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Posts Tagged ‘ERP’

There are any number of suggested approaches to implementing a business software system, but a few tips offered by frequent ERP blogger Eric Kimberling contain some key points that we think all software vendors could agree with.  We’ll share a few of those tips, with which we concur, here.  We could add a few more from our own experience, but these provide a great foundation in helping to avoid time and cost overruns.

  • Create your project management organizational structure. Your ERP provider will have a project manager, or project architect, or maybe both as we often do.  You need to have one on the client side too.  As well, remember (as should your provider) that there are a great many non-technical project aspects to attend to that involve work streams, people issues, organizational changes and the not-so-simple mechanics of having staff available for training and implementation when they already have their ‘real jobs’ to do!
  • Define project roles and responsibilities. No two projects are alike.  Your provider knows in advance (or should know) exactly who will be doing your training, your customizations, your technical work and writing your reports.  But ultimately, it’s your project, so be sure you have defined all the roles at your end, and that each person knows who they’ll be working with.  Strike a balance between your “internal competencies and your bandwidth” as Kimberling puts it.
  • Make key strategic decisions regarding your implementation.  Again, all projects have their unique challenges.  (We’ll get 90% of our side right and still beat ourselves up over how we could have done the other 10% better.)  So early in your project, work with your partners to realistically define project phases and timetables.  Hint: all clients and most implementers underestimate the actual time required, and the unplanned hiccups along the way.  Data conversion is typically one large problem area.  Another hint: the less data you absolutely have to transfer from old to new system, the easier (i.e., less costly) your project.  Remember, you can always turn on the old system on the few occasions where a missing piece of old data is critical.
  • Define your future state business.  Don’t fall into the trap of letting your software always drive your business process improvements.  The software should be made to fit the way you do business.  That’s why buying a ‘customizable’ system is so critically important.  Modifications and customizations exist for a reason: they support the business’ intrinsic competitive advantages.  Don’t settle for software or process flows that do not match up with your own best practices.  Defining your future state can often be accomplished in stage one, after you’ve mapped the current state and identified the gaps and technology touch points you need.
  • Think people. Many projects fail or succeed based on how well firms have handled the changes to the organization and to the workflows that a newer, better system require.  Remember that people are always on the critical path to project success.  And don’t wait until it’s time to get folks trained to bring them into the picture.  The time to involve your team is at the very start of your project.  But that’s a post for another time.

 

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Those in the I.T. and ERP arena who implement software and hardware solutions for a living have long known – or at least, should know – that speaking the language of business is as important as speaking the various languages of technology.  A recent article on the shortage of data scientists in the U.S. in the 21st century makes that point clear, noting that a McKinsey analysis recently predicted a shortage of 250,000 data scientists here by 2024.  Worth noting: Countries like Malaysia are busy building national programs as they seek to fill the gap by becoming a global hub of data science talent.

An article from information-management.com reinforces the point, noting that data is becoming more ubiquitous in every organization and data scientists are bound to grow in importance.  “Today’s students will be the first data-native employees of the future, and it’s critical that they understand data science, how data science is changing and how data science solves real world problems,” says Ashish Thusoo, CEO and chief data scientist at Qubole a “data-as-a-service” company in Santa Clara, California.

As the impact of AI (artificial intelligence), machine learning and big data all seep into the business world, it becomes more important than ever that tomorrow’s data scientists can optimize business processes, think in the language of business and apply human creativity to solving real-world business problems.  A lot of the tedious and manual data entry work is going to be performed by machines and algorithms, and the pace of change will only accelerate.  The critical question then becomes: Can we teach our students and employees to master the arcana of data while thinking like business people?

Mr. Thusoo puts it nicely in an article found here: “Data scientists will need to be able to think like MBAs and MBAs will need to think like data scientists. That requires an interdisciplinary approach to education.”

 

These future data masons will be working across multiple disciplines and communication skills will be of great importance.  They will need to be collaborators, understanding the various aspects of the business while being effective communicators.  They’ll require multi-disciplinary talents for sure, and be able to speak a bit of many ‘languages,’ like marketing, production, sales, accounting and leadership.

And of course, the learning never stops.  These workers will require social skills, data skills and overall learning skills to go with foundational hard technical skills.

In the end we are learning that data science is rapidly evolving into a profession that requires a whole suite of both soft and hard skills, and that we will need a whole lot more folks to fill these roles.  But then again, today’s best business analysts, software engineers and enterprise implementation teams have always known this.

The difference going forward is that we are going to need a whole more of us.

 

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At a recent “Digital Enterprise Boot Camp” in Toronto, a group of leading IT executives and project managers discussed their experiences with recent ERP implementations and digital transformations.  Some of the key takeaways included…

For starters, there’s budget.  ERP implementations are large and costly, and one takeaway was that you don’t have to buy every module.  Focus those capital expenditures on the key project areas and the fewest number of early feasible users.  That way, you can see some progress, and pitfalls, along the way, and only invest more deeply later as project objectives begin to prove out.

Think next about best practices that are not necessarily technical in nature.  There are very real differences between projects that succeed and projects that fail, and they often have little to do with technology.  Best operational practices add real value to an ERP implementation, and smart CIOs consider those workflows and the people who will manage them before evening thinking about specific software.

Recognize the need for strong internal discipline.  This was especially valid for companies who had grown both organically and via acquisition, as different cultures and business styles lead to different processes and different outcomes.  You’re looking for standardized and consistent operations, mapped out before you implement process changes and software to match.

ERP isn’t just about software, it’s about the business transformation.  Most of the best projects are more about people and processes than software.  Software alone is not an effective blueprint for running your business.  Effective change management and project management are the real keys.

20 years is too long to be on the same legacy system.  Businesses change a lot over twenty years – these days more than ever, and twenty year-old ERP systems simply don’t keep up.  Business today is more aligned with technology than ever, and your systems need to keep up.  Organizational change management and careful planning of processes and the people involved are the first steps.

Internal biases are alive and well entrenched.  Most organizations have internal biases, recognized or not.  The main thing is to mitigate the biases by understanding the changes and flows truly required to align your business with its best profit-making capabilities today, and then explore the solutions – from change management and process flow through software and implementation services customized to our unique circumstances – that will truly match your needs.  After all, there’s a good chance those choices will have to work for you for the next twenty years.

(Read the full article here.)

 

 

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Panorama Consulting does a nice job of summing up their view of the key questions companies should ask themselves before embarking on an ERP implementation.  We would concur with virtually all of them.  While a different ten could be just as valid, these are a good starting point for ensuring your implementation team has asked the right ‘big questions’ before the hard work begins.  We’ll reprise them here today from an original posting they did here, adding a few comments from our own experience as well.

 

  1. Do you have the right team? You want the A Team, freed up when necessary to put serious attention to the new plans.  Add to that your vendor team implementation lead consultant, and project managers from both teams.  They should be in on all key planning meetings.
  2. What will the project’s org chart look like? Project roles need to be clearly defined.  Include project management, the core team, functional and technical resources, and key managers who will be involved in the business process analysis.
  3. What will the total cost of ownership (TCO) of the project be? Remember that project estimates are just that – estimates.  Leave margin for error for things not considered, discussed or discovered initially.  Don’t forget hardware, lost productivity or hidden costs beyond your vendor’s purview.
  4. What is the business case (cost justification)? There is always a projected ROI (Return on Investment), or you wouldn’t be doing the project, right?  Beyond the immediate exigencies, be sure you’ve identified the long-term cost benefits – they are often huge, and easily can justify a project.  Establish benchmarks or metrics early on, while understanding that it may take longer to reach them than originally projected (it’s the nature of the beast).  Each company will have its own business case, but yours should be widely shared and understood.
  5. What is your overarching implementation plan? Be sure you’ve worked out things like data migrations (there may be more than one), conference room pilots, necessary modifications and a user training schedule with your vendor.
  6. How will you handle third-party or external program integration? ERP systems don’t typically handle every single aspect of your business – and even if they could, that doesn’t mean that their approach would be your best choice.  Third party applications enable users to choose among best-of-breed solutions to narrower project requirements like shipping modes, EDI, e-commerce and other needs.
  7. What organizational change management strategies and tactics will you deploy? Roles, processes and sometimes even people will change, post-implementation.  Make sure you’ve thought about that ahead of time, so a clear transition strategy can be embraced.
  8. What project governance and controls will you put in place? Poor project management can, as Panorama notes, run a project off the rails.  Be clear ahead of time about who makes what decisions, how they will be made, what controls you will have in place and what issues or decisions will need to be made by the project steering committee.
  9. What milestones will you use to evaluate progress? Take time to evaluate your project at regular intervals, and identify key project criteria that you will compare to with each one.  Don’t be afraid to pull the cord to temporarily stop a project when things go off-track mid-course.
  10. How will you define success? Or as we like to say: What does ‘done’ look like?  This might be the hardest one of all, since continuous improvement – and ERP is simply a tool for continuous improvement – is never ‘done.’  It might be as vague as being better off than before, or as concrete as adherence to a fixed ROI figure.  Each company is unique.  Just be certain in the early going to have some frank internal discussions about what the right success metrics will be for your unique project, and its corresponding investment.

 

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It doesn’t get much clearer than that.  When the world’s leading information technology research company says in effect “be very careful” it might be time to pay attention.

In fact, it was last year when the giant research firm warned those considering “post-modern ERP” that they will not be immune to the “traditional ERP headaches of higher costs, greater complexity and failed integration by 2018.”

The “Achilles Hill,” suggests Gartner, will be the lack of a cloud application integration strategy and related skills.

Carol Hardcastle, Gartner research vice president, said in a statement: “This new environment promises more business agility, but only if the increased complexity is recognized and addressed. Twenty five or more years after ERP solutions entered the applications market, many ERP projects are still compromised in time, cost and more insidiously in business outcomes.”

These so-called post-modern ERP solutions are simply not the “Nirvana” that their cloud publishers want buyers to think they are.  What’s lacking is integration of all the parts, not to mention the skills to pull them altogether.

On-premise providers have had years, decades even, to launch all the necessary software ERP components to comprise a completely integrated suite of applications.  Even those who haven’t will usually have ecosystems of third party providers to provide the key components of those applications, things like accounting, workflows, production management, kitting, manufacturing, planning, purchasing, warehouse management or CRM.

Simply throwing software up onto a cloud service provider does not automatically make these things happen.  Even top tier players in the space we happen to work and live in – the small to midsize business – have mostly only managed to cobble together partial or incomplete ERP cloud versions of their systems, often lacking the full-featured capabilities of their earth-bound brethren.

An article in the UK’s “The Register” (byline: ‘Biting the hand that feeds IT’) noted last year, “Nobody was singled out by Gartner, but it’s been the iPad toting, cloud-friendly sales and executive classes who have driven uptake of business software providers such as Salesforce, side-lining the more considered counsel of those in IT who could have taken a more measured approach.  However, according to Gartner, vendors are also guilty, putting self-interest ahead of their customers.”

Ms. Hardcastle concludes… “The blame for this does not lie solely with end-user organizations that lack the experience and expertise to avoid many of the pitfalls. System integrators and ERP vendors have to be accountable to their customers in this respect.”

The solution, as always, includes the important precepts: Starting with a solid ERP plan… having full management buy-in… analyzing your processes before your begin… aligning people, processes and systems… planning your integrations carefully… and keeping your eyes on the big prize – that is, what you need to do to take your company to the level you dreamed and planned for in the first place.

A dream, Gartner Research might well add, that may not yet include any clouds.

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For folks contemplating an upgrade to a new business management system – given that many have been on old, or even ancient systems, for a very long time now – one question to ask early on can have a big effect on how well the implementation proceeds.  In essence, it comes down to this: Where does your company stand on the standardization vs. flexibility spectrum?

We are reminded of this question by the folks at Panorama Consulting, and we would concur that it’s an important question to ask oneself.

Standardization certainly has its benefits.  If you have reasonably clear, easy to understand (and teach) repeatable processes, you have the makings of a successful ERP implementation.  Generally speaking, if you can provide the logic process and stick to it, your software can be made to conform to that logic over and over again. It gets even better if your processes happen mostly to coincide with how your software works out of the box, more or less.

Some businesses can conform to that prescription.  Burger chains come to mind, though of course they’re not what we usually think of when it comes to ERP.  But the idea that even your company, say a manufacturer or a distributor, can set out process flows that are consistent over time and customer, implies that standardization could serve you well, and ease the pains of ERP implementation.

The downside is this doesn’t leave you as open to changing trends, industry shifts, or simply producing custom products.  One’s not better than the other, they just reflect different business models.

As a result, we (like Panorama) find some companies end up being too standardized.  They end up missing out on opportunities when they are unable to customize or configure to specific client needs.  The software side of that problem is that it often requires customization or modifications to accommodate that kind of flexibility.

In between these two poles comes resistance to change on one hand, or an insistence on abiding by standard business processes to the exclusion of what’s truly good for the business (like customizing product or getting creative in delivery).

There is no one-size-fits-all answer to the problem, any more than there is a “perfect” software solution.  Certain software products tend to be less customizable and more rigid, but may allow you sufficient room to embrace your own standard processes and keep everything simple.  Other solutions tend to be more complex, with the associated higher level of flexibility and customization, but with the attendant implementation cost and complexity.

Like we said, there’s no right answer.  But the question itself is one every company should wrestle with and discuss, both internally and externally, before making any final ERP decisions.

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In our prior post we began listing some of the red flags, incidents culled from real-life incidents as noted in a white paper from Tribridge, which hurt businesses in multiple ways.  As it turns out, there are a lot of them, so we’re adding a few more here to round out a two-part post.  The original document can be found here.

Continuing our list of issues we often see clients wrestle with – and waste TONS of time and money on – here are a few more that can be remedied by taking the plunge and finally updating that old, tired accounting system to one of today’s new offerings.

  1. Errors tracking time and equipment. Paper based tracking systems invariably lead to mistakes, but when those mistakes show up in somebody’s paycheck as the result of mistaken record keeping, things can get a bit testy.  Multiple teams performing manual time entry on paper sheets is one such recipe.  Not to mention a lack of insight into T&M performance (since it’s all written down instead of inside the computer).  Today’s modern systems provide web-based data collection opportunities for remote employees.  These can feed payroll – or a payroll service – and later provide all the reporting a company needs to track and manage its service performance.
  2. Document delays that slow month-end close. We see it all the time: companies that can’t close their books within a couple days of month-end.   (Some can’t do it within a couple months!)  While there are a host of causes, most have to do with manual processing of various sorts, often coupled with high transaction volumes and multiple silos of unconnected information. An ERP system is built to manage and consolidate exactly this type of month-end chaos.
  3. Service and warranty confusion. Service management software, often built piecemeal a decade or two ago and with few links to accounting, can cause delays to service work, lack of up to date inventory information and poor warranty tracking that makes tech’s lives difficult.  A fully integrated modern system utilizing tablets in the field can record service work, material consumption and keep warranty information up to date.  Orders can be placed and managed, and inventory and assets can be tracked accurately and almost instantly.
  4. Inaccurate inventory levels. Whether you’re in retail, wholesale or manufacturing, inventory counts.  Errors in counts, lack of consistent cycle counting, month-end closing complications, difficulty with counting bulk-weight items (like nuts and bolts), and no inventory into warehouse moves or inter-store transactions are but a few of the ways that inventory can become inaccurate, or worse.
  5. Unsupported inventory practices. A lot of older systems do not support all the recognized inventory accounting and costing practices (like LIFO, FIFO or Standard) or, if they do, they are often awkwardly implemented and difficult to use.  This can lead to using spreadsheets to manage inventory.  But manufacturers need to be flexible enough to manage processes unique to their particular build-to-order or build-to-stock or engineer-to-order requirements.   Today’s newer systems allow for better synchronization of build-to-order and –stock situations, and allow for a choice of costing systems (typically Standard, Average, LIFO and FIFO) which, with careful management and implementation, can better match up with manufacturers’ exact requirements.

Time and space prohibit us from sharing even more red flags.  Suffice it to say that if even a few of these issues are yours or sound familiar, it may be time for you to start your search.  The answers lie in today’s advanced, sophisticated, and yet very cost effective new ERP systems.

 

 

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