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Posts Tagged ‘Enterprise Resouce Planning software’

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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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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erp-upgrade-pic_2Our prior post attempts to answer the question captioned in our title by suggesting the first three, commonly accepted steps in the process: Preparation; Process Review; Fit/Gap Analysis.  Today we’ll conclude with the last three steps.

Step Four: Architecture.  In this step, which may be a part of one of the next steps, you identify the hardware foundation for your solution.  It could be cloud based for certain well-defined verticals and for more generic (i.e., pure accounting) solutions, or it may consist of hardware, either on-premise or off, that will serve as the underlying architecture for your solution.  The hardware however is always a byproduct of – and dependent on — the desired software solution.  This step is the natural follow-on to any potential solution identified in the earlier fit/gap analysis.

If you’ve decided on standing pat or upgrading your current solution, you still need to ensure that the hardware it runs on is up to the task and offering you the speed, functionality and scalability you require today.  If you’re considering new technology, new or upgraded hardware will be a part of that overall consideration.

Step Five: Scope definition.  Just as it’s important to define what your choices will do, it’s important to define what they won’t – at least initially.  Here you determine the bounds of your new implementation.  This is the place to look at where you potentially will, and will not, modify the workings or code of the proposed new solution.  We often advise clients to work as much as possible with their new software “out-of-the-box” and to forego all but the most critical, business-necessary modifications until they’re up and running and have had time to truly understand the capabilities of their new system.

We find most companies are a bit overwhelmed initially with what their new system can do for them.  It’s almost too much to wrap your head around all at once.  So initially, take it one step at a time.  There’s plenty of time later to decide where you want to fine tune your system (assuming your selection can be fine-tuned and modified – some systems are better at this than others).

Finally as to scope, remember, this is where you can best identify and control costs.  A good, tight scope definition helps your software partner quote more accurately, and helps you ensure the budget is both realistic and achievable – in both dollars and time to implement.

Step Six: Proof of concept.  Once you’ve reviewed your processes, identified gaps and potential solutions, defined requirements, hardware, scope and acceptance criteria, you need some assurance that the proposed solution will work.  If you’re already familiar with a trusted adviser and software partner, they can step you through this process with either basic PoC demonstrations, or a combination of referrals, conversations and software high-level reviews.

This is not user training and does not involve porting over of existing data (aside from perhaps a few sample records for demo purposes).  It’s not a full prototype or a complete system test.  Proof of concept simply means a general acceptance that the overall processes you have identified as key to your flow can be accommodated in the proposed solution.  There may be some cost associated with this step, depending on the depth of your requirements for proof.  The key thing is to have established trust between your firm and your implementation partner for the long road ahead.

 

There are any number of variations on the steps and flow of your selection process, but the outline we’ve provided covers the fundamentals of an accepted method for determining your requirements, and whether your current solution will get you through, or a look at new technology is in order.

In all cases, keep an open mind… be honest and open about your expectations and your budget… and remember that ERP is, above all, a strategic investment in business improvement.  We may be biased after 30 years of doing it, but the relationship with your provider – and their business and technical capabilities and understanding of the business environment in which you operate – are the keys to success.  Remain honest and open with one another throughout the process, keep the expectations realistic and the lines of communication open, and you will ultimately be one of the success stories.

 

 

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erp-upgrade-picIn this brief, two-part post, we’ll look at the commonly accepted process steps for answering the question in our title.  While there are many formats and variations on this process, there are essentially about six key steps a company can take to gain clarity on whether to upgrade, purchase new, or stand pat.

The first step is preparation: This is the information gathering phase where you define the internal skills and staff required to staff the process.  You’re doing this, presumably, because you question the utility or capabilities or robustness of whatever system you’re using today.  So you’re about to engage, possibly, in some real transformation.  Therefore, you want to look for a few thought leaders in the company who can help you map out what you’ll need in the future – and whether that will come from what you have, or require something new.

Here you want to identify the purpose of your assessment, and try to gather your subject matter experts.  How well can you identify and map your current business processes, in each department?  Do the participants have some ideas about what the future processes might look like?  Once you have an internal team established, and you’ve asked some of these questions, then consider bringing in the external subject matter experts.  These are typically folks who do this kind of thing for a living.  Fellow business people (owners, managers and grizzled veterans) are good referral sources.

Be sure you investigate and document your KPIs (key performance indicators) – those few key business benchmarks that you rely upon to determine the overall health of your business.  Try to begin to map your business processes at least at a high level, to share with the consultant you later engage.

Step two: Review your processes and requirements.  You want to identify, at least at a high level, the key requirements you require of a business management system, regardless of whether you’re inclined to keep or replace.  The business process review will largely define the scope of your ERP requirements, and serves as a tool in your selection process.

(At our firm, we use the term Business Process Analysis, or BPA, to describe a process for identifying workflows, mapping processes, identifying key technology touch-points, mapping current and possible future process flows, and ultimately creating a written Summary of Recommendations that serves as the “roadmap” for most of what comes after.)

Step Three: Perform a fit/gap analysis.  Just like it sounds, in this step you identify the gaps in your current methods or system between your business requirements and what you have today.  Reporting is often one key area.  Often, entire swaths of the business are untouched by the current system if the required technology simply wasn’t available when the system was implemented.  We often find this in the manufacturing/shop floor and warehousing/distribution realm.  Technology exists today that was uncommon ten or twenty years ago that allows companies to better manage product configuration, production and movement within the plant.  These technologies open up vast areas for process improvements and cost reductions across the board – and they simply didn’t exist (at least in economical form) a decade or two ago.  The fit/gap analysis is intended to identify all these shortcomings, and offer suggestions (including possible software selections) for how to fill them.

In our concluding (next) post, we’ll take a look at the final three steps.  Stay tuned…

 

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erp-reportsThe business world is now over twenty years into the adoption of what today we call ERP systems – Enterprise Resource Planning.  The term ERP is actually derived from its predecessor – MRP, or Material Requirements Planning systems.  The term is said to have been coined by someone at The Gartner Group around 1990 as an extension of MRP intended to encompass a larger vision of the organization as a whole.

A survey conducted a while ago by Thomas Wailgum of IDG Communications noted that CIOs indicated that ERP systems were “essential to the core of their businesses, and that they could not live without them,” as noted in a recent white paper from an outfit called Edgewater Technology.

But as also has been often noted, many of these systems have grown out of date and long in the tooth.  Some still harken back to the old green-screen days, and a good number of companies today still run on antiquated (and increasingly more difficult to maintain) systems like the AS/400 and other legacy platforms.  In many cases, these systems’ shortcomings, cost and complexity can often work against the very efficiency goals they were once meant to improve.

If you are among these dinosaurs, we’ve found a few questions from others (but with which we concur and often ask them of clients ourselves) that you might want to ask of your own organization, like…

Should you continue with your current system?… Is it time to upgrade?… Is it time to change?

Following are a few questions from a white paper from Edgewater Fullscope (a software reseller with offices in the southeastern U.S.) that we thought provides a good starting point for looking at how effective your current information and reporting system is.

  • Are you getting the reports and information you need to run your business effectively?
  • Can users run their own reports queries or do they need to turn to IT for support?
  • If so, what are those costs in terms of time and labor to develop these custom reports and inquires?
  • How easily can you access reports and inquires?
  • How easily can you export them to desktop applications like MS Excel?
  • Is the information you’re getting real-time, actionable, and easy to understand?

There are many more similar questions you could ask, and there is a lot more drilling down to the fundamental WHY questions that are so important in this process.  But we think Edgewater’s questions are a good start.

Companies who are not satisfied with their answers are ripe for a doing a little self-examination.  That’s best done when assisted by competent subject matter experts from outside the firm who are well-versed in asking – and help you answer – those questions.

But until you start asking and analyzing, and then reviewing processes and conducting a fit/gap analysis, you may only be extending your current pain, and not moving toward a better solution.

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erp_pic3A report we came across recently, based on a survey of ERP buyers, revealed a number of trends gaining momentum in 2016.  A few worthy of note included…

Increasing adoption of ERP systems among small and mid-size organizations.  Newer ERP systems, including SaaS options, along with the latest mobile technologies, have put business management software within the grasp of virtually any business today, thereby negating the edge once held by the larger, more tech-savvy industrial firms.  Gone are the days of multi-million dollar ERP implementations.  Today’s company can get started for a figure in the thousands to tens of thousands, easily.

High profile lawsuits expose the causes of ERP failures.  There have been some pretty high-profile ERP failures over the years.  (There have also been many more great successes.)  The record shows that the failures are much less failures of technology, and much more failures of sound strategic planning, organizational change management, well-scoped process analysis, misaligned (or unrealistic) expectations between provider and consumer, pure communications, or unrealistic budgets and timeframes.

“Best of breed” makes a comeback.  For several years, standalone ERP systems with little integration to other systems were much in fashion.  But the increasing ubiquity of systems that hook out to the rest of the world has made that approach a more viable alternative.  These core systems don’t – in and of themselves – try to be all things to all people.  Instead, they focus on the core ERP functionality, and then let others with vertical expertise provide certified and well-integrated extensions that truly do enable them to become “best of breed” instead of “one-size-fits-all” solutions.

ERP project recover becomes a skill set.  Lots of ERP installations ‘go south.’  Deeply knowledgeable implementers with appropriate domain experience can unravel what went wrong, and where, and then recover with the steps necessary to do the job right the second time.  It requires strong domain experience and unique skill sets that can get to the root(s) of the problem, and rebuild, implement and train users from there.

Customization becomes more accepted by the mainstream.  The word ‘customizations’ used to terrify CEOs, CFOs and other execs.  But the fact is, about 90% of all implementations (according to a 2015 survey by Panorama Consulting) are (and must be) customized to some degree to meet business requirements.   But today’s tools make it a lot less risky to do so.  With an experienced provider, customizations and modifications can be executed and tested safely and made to fit each client’s unique needs – all with a minimum of operational risk.  Just be sure you’re dealing with someone with domain and customization experience.

These are a few of the most recent, growing trends in the world of ERP, as the increasing breadth of software and technologies bring it within range of nearly every business today.

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happyCompanies invest in new and upgraded business systems for many reasons ranging from the replacement of the old system because it’s no longer supported, or hasn’t kept up with changes in technology, or they can’t get good (or any) support… to the more substantive reasons like a desire to reduce costs and get leaner, or the fact that they are growing and need the business platform to get them there.  But whatever a company’s reasons, a handful are fairly universal in terms of ROI and system benefits.  Five benefits highlighted in an article by Eric Kimberling, an ERP consultant, gives us the basis for comments derived from 30 years of implementations ourselves.

  1. Increased revenues. Most folks look at ERP as a way to reduce costs, neglecting to realize that capabilities like CRM (Customer Relationship Management) and demand planning make it much easier to track and manage sales and marketing efforts and match capabilities to customer demand, thereby not only improving the bottom line but increasing the top line.  The key is to identify inefficiencies and opportunities within them.  The data inside your ERP will allow you.
  2. Decreased inventory cycle times. With all your data inside one repository, it becomes a lot easier to spot trends, identify overstocks, manage product flow, sell what you have and demand-plan for what you don’t.  That doesn’t even begin to extol the virtues of improved inventory visibility overall, and how that can help reduce excess inventory and improve turns.
  3. More efficient business processes. This one’s part ERP, part people.  But by combining both, you can identify process gaps, redundancies and workflow inefficiencies, and design better processes in their place, utilizing your system to manage and automate those improved workflows.  An ERP implementation is the perfect time to improve your processes.
  4. Integrated business processes. Improved integration across customer service teams, inventory planners, production managers and accounting can all make it possible to have a unified view of the company reality across all users.  You have to map your processes carefully and involve all the key players.  But when you do, you have a more integrated, efficient and less redundant cycle of work flows and business processes that can be integrated neatly inside your software.
  5. Higher employee morale. Maybe the least measurable element, but important nonetheless.  When you make someone’s job less frustrating, or allow them to do more, more sensibly, or sometimes, just make their job easier… it’s a morale booster.  Making it easier to process an order or find the information you’re looking for quickly can make a big difference in a person’s working day.  Don’t underestimate the value of an employee who just feels better, and more productive, about their job.

As always, the key is to define the process up front.  Identify the gaps and weaknesses.  Find the hidden silos of information not available to all.  Look for redundancy (the double and triple data entry tasks).  They’re all there, and they can all be remedied through an effective combination of people, process improvement and software.  The benefits are very, very real – as anyone who’s gone through a successful implementation will tell you.

 

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