ERP for 2016

November 27th, 2015 by Stephen Jones Leave a reply »

Enterprise software spending is forecast to decline 1.2% in 2015,. Gartner said software as a service (SaaS) is about market share, not profitability. Gartner also said that IT services spending in 2015 is projected to decline 4.5%. Gartner said it expects modest increased spending on consulting in 2015 and 2016, as vendors have demonstrated their ability to stimulate new demand from buyers looking for help with navigating business and technology complexities, particularly related to building a digital business.
However, the forecast for implementation services has been slightly reduced. Increasingly, Gartner said, buyers prefer solutions that minimise time and cost of implementation, driving demand for more-efficient delivery methods, out-of-the-box implementation, and lower-cost solutions.
The activity is stronger than the growth in spending indicates. Switching to ‘as a service’ delivery, masks the increase in activity.
Many of the world’s nations, including the UAE, have made strides in smart government and smart city initiatives, using machine-to-machine (M2M) solutions that combine sensor data with advanced algorithms and artificial intelligence (AI). According to Gartner, these systems are making “increasingly significant business decisions over which humans have decreasing control”.
Advancements made in M2M, both in capability and affordability, have accelerated the adoption of solutions, but now, among business leaders, such systems are seen as a threat rather than a benefit to the enterprise.
“As smart machines become increasingly capable, they will become viable alternatives to human workers under certain circumstances, which will lead to significant repercussions for the business and thus for CIOs,” said Stephen Prentice, vice president and Gartner Fellow. “In the 2015 Gartner CEO and business leader survey, opinions were equally divided on this issue and indicate that business leaders are starting to take notice of the advances being made and more readily acknowledge that the threat to knowledge work is real.”

A recent e-book analyzes the challenges software buyers face when purchasing an ERP system, and tries to guide them through the potential pitfalls that litter the software selection process. http://www.softwareadvice.com/erp/buyerview/report-2015/

Well there is some useful insight, however let me give a 40 year’s hands on perspective.

“We found 59% of ERP buyers cite data integration as the top reason for purchasing a system, while a staggering 24% of users say their current system lacks adequate support.” That really means users are fed up with existing multiple unintegrated systems and want a single integrated system. Not supporting integration is more a reason for ruling out a system” but not for ruling in.one

For any company large enough to need an erp system its likely they will have additional systems, or external partner systems that need to e interfaced- the IoT will extend this need – so integration ease has to be considered.

The first time users largely focus on price, and ease of use
The second time its more about finding the right partner, and the functional and vertical capability.
With regard to support I am surprised the criticism identified by the research isn’t much larger – for us, our support is a major selling point and we pick up a lot of failed projects because of support issues customers experience. Without wanting to sound arrogant its not feasible for freelancers for a small company to properly implement a tier 1 erp systems across the multiple, functionalties and technologies. one project and all their resource is tied up for several months. they don’t have the facilities for test nor the time to train. implementing tier 3 back off solutions with 2 or 3 people in 2 months is not the same implementing a Tier one system with a broader scope of features and multi company, multi geography complexities that need a much larger team for a much longer time> That has many implications from Project management differences, to the end for a larger more senior and more stable consulting tem to see a project to the end and for ongoing support. Offshoring, freelancing, sub contracting or whatever else its called may deal with the easy, repetitive , grunt work but for Tier 1 its not the way to build a groups mission critical business system.
Professional consultancies don’t claim to do miracles in no time if they do then beware. if the price looks too good to be true then it is.
Some key factors that frustrate erp success:
You will not get the benefit of an integrated system if you then implement it on functional lines. IT and finance are hung up on their responsibilities for e.g. segmentation of duty, data protection etc which all too often misses the point of an integrated system. Business process are implemented cross function- the functional hierarchy of finance, HR etc, do not support the real business processes of customer satisfaction, or maximizing cash flow. Users need to take decisions in an informed context.

A master scheduling system is no use, when not used. Such a system needs aligned business functional strategies , Sales Operation and Finance meeting to set the company game plan and review it regularly e.g. monthly, is essential (it should reflect the length of the supply chain and stability of the schedule, and the time it takes to react e.g .to add or remove extra shifts) and it is not much use having such a system without a master scheduler with the authority to manage the business game plan, and call the shots once the Sales Operation and Finance goals are agreed.

There are myths and divided opinions about whether or not customisation is good or bad, and whether policy should be dictated from on high with cases and workflows and alerts, or whether managers should have autonomy, skills, and information to make good on the spot decisions. Erp is good for standardised back office system where there is compliance to agreed standards e.g. ifrs.
However vertical features and differentiation from competitors need point solutions A car, a shopping trolley and a bus all have wheels and can move things around but are generally not interchangeable – there are times when you need the right tool for the job. The key is to spend your dollars on what helps you better make money, rather than on those functions where out of the box will do.

Most companies spend more on their company cars than on their business systems. Mangers spend more per hour on someone to have someone paint their wives toenails than they expect to pay for a consultant with 20 year’s experience. Erp systems for a mid size company would have cost several millions $s in the 80’s and to provide an acceptable payback of 3-4 years.
Now companies squeal at paying a 1/0th that cost. If something looks too good to be true then it probably is. Just because a salesman tells you what you want to hear does not mean you should not make a sensible decisions.
Erp systems grow and add more modules and features- those extra features don’t implement themselves and budgets need to be appropriate to the scope.Buying a Ferrari and not paying for driving lessons, and only using first gear does not make sense. Betting your business system on the cheapest quote you can get ,with no support, and is an option many take- and correlates directly to success rates.
Start with a business case. How do you make money?. How is this project going to make a difference? Does that translate to objectives with specific targets, timelines and owners? Does that give an ROI? If not then why are they expected to just happen? . Whose project is it? yours or the consultants’?
Why do you want to do anything at all?
Does the software really provide what you need?
• Are you buying because the IT manager wants it on his cv?
• Or because the auditor says so?
• Your customers demand different controls or service?
• Because you have problem to solve.
• Or is to remove bottlenecks to grow??
• You need to show formal controls and reports for investors? Maybe for an ipo?
• Has management become a bottleneck
• Has the business diversified, or expanded to new regions?.
• Or because you have a clear vision of how it will make a difference and what it takes to make it happen.
• Which is more important? A software with more features, or one with lower costs, or a partner with a track record of delivery and support whatever the solution, or vertical?
• Pretty dashboards for the boss, or easy to use for employees, or better customer service?
• Should managers or operators make the selection?
Its easy get lost in a 1000 rfp questions and most vendors give the same answers – yet there another 1000 equally important set of questions nobody thought to ask. The chances are it still does not tell the consultant what he needs to implement or what is the real need. Narrow it down to 3 must haves (the main reason to buy) – and 3 show stoppers (can’t work without) per function and focus your time on those.
Don’t treat professional consultants like hired plumbers. Let them add value. Fixed price fixed deliverables do not invite suggestions of good ideas or sharing of best practise experience. No matter how good your management team they don’t have the same exposure to how technology can be used. 20 years ago no-one knew they needed washed lettuce, so they never asked for it but its a $4bn business now.

With the advent of the cloud and modern systems like Dynamics Ax, Dynamics CRM, Office 365, BIM, Holo lens, predictive analytics, cross platform operating systems like Windows 10 the opportunity to forge ahead or to fall behind is ever greater. Professional advice and guidance is essential. Global players tend t strait jacket your business with blueprints and accelerators i.e. do it our way and change your business or pay a lot more. Traditional Systems integrators, with industry professionals, and focus on a specific erp system and verticals are consistently the ones that deliver. If an 18 months IT graduate is trying to advise you on your CFO on his global chart of accounts then both companies have missed the point and frankly deserve to fail.
its not difficult to succeed- be clear what you want to do , what it’s worth and what it really takes then work with someone who is known to deliver and work with them – at the end of the day its not the consultant’s project- if you want to succeed then take ownership and work shoulder to shoulder. Sign your charter make it public and find an executive champion.

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