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Archive for the ‘General ERP Articles’ Category

We borrow today from a pretty basic but very worthwhile article penned by ERP consultants Panorama Consulting, in which they give company managers five good arguments for persuading those Powers That Be of the need to upgrade their frontline ERP systems – you know, the ones they run their businesses on every day.  We’ll reprise their five suggested pathways here today.  We thought their comments were smart enough and succinct enough to quote nearly verbatim, but to give due credit, you’ll find the original article here.

 

  1. Return on Investment. Executives need to see when, how and where a new system will start paying dividends. Collecting actual data on costs of time-consuming workarounds (e.g., one full-time employee spending x hours/week hand-counting inventory at $x cost) and showing how the system will increase efficiency and free up staff to generate returns via other efforts.
  2. Measurement Tools. People can be (rightfully) nervous about bloated ERP projects that suck time, energy and money and never meet expectations. Show that a new ERP system will have quantifiable results by identifying and describing key performance indicators of the project. Determine how success will be monitored throughout the implementation and beyond.
  3. Standardization Strategy. One of the great benefits of an ERP system can be realized via standardization across business units. Identify departments wherein standardization could be most easily achieved (human resources, accounting, customer service, etc.) and develop a strategy to blueprint processes in each of them. ERP consultants like can help you sort through “current state” processes to build the “future state” processes needed for enhanced business benefits and ERP system utilization. Documenting and mapping processes is essential prior to software selection.
  4. Change Management. Investigate and document previous training and organizational change management initiatives conducted by your company. What worked? What didn’t? What do end-users need to increase usability, or to save time or money? Create channels of communication with end-users to start achieving buy-in and determining change management strategies from the beginning. Document what they say and communicate it to the executive level.
  5. Total Cost of Ownership. Executives should have a clear picture of the total cost of ownership (TCO) for their purchases. Panorama suggests TCO should be quantified for at least seven years. Sounds about right to us. Executives don’t like surprises. Work with your consultant to determine the true TCO including licensing, resources, integration and customization.

All in all, doing this is not easy, but it’s actually very manageable when viewed as steps in a process.  You can do it, and a little help from your consultant will easily cap off a reasonable proposal if everyone keeps the end goal in sight and moves efficiently.  You won’t be the first, nor the last.  And early in the year is the best time to begin.

 

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In the early, exciting days of the PC era – when our firm was getting started — the pace of growth in technology was largely driven by the now famous “Moore’s Law” named after Intel co-founder Gordon Moore, who noted that the power of the PC’s main processor doubled roughly every two years.  That law has governed pretty much the entire computer realm for nearly 50 years.

But no more.  Or should we say, no Moore.

The physical limitations of electrons and heat in confined spaces are bringing this biannual doubling of capacity close to its predictable end.  Moreover, designing chips significantly faster today requires a different sort of Moore-doubling – as in doubling (or more) the cost of the chip fab plants that make them, which are now in the $10 billion plus range.  As a result, there are few competitors remaining, even as the market for chips rose by more than 20% in 2017 alone.

As tempers fray between the U.S. and China and the physics of the matter intervene, the future of the industry looks increasingly messier – and thus ripe for all manner of competition, collapse and new innovations.

China, which does have the money to compete, is on a global quest for technological supremacy by 2025 in national push, and has long been a voracious consumer of American technology, which has often been given up freely American by firms as a right to compete there.  But we’re not here to argue politics, trade wars notwithstanding.

This is a complex supply chain starting with the purest of silicon dioxide mined from the Appalachian Mountains and shipped to Japan to be turned into pure silicon ingots.  These are then sliced into wafers in Taiwan or South Korea and imprinted meticulously with equipment made in the Netherlands.  The design pattern might come from ARM or Intel or one of a handful of other chip designers, and it’s all eventually packaged into ceramic containers that populate any chip board out there today, to be tested in China or Vietnam or the Philippines.  The resulting circuit board arrives in Mexico or Germany or China for assembly into a robot or a PC or a cloud server.

One edge that the West, in particular the U.S., holds is that the semiconductor industry relies greatly on what one industry expert calls “repetitive cycles of learning,” ensuring higher barriers to entry for those without deep prior experience and knowledge.  So it gets harder.  Then again, the effect of something called Dennard scaling has meant that shrinking components tend to offer fewer and fewer benefits in chip making over successive generations.  Thus, being a few steps behind the industry leaders may not matter so much.

But with the demise of Moore’s law, for perhaps the first time in decades, there opens a whole new competitive opportunity.

Quantum computing, which relies on principles of physics that exist at the atomic level, afford the opportunity to think in entirely new ways about how we make the next generation(s) of computers.

Quantum can speed up some calculations immensely, even if at the expense of doing so a bit less accurately.  Still, this may hold computational benefits in many fields where absolute calculation perfection is not required.  Google, IBM, Microsoft and others have quantum-computing projects they’re working on right now.  Here again though, China is making big bets, the technology is nascent and not yet fully practicable, and the winners of the future are unclear.

What is clear is that the Moore’s Law that governed the growth of our industry when we started in the 1980s is destined to be something altogether different to the next generation of computing pioneers.

We wish them the best of luck.

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We’ve been around long enough to see the advent of computerized (PC-based) accounting go from “nobody wants it (but everybody needs it)” to “everybody has it” in a span of 20 years.  Then we saw the Internet rise seemingly out of nowhere, and next thing you know, a little dorm room operator begets Facebook’s 2 billion users, and in the span of a decade Amazon grows from an online bookseller into a $3 billion revenue behemoth – and last year, nearly $200 billion.

So when it comes to revolutionary change, exploded business models and unforeseen surprises, don’t say it can’t happen.  This thing called Blockchain could, maybe… be next, and it’s worth your paying attention to.

Blockchain is the term used to describe an online, decentralized, distributed-ledger of recent invention (i.e., ten years ago) that is known for its security and simultaneous openness to all its members.  Blockchain has enormous cost-cutting potential in business because it cuts costs by “eliminating the middleman” like say, a bank.   Records cannot be altered retroactively without the alteration of all subsequent ‘blocks,’ thus creating a sense of trust among all parties.  Blockchain has found its way into testing across a variety of applications from supply chain to healthcare, from banking to insurance and a host of others.  Major companies like IBM, JP Morgan, Citi and many others are investing heavily in it.

For now, most blockchain projects remain experimental, largely in their testing phase.  While the concept is as elegant as it is appealing, there are challenges with scaling the technology upwards.  It takes a lot of computing power, after all, to keep an eye on all those ledgers and transactions.  Many projects will doubtless whither on the vine.  But for now, as a recent article in The Economist put it, “the less world-changing a proposed user the better its chance of success.”

The encryption possibilities of blockchain make it appear ideal in the realm of financial documentation and transactions – an easy concept to introduce, given that records are hard to change, making it well-suited for security and potentially very useful.

In supply chains, the back office potential to reduce paperwork, costs, transaction time and administration hold enormous potential, as companies talk directly (digitally) to one another via a shared database that all can use and which, in theory, requires very little regulation or administration.

Clearly, the potential is there, and the appeal is evident to business.  Still, large IT projects always take more time and resources than people usually project – it’s just human nature – and blockchain requires cooperation across multiple firms, so these projects will take even longer.  Backers and participants will need patience.

But then, twenty years ago, how many folks thought the internet would rule so much of commerce today – and still be growing – or that ‘the cloud’ would ultimately become the data repository for so much of the world’s knowledge and the planet’s operations and finance?

 

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Software implementations carry significant risks, including budget and duration overruns and implementation failures. As the folks at Panorama Consulting pointed out in a recent article, quite often, these risks can be mitigated with proper planning at the beginning of the project. Instead of making decisions based on fear, you should feel confident you’re addressing the potential pitfalls of ERP projects.  Here are six ways they propose to mitigate risk before beginning the software implementation process:

 

  1. Understand Your Business Strategy Objectives – Clarifying your business strategy requires collaboration among all stakeholders. During these discussions, define what customer success looks like and determine what’s working and what’s not. Most importantly, clearly articulate your objectives – do you want to create new business models or generate new revenue using ERP software? These discussions will help you achieve organizational alignment. Ultimately, executives and middle management should be aligned around what changes are needed to improve your organization’s competitive advantage.
  2. Set Realistic Expectations – ERP failure is often caused by unrealistic timelines and budgets. Understanding what benchmarks are realistic for your industry and company size will help you set realistic expectations. While you may need to adjust expectations throughout the project, starting with a realistic estimate will make these adjustments less surprising to executives.
  3. Prepare Employees for Organizational Change – It is human nature to resist change. Change resistance causes implementation delays, quality problems and reduced productivity. If employees don’t adapt to change, your digital strategy will not lead to lasting business transformation. Obtaining buy-in from executives first is a good way to obtain buy-in from team members and employees. If executives are excited for change, this attitude will be contagious. You can obtain buy-in from all stakeholders by communicating the nature of upcoming changes and the reason for change. Communication should be guided by a change management plan, which is informed by readiness assessments and user acceptance testing.
  4. Optimize Your Business Processes – An ERP implementation is a good opportunity to optimize your business processes. While most back-office processes can be optimized based on standard software functionality, some processes should be redesigned independent of software. Processes that provide competitive advantage shouldn’t be constrained by an ERP vendor’s “best practices.” Optimized processes help you develop demo scripts for ERP vendors to ensure they focus on your unique needs.
  5. Plan for Data Migration – With every software implementation, there is the risk that ERP software will not enable the organization’s strategic objectives. To mitigate this risk, reliable and actionable data is essential.  As soon as you select a software application, you should start preparing for data migration. Most legacy data is not ready for new systems. Data is usually spread across multiple sources with various structures and formats.  To account for this complexity, document and establish a data strategy. You also should define future nomenclature for items, item descriptions, units of measure, etc.  Successful data migration requires involvement from four key groups: data owners, the functional team, the data migration team and the project team.
  6. Limit Software Customization – Once you start down the path of software customization, it’s difficult to stop. Strong project governance and project management ensure the implementation team doesn’t over-customize the ERP software. Investing in business process reengineering also is a good strategy for limiting last-minute customization.

We think these tips are a good foundation for looking at your ERP project, and encourage all purchasers to think them through early and often.  History will then be on your side.

 

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One of our key software partners in a recent post reminds us of the long-standing value of a “product configurator.”  Because we work so much with manufacturers and distributors (almost exclusively actually) we see the value in these products every day, and find our own manufacturing software solutions well-equipped, either intrinsically or via third-party add-ons, for them.

As our partners at Insight Works https://www.dmsiworks.com/products/configurator/ (formerly DMS – Dynamics Manufacturing Systems) explains theirs…

A Product Configurator significantly simplifies the creation of production Bills of Material (BOMs) and Routings, or assembly BOMs, to make quote and order generation more efficient.

In the Insights product, new features include:

  • Easily Configurable Rules: Set combination rules for specific products. For example, when building a bicycle, if a specific style of handlebars is selected then a specific lamp will be included while the bell will be excluded.
  • Apply Multipliers: When it comes to bulk material usage, multipliers can be used to ensure automatically generated BOMs include waste and trim material. For example, a window frame may require an additional 10% of frame material for production purposes which will be cut and trimmed for the final product.
  • Build Sophisticated Rules: For anyone who may require more sophisticated rules not supported by the user interface, Product Configurator includes an API… so that rules can be done without a developer license, allowing end-users to create “scripts” for rules.

 

It all adds up to the ability configure a bill of materials so that end products can be built according to the rules that you specify.

These are ideal for companies that make to order or who build assemblies.  They typically support thousands of functions.  Whereas early configurators of the 1980s and ‘90s in large scale systems once ran in the hundreds of thousands of dollars, today’s solutions are a tiny fraction of the cost, with far-ranging capabilities available on PC-based systems.

Using pre-configured items saves lots of time… eliminates countless data entry and keyboarding mistakes… greatly simplifies order-taking for the sales team… and ensures product accuracy by ensuring that build-rules are always followed.

If you build to assemblies or make to order, you owe it to yourself to look into the world of product configurators.  They frequently pay for themselves quickly, and many times over, while increasing your competitive edge in terms of improved order accuracy, reduced order and build times, and greatly simplified order taking.

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We’ve written here before about the powerful capabilities of the emerging science of quantum computing – the idea that computers using the properties of sub-atomic particles can perform calculations many orders of magnitude faster than the speed of today’s computers.  This opens entire new worlds of computing power, and of course, potentially failsafe encryption.

Today, we’ll look very briefly at the latest developments and opinions.

According to The New York Times, China is moving forward at a rapid pace, working on building the first actual quantum computer while focusing on “encryption that relies on the same concepts from the world of physics.”  That raw power could break current digital encryption, putting at risk everything from billions of dollars in e-commerce to national secrets in government databases.  Thus, the race is on for quantum encryption to protect data too.  Quantum encryption would make it evident if a message had been intercepted.

As John Prisco notes in the TheHill.com, this has to be a national priority and could turn out to be “as important as previous national contests such as the arms or space race.”  China has invested “tens of millions of dollars building networks that can transmit data using quantum encryption.”

Others think the fears are overblown, since there are currently no functioning quantum computers.  Indeed, there are “gargantuan technical challenges” to be overcome and researchers have been saying we are 20 years away for 20 years now, according to Mikhail Dyakonov in IEEE Spectrum.

But most experts are not so pessimistic about quantum.  Martin Giles in the MIT Technology Review says our nation needs to be prepared, and a recent report from the U.S. National Academies of Science, Engineering and Medicine says “we need to speed up preparations for the time when super-powerful quantum computers can crack conventional cryptographic defenses.”

In the end, the biggest challenge may we be developing quantum-proof standards and then getting industries to upgrade their hardware and software to meet them, according to a recent tech article in The Week.  “If hackers get their hands on quantum-computing technology before there’s widespread quantum encryption, the result could be a security and privacy nightmare.”

Just what the world needs to worry about now.

 

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If our “old-fashioned” Christmas scene below puts you in mind of warm memories, happy times and a cozy day of rest, then we’ve done our job here today…

 

We appreciate all our families, friends, customers and partners on this day and throughout the year.

We thank you, and wish you the very merriest of Christmases, the happiest of Holidays, and the warmest regards for you and your family!

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