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Posts Tagged ‘ERP’

Our cohorts at Panorama Consulting often write good pieces about the importance of business process change management, especially when it relates to firms in growth mode who also happen to be implementing success strategies and software systems aimed at supporting that growth.

Recently they penned a piece on the topic of what you can learn from your business process management mistakes.  Because we also spend our days reviewing firms’ business processes, we thought their words worth sharing with our audience.  You’ll find their original piece here.

 

Just as researchers search furiously for the cause of disasters involving ships and planes, they suggest we too search for causes behind operational disruptions, which often cause morale problems among employees, inadequate software implementations and customizations, frustration all around, and low benefit realization.

To learn from our failures, the authors suggest we

  • Forgive – “Take a deep breath, forgive ourselves and others” to gain a clear head.
  • Analyze – Conduct a “lessons learned meeting to review project deliverables. Quantifying the direct and indirect costs in terms of time and money will give you an idea of the benefits you’ll need to realize to achieve a positive ROI on failure.”
  • Disseminate – Share lessons learned across the organization.

Panorama notes that “operational disruptions can be avoided by developing an effective business process management plan.”  They suggest including…

  • Business Process Mapping. We wholeheartedly concur, because any successful implementation always starts here.  At a high level, we map current processes and future-state processes, looking for technology touch points, redundancies (and ways to eliminate them), and how to do away with multiple and sometimes proprietary silos of information.  You reengineer your processes in order to optimize your workflows, both human and machine, to best capture the talents of your organization and the areas where you lend the most value to your customers.
  • Organization Change Management. Implementing new business solutions can often result in a decrease in productivity initially.  As the authors note: “Business process management cannot succeed without customized training and targeted employee communication, both of which should begin before software selection.”
  • Continuous Improvement. It’s a mentality.  And it will help ensure that you maintain optimized processes consistently into the future.  Set KPIs and other benchmarks which allow you to record progress and build toward improved performance.  Measure regularly.  If you can’t measure it, you can’t improve it.

Good advice all to anyone implementing process change, organizational change, or structural changes from software to process management.

 

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An ERP software provider called Abas (abas-erp.com) recently released a paper called “Writing a Better RFP” intended to advise companies on what’s wrong with most of their RFP processes, and how they might do better.  While we have no affiliation or relationship with Abas, we thought their advice was very wise and up-to-date in tackling the old paradigm for software selection.

Abas points out two flaws in most companies’ current Request for Proposal strategies:

  1. Putting excessive internal resources into filling out unnecessarily long RFP templates, and
  2. Paying third-party RFP specialists to create complex RFPs.

They make the point that these methods do little more than to make the process very expensive and bog down the selection process – and are of little help in selecting a vendor anyway.

The article’s author goes on to point out that today there are a great many common core functionalities across ERP packages.  Your goal should be to “reveal areas of competitive differentiation between potential vendors.”

So skip the generic questions they advise (which virtually all of today’s modern packages can handle) and cut to the questions that really matter to your company’s work, and how you run the business. They give the example of: “Is the ERP system capable of recommending an available-to-promise date or hard allocating inventory at order entry?”  You get the idea: ask the questions that are truly your choke points, or that relate to your competitive differentiators, to understand how the solution could improve your workflows.

Also, they advise: ask questions that seek to determine whether the vendor has experience and domain knowledge in your particular industry.  In this regard, all systems – and all vendors – are definitely not the same.  You want not just software fit, you want implementation expertise.

Abas points out – and we could not agree more – that RFPs are far too lengthy, and we too often find them filled with hundreds of largely irrelevant, or at least ‘generic’ questions that waste everyone’s time, and do nothing to help you establish clear winners or losers.  They further advise to give more ‘weight’ to the more important questions (to your business) and to the perceived expertise of your provider, and less weight to many of the generic components that most any system can handle, so you’re weighing in a manner that’s relevant to your most important needs.

What’s the right number of questions?  Believe it or not, Abas suggests (and again, biased or not – we prefer to think of it as ‘experienced’ – we couldn’t agree more…) that about 10 to 15, industry-specific  questions will tell you all you need to know to differentiate among vendors. 

Your RFP should be proactive, not reactive.  It should ask the questions most critical to the issues your business faces – and not just short-term, but down the road as well.  What emerging technologies might cause you disruption?  How well will your solution scale, or morph to fit your possible future needs?  Can it be changed and modified easily, and by whom?  All good food for thought.

And finally, ask yourself: Are you looking at cost, or value?  Sure, cost is important and the bottom line matters.  But focusing on cost alone is short-sighted.  Look at the bigger picture: total cost of ownership (TCO), along with the value proposition to your business over the next ten years, not the next two or three.

 

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A lot of companies fall into the “We Have To” category when it comes to upgrading their business software.  As in, we have to, because… our software is terribly old and outdated, or… it’s not supported any more, or… we’re so heavily modified in unnecessary ways that it just makes sense to start over.

Valid considerations all.  But should they be the foundational purpose – the raison d’etre if you will – for your upgrade?  In a word, no.

In fact, software upgrades provide the perfect opportunity to take a big step back.  Instead of simply replacing your old technology, you can recognize that software has taken huge leaps in the past few years, and that a new implementation is the ideal time to look at the big picture, the new tools, and the process realignment and organizational change management that fit so perfectly with a new system or upgrade.

View your effort as a digital transformation project, says Eric Kimberling, CEO of Colorado’s Panorama Consulting.  He recommends that companies “step back and define a clear vision for [their] ERP.”  He suggests that companies ask themselves: “What exactly are you trying to accomplish?  What business improvements do you expect?  How will modern technology help you realize those improvements?  How will your project governance align with those goals during implementation?”

It’s the right time to clearly define the benefits you expect to derive from your new system, and to better understand your own internal processes and workflows, whether automated or not.  You can then look at who is responsible for what, to determine whether that’s properly aligned – something the odds are you haven’t looked at in a very long time.

Your business case should extend beyond merely justifying your project.  You should be able to create gains, and then track those efforts in whatever sort of scorecard works for you going forward.  Defining just a few key performance indicators, and then monitoring these over time, remains one of the best prescriptions for implementing a new system that we’ve ever heard, or given.

As an added incentive, it’s worth recognizing the plethora of tools now available that didn’t exist, at least in manageable form, even a few years ago.  Business Intelligence reporting is a key one.  Companies today are finding gold from analyzing all the data they can get their hands on, often in unexpected places.  And when it comes to saving money through better understanding of your key business data – like inventory, turns, cash turnover and the like – it’s worth the investment.

It all comes down to planning.  If you work with your internal staff and a good outside consulting team, you’ll find it won’t take very long to get the momentum rolling toward improving your processes, refining your strategies, streamlining your workflows, and turning the “we have to do it” implementation blues into the “why did we wait so long” jig.

 

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Michael Hartmann is CEO of QBS Group and a former Microsoft employee.  In a recent article, he writes about how he thinks ERP buyers will approach Dynamics 365 Business Central (the ERP system formerly known as “Dynamics NAV” or “Navision” for those keeping score), as well what it means to the market and to resellers (like us!).  We’ll share a few of his thoughts here today.

The news is really very good, Hartmann notes.  From a bumpy start in a dual-world of NAV software and the new sort-of NAV D/365 platform, Microsoft has now finally moved to a much clearer path “knowing that it is not just cloud enabled, it is actually developed from the ground up to be the SaaS platform for Dynamics in small and medium businesses. Microsoft will keep a dual strategy, allowing the partner and customer to choose respectively on-premise (Dynamics NAV 2018) or a cloud deployment.”

Hartmann points out that with the new Business Central product now fully available – all based on the original NAV code base – the question arises of how quickly it will be adopted by the marketplace.  He argues that some of the basic rules of the ERP market have not changed.

For one thing, despite the cloud positioning, most existing clients have modifications to their systems.  Migrating these capabilities, Hartmann says, will take time and investment by capable partners, in order to move these modifications into the new “extensions” model Microsoft is providing for modifications to its cloud product.  And, he notes: “customers want to work with an ERP solution that has industry capabilities and they need to mirror business processes that reflect the specifics of their industry.”

Finally, he comments on the path forward for resellers:

“Selling, configuring, deploying, and supporting an ERP platform requires specific skills. Partners will be held accountable if the ERP system does not produce the desired business impact and keep the operation up and running. It is not an easy “expand to ERP” move for an IT partner.

“As a result, generally speaking, only when the trusted partner of an ERP customer is ready to offer migration services will customers go to the new platform, such as Dynamics 365 Business Central.  And it is not the type of quick upgrade that many of us have seen in the past with Office or other productivity apps. Microsoft has considered this and is now investing heavily in a program called Ready-to-Go. This program allows [the reseller] to run through a set of milestones that will make sure [an]existing NAV solution can be successfully migrated and deployed on Dynamics 365 Business Central. Hitting these milestones requires training and work from multiple resources inside a partner organization.

The conclusion to be drawn is that the move from on-premise to cloud will be a journey – something we’ve expounded on many times in the past.  It’s an evolution, not an event.  The great news is that current NAV clients can be confident that their solutions are going to run – either on-premise or in the cloud, at their choosing – for a very long time to come.

And that is very comforting and reassuring to everyone – customers, users and resellers alike – indeed.

You can follow the full text of Hartmann’s article here.

 

 

 

 

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As ERP implementers, we’ve seen many of them: the signs that an ERP project is in jeopardy.  Or in some cases, we get called in after it’s happened, and are asked to help set things right.  In that sense, we’re in the same business as the folks at Panorama Consulting, who recently released a brief outline highlighting some of those very warning signs.  Their list was complete and good enough that we thought we share excerpts of it in our post today.  Here then is their Top 10 Warning Signs list:

 

  1. Unrealistic implementation project timeline, budget, and resources. Unrealistic expectations lead to bad decisions.  A strong dose of reality goes a long way.  This one’s more common that you think – and no one thinks it’s going to happen to them.
  2. Lack of involvement from your executive team. Exec involvement needs to go beyond approving budgets and timelines, and must include being involved in key decisions all along the way.
  3. Unclear business processes and requirements. Take time to complete this step clearly, in writing, with full team cooperation before you begin your implementation process.  The Business Process Analysis is the critical first step toward project success.
  4. Not enough time spent on business process reengineering. If you don’t refine and redefine your business processes, you’re just “paving the cow paths” as they say.  Or automating already inefficient processes that “bake in” those inefficiencies for the long run.
  5. Your organizational change management strategy consists solely of end user training. User training is important, but it’s only one component of what you’ll need to overcome resistance to new ways and new systems.  Change-impact plans and constant communication are required.
  6. Too little or too much dependency on outside ERP consultants. Don’t underestimate your need for outside help, but don’t “outsource” your whole implementation either.  Remember, it’s your system, and you need to own it.  Find the balance that leverages outside help while allowing your team to take project ownership for the long haul.  It’s hard work.
  7. Ill-defined project governance and controls. Make sure you have clearly assigned approval processes in place for changes and change orders.  Scope changes, customization requests and unexpected challenges need to be met with an intelligent process that vets each change, if you want to keep your project within scope, budget and timeline.
  8. No business case or benefits realization plan. You can’t improve what you don’t measure, so be sure to have benchmarks, goals and KPIs (key performance indicators) defined and thought through before you begin to implement.  As Panorama says, your ERP investment should be “a tool to manage and optimize potential business benefits during and after implementation.”
  9. The project is managed like an IT project. The only truly successful projects, as benchmarked by several of the criteria above, are those that approach ERP as a strategic business effort.  While ERP involves technology, in the end, it’s about the business, and not the technology.
  10. You don’t have a contingency budget. Most projects don’t go exactly as planned, and you don’t want to “paint yourself into a corner,” as Panorama notes.  Plan, budget-wise, for the unexpected, so you can finish up your project satisfied that you completed your goals.  They recommend 15% to 20% of expected project cost as a contingency.  A word to the wise.

We agree with Panorama’s assessment as shared today, and encourage anyone to match up their own ERP project goals and parameters with those listed above.  Thinking about them will be some of the best time you’ll spend in your entire project.

 

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ERP blogger Eric Kimberling points out reasons that he, we and others have seen lead to project failure.  He lists a few in a recent post, including:

 

  • Lack of executive buy-in
  • Poor project management and controls
  • Unrealistic expectations early in the project
  • Too much focus on the technical aspects of the implementation
  • Choosing the wrong software for your organization
  • Too much customization of the software
  • Failure to regularly identify and mitigate implementation risks along the way

To avoid project failure, Kimberling gives three tips if you’ve gone off the tracks:

  1. Perform an assessment of your current project. Start by assessing project management, governance, and controls; organizational change management; data migration; business process reengineering; testing; and integration and customization.  You’ll zero in pretty quickly on your Achilles Heel.
  2. Look for common warning signs. Was there insufficient testing… not enough conference room pilots… too few users involved… not enough attention paid to the non-technical aspects of implementation… too little regard for customizations or configuration required to meet your team’s workflows?  Caught early, most are easily remedied.  Just don’t be afraid to pull the project stop cord for a bit when you see them.
  3. Develop a project recovery plan. To correct issues or remediate risks revealed by the warning signs, have a plan.  It can be formal or, more likely, updates to your current implementation plan.  Include people, processes, and technology and don’t try to solve world peace in one pass.  Pick the low-hanging fruit, starting if possible with the areas having the greatest impact on operations.

These simple tips won’t rescue a totally failed implementation, but if you heed the early warning signs, you can eliminate some back-tracking, focus on just the next couple of steps, and regain your footing until you merge back into the original, if now slightly altered, game plan.

 

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For a long time, the idea of implementing ERP and getting lean seemed like they were worlds apart.  ERP was robust and embraced all aspects of the business:  analyzing sales trends… forecasting inventory… pushing materials through production… managing the many aspects of the business.  Meanwhile, lean was small and responsive… material is pulled through production… just-in-time inventory planning becomes paramount… paring things down to their simplest proportions and keeping things moving constantly are key.

And yet.  When you look at lean coupled with ERP—as so many companies do today – you begin to see the synergies.  Streamlining processes (via lean), then automating them (via ERP).  Stripping complexity down (lean) and then using the improved process repeatedly throughout your workflows to eliminate redundant steps and waste (ERP).

Take kanban.  These are visual signals used to resupply inventory.  They’re an important early step in the lean process, and especially effective in single plant locations.  ERP supports kanban by turning these visual signals into electronic trigger points, and they work just as effectively across multiple locations.

A key principle of lean is the just-in-time inventory noted earlier.  You want just enough material to meet demand and keep flow moving.  It’s all about eliminating waste.

Well, with ERP, you can analyze individual workstations or shop floor cells.  You can investigate and analyze the impact of, say, setup times or machine changeovers or maintenance, and their effects on the overall schedule plan.

In the same vein, your ERP reports provide you with the data you need to compare your current inventory levels to your sales demands, and adjust accordingly – and quickly.  That’s critical to keeping inventories low, just-in-time and always moving.

In similar fashion, ERP can identify and track waste, the bane of lean.  You can’t improve something unless and until you can measure it, and with the right ERP setup you can track your most wasteful production areas, and know where to focus your efforts to eliminate it.

In other words, ERP allows you to analyze all of the many factors that come into play on the shop floor, and throughout the business.  It can provide the raw information you need then to begin to identify mistakes, inefficiencies and waste – on the way to getting lean.

We’re big believers in the combined power of lean and ERP.  In our view, they go together like a hand and glove – and together, they are the single most important factor in improving performance and profitability among firms that are growing – and those that want to grow.

 

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