🧮ERP: Planning (Part I: It’s all about Partnership - An Introduction)

ERP Implementations Series

Unless the organization (customer) implementing an ERP system has a strong IT team and the knowledge required for the implementation is available already in-house, the resources need to be acquired from the market, and probably the right thing to do is to identify a certified implementer (partner) which can fill the knowledge and skillset gaps, respectively which can help splitting the risks associated with such an implementation.

In theory, the customer provides knowledge about its processes, while the partner comes with expertise about the system to be implemented and further technologies, industry best practices, project methodologies, etc. Further on, the mix is leveraged to harness the knowledge and reach project’s objectives. 

In praxis however finding an implementer which can act as partner might be more challenging than expected. This because the implementer needs to understand customer’s business and where it’s heading, bridge the gap between functional requirements and system’s functionality, advise on areas of improvement, prepare the customer for the project and lead the customer through the changes, respectively establish a basis for the future. Some of the implications are seldom made explicit even if they are implied by what is needed by the project. 

Technology is seldom the issue in an ERP implementation, the challenges residing in handing the change and the logistics required. There are so many aspects to be considered and handled, and this can be challenging for any implementer no matter how long has been on the market or how experienced the resources are. Somebody needs to lead the change and the customer seldom has the knowledge to handle the change. In some cases, the implementer must make the customer aware of the implications, while in others needs to take the initiative and lead the change, though the customer needs to play along, which can be challenging also. 

Many aspects need to be handled at management level from a strategical point of view on customer’s side. It starts with assuring that the most important aspects of the business where considered, that the goals and objectives are clear, that the proper environment is created, and ends with the timely decision-making, with assuring that the resources are available when needed, that the needed organization structures and roles are in place, that the required knowledge is available before, during and after implementation, that the potential brought by the ERP system is harnessed for the years to come. 

A partnership allows in theory splitting the implementation risks as ERP implementations have a high rate of failure. Quite often the outcomes of such projects don’t meet the expectations, the systems being in extremis unusable or a bottleneck for the organization. Ideally one should work with the partner(s) and attempt solving the issues, split eventually the incurred cost overruns, find a middle way. Most of the times it’s recommended to find a solution together rather than coming to a litigation. 

Given the complex dependencies existing between the various parts of the project, the causes that lead to poor implementations are difficult to prove, as there are almost always grey areas. Moreover, the litigations can require a considerable time and resources to settle. These can be just extreme situations, and as long one has a good partner, there’s no need to think that far. On the other side, even if undesirable, one must be prepared also for such outcomes, even if the countermeasures may involve an additional effort. Therefore, one must address such issues in contracts by establishing the areas of accountability/responsibilities for each party, document adequately the requirements and further (important) communication, make sure that the deliverables have the expected quality, etc.

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ERP Systems: ERP Software Predictions for 2010

    Again on Panorama Consulting Group’s 360 ° Blog post on Top Ten ERP Software Predictions for 2010. Sorry, given the current economical context, excepting the eventual acquisition moves and few sporadic attempts to change something in ERP vendors’ strategy I don’t feel anything big coming for the next year. Most probably ERP vendors like any other companies will be more focused on cutting down losses, reducing the headcount, introducing one or two features in their products, maybe putting on hold some of the projects they are working on unless immediate profit is expected, the shift changing from “thinking big” to “focused thinking”, keeping the flag up.

    It’s true that the crisis we are going through stresses the importance of having tangible benefits after implementing an ERP solution, cutting down the costs, breaking such projects in easily chewing pieces in the attempt of reducing the risks and obtaining results faster, though whether phased rollouts is best approach for that it’s more a philosophical question. Even more, an ERP solution is just a piece of the puzzle, you have to consider in the end the overall infrastructure, the many other systems floating around as isolated islands, the culture of people, the maturity of the business, and maybe the most important - the means by which an ERP system could be leveraged to higher level of performance, and maybe this is the best factor considered when calculating the ROI; however you can’t achieve that if you’re not having in place adequate (business intelligence) tools and mindset to derive benefit out of your ERP system! Maybe that’s the direction CIOs have to follow – striving for performance and eliminating waste, thinking lean and green, sustaining business value.

    The crisis stressed also the importance of having in place adequate risk management, though that have been on managers’ plate since several good years, and if they ignored it until now, most probably they won’t change things over night, as some experience and again mindset is required in order to get things right.

    I agree on the increased adoption of SaaS by SMBs, though I wonder if that can be achieved at large scale, how SMBs will deal with specific requirements, how they will integrate the SaaS ERP solution with the existing systems. I don’t think the ERP and SaaS market is mature enough to address the challenges concerning the merging of the two solutions, of course that don’t mean that attempts won’t be made in this direction.

    For small vendors will be difficult to enter on a market dominated of giants like Oracle and SAP, it takes lot of time and effort to come up with a feasible ERP system, maybe small vendors can better address the requirements of SMBs by offering more customized solutions, better and cheaper support than big vendors do. Everything is possible, first of all you need to have a good product, a good marketing strategy, gain customers’ trust and maintain it over time.

🧮ERP Implementation: The right ERP software

ERP Implementations Series

Reading an interesting post in Panorama Consulting Group’s 360° Blog on Top Ten ERP Software Predictions for 2010, I was struck by the syntagm “choose the right software for their organizations”. I know from my own experience that this is a quest for Pandora’s Box, no matter how much we like to be confident and connoisseur about it, in the end is just philosophy.

Putting myself in the position of IT Manager or whoever implied in taking decisions related to software adoption I would ask myself: “what’s the right ERP software for my company?”. In theory things are not complicated, I evaluate my requirements and the functionality provided in the various ERP solutions, the costs involved with them, the amount of time and resources I can afford, and in the end I choose whatever may seem appropriate for my business model. It sounds simple, isn’t it? Of course, this supposing that I understand my business as a whole, its infrastructure and its culture, the issues it faces, the short term needs vs. the long term needs, that the requirements are defined upfront, etc.

In order to be sure that I’m doing the right thing, I even discuss with the sales representatives of the ERP vendors, have maybe one or two presentation sessions supplemented by a Q&A session in which my most experienced workers from each department express their concerns, ask for details, etc. Now jumping over the fact that the presentational skills and convincing tone of the sales representative might be a decisive factor in choosing a solution, I realize that the most important ERP solutions offer relatively similar functionality, most probably the differences rely in details. Now, there are a few questions that might occur to me… 

How much the people in the room, who maybe never worked with an ERP system, would understand what an ERP system is about? How much can they articulate their needs, identify which are the details that makes the most important impact on the business? How much the sales representative has understood my business and the overall context? In definitive he’s just trying to sell a product, how much he’s willing to dive into my requirements, analyze them and identify feasible solutions? Actually for that a few presentation sessions are not enough, it might take weeks, a whole team of resources, multiple iterations until you’ll come up with a feasible solution. Even then, once the ERP system is in place you observe that it doesn’t look exactly with what you wanted, with what you team intended, but that’s normal for IT solutions, unfortunately.

Sometime after Go Live, most probably the employees will understand what an ERP system is about – sticking to the processes, data ownership, more time spent on data entry and data management, unified implementation starting with the strategic planning and ending with the booking of revenue, dealing with issues not considered during implementation, functionality that is not so easy to use as expected so Excel or MS Access seems to be a more flexible solution, difficulty of changing the system and processes when needed by the business, more systems need to be integrated with it, that the 360 ° overview of the business is just a myth, and so on. From my experience I observed that the users have great expectations before and during implementing an ERP system, though the reality brings them down to earth, almost no magic behind the software the whole company was talking about, just a different way of approaching things!

The fact is that the decision of going with one ERP solution is validated only by the final outcome considered on long term, the impact it has on the business, the overall adoption and the degree to which it will fit the business needs, the flexibility of modifying it when needed. On the other side, if the ERP system doesn’t impact the business in a negative way, then the system can be considered successful, even if creepy things come to the surface from time to time. Was it the right decision? That I will not know for sure unless I’m moving to another ERP solution and I can compare the outcome with what I had in place, otherwise we just consider hypothetical situations. Actually the comparison might not be well founded because in such situation I benefit from the experience of already implementing an ERP system, I better understand the issues I was confronted with and eventually better address them in the new implementation.

The important point I would like to highlight is that a company needs to have a certain maturity when going with an ERP solution, situation that needs to be addressed by vendors or/and organizations themselves in order to increase the chances of success, otherwise the mixture of acronyms like ROI, CIOs, SMBs, SaaS, ERP, CRM in vision philosophies are just nice stories to read before going to bed. Of course the learning by doings syntagma can be applied to ERP implementations too, though the costs are too high for such a scenario. 

The state of art in ERP world – the vendor wants to sell you a product and profit on customer’s expense also after doing that, often not being interested whether the product fits the purpose as long more issues lead to be more income, while on the other side the customer wants an affordable flexible solution that allows bringing the business to higher level of performance. Most probable something must be changed in how the two parties work, and this might be, at least from my point of view, the most important challenge for the next years.