
  7. Functionality
  8. Ease of Use
  9. Ease of implementation
  10. Ability to work with existing software

As we noted back in 2012 when we first wrote about this:

We know.  We’re prejudiced.  But it’s also nice to know… we’re right.  It’s a lesson we preach every day.  No, not about being right… the part about how critical it is that your system provider be capable of providing experienced hands, a high level of support and deployment assistance.  That’s the real number one factor to consider.  But don’t take it from us – take it from the folks who matter: the customers who bought.

 

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tipsERP blogger Eric Kimberling of Panorama Consulting recently posted some advice about selecting an ERP system, along with a few comments about specific systems, which we thought we’d share today (while adding a couple of our own).

We know that most clients think (or hope) an implementation can be accomplished in a few short months.  We usually try to let them down gently when we will tell them that a year or more is the norm – with large and comprehensive systems often taking considerably longer.

Kimberling, who owns an ERP consulting firm on Colorado, notes that his firm’s experience is indeed the same: about 18-24 months for the “average implementation.”  And that’s regardless of whether the system chosen was SAP, Infor, Oracle or Microsoft Dynamics.

Among those particular choices (SAP, Infor, Dynamics, Oracle, Dynamics), his firm’s experience showed that Microsoft Dynamics was the lowest cost on average to implement, but generally took longer too.

Some of Kimberling’s advice to shoppers includes:

  • Define and prioritize your highest priority business requirements to quickly arrive at a short-list
  • Leverage independent experts who can help you quickly narrow the field
  • Don’t forget to consider implementation while evaluating ERP systems (Don’t just focus on the software: understand how it will be implemented.)

And we would add one that’s maybe a bit of a surprise: the software is not what matters, at least not entirely.  There’s lots of good software: it’s the team you work with, and their understanding of how to apply the software to your business processes, that will yield the most superior results in the end.  We know it from years of experience.

He reminds us that 50-70% of all the implementations his firm sees experience significant operational disruption.  The industry average, he notes, has hovered just above 50% for many years.  So… expect some disruption.  Just emember, ERP is a strategic investment.  It takes time, and it’s not turn-key.  Work with your consultants and providers as a team – and we can assure you, you’ll get there.  Patience on both sides goes a long, long ways.

According to some statistics Kimberling shares at his website, payback tends to come in greatest at years 3 and 4 after purchase.  But we would add: after that, the ROI and savings are permanent.

Finally, Kimberling advises that you can quickly narrow the field down to the top ten or twenty percent by prioritizing those that meet two key requirements:

1) they are critical to your business, and

2) they are differentiating functions of various ERP systems in the market

Only those that meet both criteria should be used to narrow down your short-list.

 

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metrics_mfgIn our prior post we talked about the metrics often applied in manufacturing to determine whether a company is best-in-class, or merely adequate, that companies use to identify and then improve their strategic performance.  We noted how manufacturing education associations like APICS and MESA have created metrics guidelines to help companies analyze their own strengths and weaknesses.  And then, because after all we’re all about ERP, we noted the difficulty in making the leap from identifying key metrics to actually implementing improved operations, controls and workflows through ERP.

Today then, a quick look at a couple examples drawn from the experiences of manufacturers, as identified by some consultants at a firm called Edgewater.

One company was a biotech firm headquartered in Kentucky with branches worldwide.  Possessed of an entrepreneurial spirit, the CEO was known as a “go, go, go” style of leader.  Their greatest challenge was to use technology in ways others had not.  They needed to bring global acquisitions into the family in quick and agile fashion.  They were a big user, as are many others, of Microsoft technology, from “the stack” through ERP (Dynamics).  They chose to employ a global infrastructure (via Azure) to minimize the investment within a specific country – where they’re opening several outlets per month – and crank up hundreds of servers quickly to speed the process.  Here, the platform goes hand in hand with ERP to ramp up quickly and cost-effectively on a common platform.

Another company was an Arkansas based poultry processor (of five millions chickens a week!) with challenges very specific to their business processes.  As their I.T. director notes: “In each of our independent processing locations we consider how they perform, accounts payable or accounts receivable, and ask each one: Is this a market differentiator for us? Is it something that sets us apart? Specific business process owners must justify keeping a process at an individual location; if they cannot, we eliminate those processes and standardize them across the organization.”

Here, it’s all about those ‘best-in-class’ competitive differentiators that a SCOR metric (noted in our prior post) helped them to identify and address.

But above all in these and other cases, it’s always about the results.  To do that, the CEOs had to be sold on the idea that a lot was going to be asked of their team.  As one I.T. director pointed out succinctly in speaking of his firm’s ERP project:

“In order to be successful, we had to make some assumptions about the level of effort required from non-IT people. Fortunately, our CEO bought into that completely and committed those resources, making it really clear to all the VPs that whatever we needed to do to make it successful was what we were going to do. I didn’t have to spend a single minute trying to convince anyone about what was required of them or what we needed from them. Having that full buy-in from senior leadership down made a huge difference.”

It’s a lesson well-learned and hard-won – one even we as implementers today must remind ourselves of from time to time.  ERP is hard.  As providers, our job is just as stated above: to convey to our clients how committed their team needs to be to owing the process.  It’s a lesson we never can learn well enough.

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