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Posts Tagged ‘ERP’

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 Generally, respondents are unsatisfied because of outdated technology.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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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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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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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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