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Posts Tagged ‘Business Process Analysis’

invest techTechnology and ERP systems are too often presented as the panacea that will cure all your business ills.  But the fact is, technology without the right planning could actually end up hindering your efforts.  Recently, the folks at Panorama Consulting suggested four things a company should do before making a tech-investment leap.  We concur wholeheartedly and thus share their thoughts (and  few of our own) with you today.

  1. Without business process reengineering, new technology will simply pave the cow paths. Too often, companies jump into their enterprise software initiatives without redefining their business processes (in other words, simply automating already broken business processes). Business process reengineering is an important first step and foundation to an effective ERP implementation, so even if technology is a key part of your roadmap, make sure that you’ve done the heavy lifting to redefine key business processes prior to implementing a new system.
  2. Technology is useless without the right guiding enterprise and IT strategy. It’s easy to quickly embark on a new technology system because it will be an improvement over what you currently have – regardless of whether or not it fits into your strategic plan. There are simply too many options and variables to consider in the technology space, which can cause some to stumble when those decisions don’t fit your overall strategy. (Thus, we would add, be sure you have your strategic and business goals properly defined well ahead of your cash investment.)
  3. Organizational change management is what ultimately drives transformation – not technology. People and processes drive change.  (And here then we would add: This is where the “technology is not a cure-all” thinking comes into play.  You can’t throw tech at a people/process problem.  First define the problem, then map the process (old vs. proposed new), then factor in everyone’s feelings and input about proposed changes, and then, maybe… look at how technology can help improve your lot.)
  4. Even if it really is time for a new ERP system, the other non-technical aspects of your initiative will drive true business transformation. (Our comment: Technology is just one component of your transformation.  Be sure it serves your people/process needs first, and not the other way around.  Look at all your needs from all angles, and given the typical cost constraints under which most companies labor, choose your targets judiciously.  Map out just 2 or 3 key strategic objectives for starters, and build slowly from there.  Take it slow, keep it go, as my old Slovenian grandpa used to say.)

You can find the full text of Panorama’s thoughts here.

 

 

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bprIn our prior post we touched on the first two of five tips for ensuring reduced costs and improved competitive differentiation by analyzing and then reengineering your business processes before you implement a new ERP system.  We ran out of space before we could cover the final 3, as suggested by the folks at Panorama Consulting, so we’ll wrap up with those last 3 business process reengineering tips today.

The third tip is to define and quantify your potential cost savings.  Start by looking at your pain points relative to your current state, and evaluate how you can map solutions to these in the new system.  Look for areas of improvement such as automating your current manual processes.  Look for areas of redundant data entry.  (We’ve found it’s not unusual for customers to record the same data three or more times by different people in different places for different reasons.)  Time spent looking for information in multiple disparate silos is one of the all-time great time-sucks with its resultant expense.  Take the time to quantify the times and economic gains – if only because you’ll be astounded at the waste you’ll find and thus all the more anxious to keep your automation project moving forward.

Step four is to evaluate non-labor savings as well.  How much could you reduce inventory with better visibility into your supply chain, your work-in-process or your purchasing channels?  With better visibility over inventory, how much better might you project customer demand?  What about accounts receivable?  Is it as automated as it could be?  Non-labor savings are important because most companies are not going to lay off people when they create the labor savings noted in our prior paragraph.  Those tend to be soft cost savings, whereas non-labor savings fall into the hard costs category and are often more immediately tangible.

Finally, measure the results, striving for realistic, incremental improvements.  It’s a process, not an event.  You won’t realize the benefits if you don’t measure the results, but you’re not likely to create miracles overnight.  The cost savings will come gradually, but they will come.  To ensure that cost savings materialize, be sure you’ve defined the proper criteria and mapped out the expectations.  Equally importantly, be sure all your users are clear on what you’re doing and the results you are expecting.  You’re looking for root causes of waste, identifying means of correction, building improved processes into your software workflows, eliminating redundancy and waste… and then measuring your progress (and fine-tuning) until your see the results you’re looking for – or understand why not.

 

The bottom line though is very real: Implementing real process change as the natural precursor to implementing an ERP system will provide the economic justification and eventual payback for having implemented in the first place.  So don’t skip the critical analytical work that will ultimately deliver the cost savings you did it all for in the first place!

 

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bpr_imageWe regularly engage new clients for business process analyses because we’ve learned over the years that it’s the one sure way to create a realistic ‘roadmap’ to an ERP implementation.  We’ve long told clients that the BPA will easily save its own cost – and usually much more – just in terms of eliminating miscues and ill-advised project turns.  It sets the path for ERP.

But as a recent article by Panorama Consulting’s Eric Kimberling points out (and we concur), the business process reengineering that results from a BPA can create still greater savings for those companies willing to apply that reengineering to creating competitive differentiation.

When contemplating replacing your ERP system, you’re at the perfect point for reassessing all your key processes, and reengineering them for better performance.  Following then are 5 steps recommended to gain the most from the journey…

First, understand the process in the context of ERP systems.  Today’s systems are robust and flexible.  Most processes will have multiple possible workflows – with corresponding workflow steps and criteria to be defined.  So by starting with a clear understanding of how you want your processes to look, you can save a lot of time and expensive consulting costs later trying to do it after (or while) the software has been installed.  Moral: set your vision straight first, and define your steps in English, or in terms most comfortable to all concerned, so you can create the shortest path in your software later.

Second, recognize that all business processes are not equal.  Think about it: there are a lot of foundational tasks involved in an ERP system, many that can easily be handled by accepting your new software’s out-of-the-box method for handling them.  These are the more basic tasks (think: accounts payable processing, for example) which will probably be just fine out of the box.  So ‘go with the flow’ and use what the system offers here, saving your best efforts for the areas that provide the most competitive advantage.

Those competitive advantages may come from, say, how you handle your sales process.  In that case, paying greater attention to the details of the CRM implementation might yield more bang for the buck when designing your sales workflow.  Or it may be true of, say, your manufacturing processes.  That might mean spending a lot more time with the folks in engineering designing the right BOM workflow, route steps and setups.  The efforts put forth in these areas might be the truest path to an embedded competitive advantage inside your ERP system.  So put your greatest effort into reengineering these higher level areas, instead of the basics.

Between “basic” stuff and “competitive advantages” lies what Panorama calls “industry differentiators.”  Here you spend time reengineering to ensure that at least you have designed into your systems the appropriate industry workflows that will help you manage internal costs better.  Procurement and overall supply chain management come to mind.  Here, attention paid to ‘best practices’ will yield cost-cutting gains.  But you’ll save your most diligent reengineering efforts for those true competitive differentiators that are unique to your own firm, as mentioned above.

Given space constraints here, we’ll share the last 3 tips (on cost savings, labor savings and measurement) in our next post.  Stay tuned…

 

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steps to better erpA blog called Inside ERP posted a few cogent tips for those looking to improve the odds of success in their implementation efforts, in a post published at the IT Toolbox (here).  Their tips “start at the top” by reminding us to…

  1. Get support from the top. Remember, ERP is a business-wide project, so it requires executive buy-in at all key stages of the project.  As one provider noted: “Starting with senior leadership, there needs to be overwhelming support for a new way of doing things to encourage cooperation and adoption.”
  2. Assign a dedicated project lead. Whether internal or external, there needs to be an experienced project leader at the helm to safely guide implementation through the various political and technical challenges that the project will face. Look for someone that is persuasive, has good political skills, is an effective communicator and has enough domain experience in the matter to understand best practices. 
  3. Define organizational needs up front. At our firm, we include this as an integral part of our “Business Process Analysis.”  Define the business needs, and ensure that the software project is mapped to your firm’s required workflows and processes.  Create a list of requirements and desired outcomes at the start of the project.  You need to know at the outset “what success looks like.” 
  4. Plan for scope creep. Scope creep is usually feature creep.  It’s important to set realistic expectations at the start of the project.  Setting milestones and individual responsibilities will help.  Of course, you’ll have a process for change-orders and their approval in place, right?  Regular project meetings will greatly help to ensure that projects are staying on course. 
  5. Be ready to adjust business processes. Rather than taking the path of least resistance by avoiding “meddling with existing business processes,” recognize that an ERP implementation is the most ideal opportunity you will ever have to change and improve your processes and workflows.  Where possible, make the changes and the software work in synch.  If you only implement a new system in order to mimic the processes of the past, how are you really improving the business? 
  6. Give training its due. According to Gartner research teams, “75 percent of enterprise ERP implementation failures come from lack of end user adoption.”  Your staff needs to understand the new ERP system and how it benefits them and the company overall. They also need to know how to use the ERP system properly.  Training is overlooked or under-budgeted completely at the risk of the project.  Translation: don’t do it!  Don’t shortchange training.  It’s where the rubber meets the road, and it ensures your staff that you care about them – and about the success of your project!

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it_challengesRecently, Panorama Consulting posted a piece we swear they must have written after overhearing some of the conversations we have among ourselves and with clients.  Their post concerns the need for companies today to leverage the availability of outside resources and expertise – so they don’t have to ‘go it alone’ when it comes to surmounting a few key IT strategy challenges.  The four they call into play include:

1. Creating an IT strategy and roadmap that fits your business. There is a bewildering array of choices in enterprise software and technology solutions.  SMBs have little room for error, given their modest budgets.  Thus it is critical to work with an outside consultant who can objectively assess your needs.  

The best of them can present two options: what at our firm like to call biased and unbiased.  An unbiased analysis will be largely software agnostic: just tell us what we need in tech and software by providing us with a roadmap, and we’ll seek out our own options. The biased approach says: You guys know the territory.  Apply your own filter or bias if you think you have a solution that fits, and we’ll factor your views into our thinking.

Either way, you want to end up with a ‘roadmap’ that has been vetted by external experts to give you that extra bit of assurance that you’re on the right track.

2. Organizational adoption of new systems. Whatever decision you reach about your IT future, it’s bound to stir up some change, both direct and indirect.  Never underestimate the need for organizational change management.  Tech firms often spend too much time on the “tech” and not enough on things like people, strategy, and the business.  Be sure you keep your eyes on the prize.  Good consultants can help ensure that you’re focused on all the right business objectives, and help you manage and direct the change within your organization.

3. Alignment between new technology and your current business processes. We can’t say it too often: your technology doesn’t mean much if it is not aligned with your business processes.  You need to define and chart your workflows, and work with your consultant or provider to ensure that your software and systems match that flow.  Be sure you’re thinking about future processes when you do this.  Focus on the pain points.  A consultant with Six Sigma experience can help greatly in ensuring that your technology is well aligned with your underlying needs and processes.

4. Realizing the ROI of enterprise technology investments.  New technology, as Panorama notes “may sound good in theory, but if it doesn’t deliver tangible business benefits, then it isn’t helping your organization.”

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7 mythsAs ERP consultants we frequently and regularly preach to our customers and prospective customers the value and importance of analyzing their processes before an ERP implementation (and sometimes during when revisiting those processes in greater detail).  The result of a business process analysis (or BPA in our parlance) is usually some form of business process reengineering.

So we’re always interested in other consultants’ opinions about the process of both BPA and BPR.  Recently, the CEO at Panorama Consulting suggested 7 Myths of Business Process Reengineering, which we thought worth reprising in today’s post.  Here then, are Eric Kimberling “7 Myths” along with an abbreviated synopsis of his comments.  (You can access the full post here.)

  1. Business process reengineering doesn’t need to happen on ERP projects. Perhaps the most misguided of all. Every ERP system will wreak some sort of havoc on your business processes. Most of these changes will be positive improvements, but will still require some effort in defining your operations in the new system environment.
  2. Simply implementing a new ERP system will drive process improvements. The most pervasive myth. Today’s ERP systems are extremely robust and flexible, meaning even the simplest business processes can be performed in a wide variety of ways. This leads to a need for pre-defined business processes so the software can be configured and/or customized accordingly.
  3. ERP project teams should focus on “to-be” rather than “as-is” processes. If you are the organization making the changes or the employees doing the work every day then the current processes absolutely DO matter.  It is thus critical that you assess the current state of your processes to help you obtain the future state as part of your business process reengineering and optimization efforts.
  4. Business process improvements can be done without organizational change management. Too many executives think that they can simply redefine and implement business processes without organizational change management. This is a misguided view. The most effective business process reengineering efforts succeed largely because of the way organizational change is addressed – not because of how well the processes were defined on paper.
  5. You can’t reengineer business processes before knowing which software you are going to implement. It is typically more advantageous and efficient to both evaluate and improve your business processes prior to selecting and implementing a new system.
  6. All business processes need to be overhauled before selecting and implementing a new ERP system. Not true. Typically, the most successful organizations focus on improving their core areas of competitive advantage or differentiation as part of their ERP implementations, while letting other non-core business processes follow the lead of the software’s out-of-the-box functionality.
  7. Business process reengineering will cause my ERP implementation to take more time and money to implement. The Achilles heel of many failed ERP implementations is that they assume that “doing things right” will cost more time and money than if they cut some corners along the way. While it may look good on paper to strip out any extensive business process work, the reality is that your project will most likely take longer to implement and proceed to fail at go-live if business processes are not adequately addressed as part of your implementation. Remember that it is much less expensive to do things right the first time than it is to do clean up after an ERP failure.

We couldn’t agree more with Kimberling’s points, and urge all companies embarking on their own ERP initiative to take them to heart.

 

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bpr magnifying glassAccording to a 2014 Business Process Management Report produced by Panorama Consulting (available here)

“Organizations that effectively define and document business process improvements as part of their enterprise software initiatives are much more likely to complete their projects on-time and on-budget…. [and] are more likely to receive the business benefits that they expect from their ERP systems.”

Panorama lists three reasons why business process reengineering is sometimes overlooked (and then list 3 things you can do about it):

  1. Business process reengineering (or Business Process Analysis) appears to cost more time and money – at least on paper. After all, if we configure and implement ERP software without spending time to analyze (and change our processes), won’t the implementation go faster?
  2. Less experienced implementers defer to the ERP software to deliver business process improvements. This, Panorama points out, is like the “easy button.”  The software is so robust, surely it will fix all our problems, right?  In fact, the complexity can be overwhelming, and will cost you a lot more money if your processes aren’t well-defined before you design and build the phases of your implementation.
  3. Too many organizations think that they will simply start with a clean slate and throw out their old business processes. The truth is, you don’t want to throw the baby out with the bath water.  Sure, some of your old processes may be outdated or inefficient.  But don’t neglect those things that have made you successful.  Your people need to be trained in a way that connects your “future state” business processes to how things are being done currently.  Here, communication and training become key.

Panorama then provides 3 tips to help ensure that your team avoids these pitfalls:

  1. Don’t forget to address both your current and future business processes. Identify the gaps between current and future state and ensure employees understand what is changing, and how.
  2. Begin defining business process improvements prior to your ERP implementation. (At our firm, we always start here.  That Business Process Analysis is the critical first step – it builds the roadmap for the ERP implementation and all that follows.)
  3. Use your reengineered business processes as the foundation for your organizational change management and training strategy. Document and communicate to all persons what’s changed, how it’s changed, and how things work in the future.  It’s all about training and communication.  Whatever you do – don’t ignore these critical elements.

Just like Panorama, our long experience bears out their very good advice.  Take it to heart.

 

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