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Is Postmodern ERP Right for Your Organization?

Is Postmodern ERP Right for Your Organization?

With advancements in technology and faster, more reliable internet capability, we’re seeing more organizations use a mixture of IT solutions to address their specific needs. This mixture is sometimes referred to as a postmodern ERP approach.

A postmodern ERP system might be configured many different ways, but primarily it’s understood as an on-premise system augmented by several SaaS solutions that have been tightly integrated with the on-premise system.

The term postmodern ERP was coined by Gartner, identifying it as:

A technology strategy that automates and links administrative and operational business capabilities (such as finance, HR, purchasing, manufacturing and distribution) with appropriate levels of integration that balance the benefits of vendor-delivered integration against business flexibility and agility. This definition highlights that there are two categories of ERP strategy: administrative and operational.*

In other words, there are multiple parts to a postmodern ERP system: from financial, supply chain and manufacturing modules to marketing and staff management modules. What is required is a core ERP system with integration of various components that enhance the core – all designed to meet an organization’s unique needs.

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While most large organizations tend to use on-premise, all-inclusive ERP solutions, the trend is moving toward the postmodern model. This is due to the unique role ERP vendors play, especially those that operate as SaaS companies. These vendors provide a level of flexibility that less nimble providers can’t. SaaS providers often focus on niche functionality that some of the larger players don’t address very well.

The postmodern ERP trend will likely continue and evolve into greater integration of in-the-cloud core systems with continued integration of other solutions. Because this trend is not lost on many of the smaller solution providers, they often position their compatibility with the larger ERP systems as a component of their value proposition.

It’s not just niche software providers who are benefiting from this trend. Systems integrators and other IT companies are positioning themselves as experts on the complex integrations and customizations necessary to make postmodern ERP work.

Should You Consider Postmodern ERP?

The important issue to remember regarding the move toward postmodern ERP software is that it is a strategy and an approach, not a product. There is no “Postmodern ERP” product developed and sold by ERP Company, Inc. In our experience with clients, we’ve found that some organizations find this approach ideal for their needs, while others find it too cumbersome and costly.

Organizations considering a postmodern ERP implementation must do a great deal of homework to determine which new software will work well with existing systems and who will handle the integration and future management.

Larger corporations may find the postmodern approach more attractive, as they likely have a robust IT budget and in-house expertise to effectively manage the implement a new digital strategy.

Smaller organizations, with more limited budgets and smaller IT departments, might find the work necessary to pull off a transition to a postmodern ERP environment too cost-prohibitive. If the new environment requires a great deal of manual intervention and data does not seamlessly flow from one system to the next, then a move to postmodern ERP might be a waste of time and resources. In our project recovery engagements, we’ve seen how data inconsistencies can cause a ripple effect throughout the organization, setting the company back financially and impeding their customer engagement and growth strategy.

Postmodern ERP Challenges

For any worthwhile endeavor, especially those that could have a transformative effect on an organization, there are always pitfalls and challenges. While pitfalls should be avoided, challenges should be identified and embraced. The key to any organization hoping to transition to a postmodern ERP environment is to embrace and overcome those challenges.

Integration

Although a postmodern ERP system may be an ideal solution for many companies, it usually requires a great deal of integration and oversight by IT personnel. A vital component to managing pre- and post-integration is the ongoing management. After different components have been integrated, individual solution providers may change a component of their software. If that is the case, a refinement of the original integration may be required. Being aware of and planning for these situations will be important for those with hands-on management of this process.

Customization

In addition to complex integration, customization will likely be required, depending on how the add-on is developed and the functionality the organization is hoping for. Customization may be ongoing in a postmodern ERP environment, as specific requirements from different solutions could change every so often depending on industry standards, changes in reporting, etc.

Training

If using different, yet integrated, systems in a postmodern environment, training of employees may be different from one system to the next. Anticipating training needs, investing in the training and being aware of when functionality changes from one solution to the next should be factored into the transition. We frequently use change management plans at organizations experiencing significant technology changes.

SaaS Service Level Agreements

Finally, support will likely vary from solution to solution. Even if a postmodern ERP system is so well-integrated that it runs like a Swiss watch, one weak link in a particular add-on solution could impact the entire system. Isolating the issue could prove problematic, especially with multiple add-on systems. It will be important for any organization implementing a postmodern ERP system to clearly understand what is and is not included in the service level agreement (SLA) associated with individual solutions. It’s also imperative that organizations understand if warranties and support have been voided based on certain customizations.

Postmodern ERP Checklist

Similar to the due diligence performed during an ERP selection, organizations should approach a transition to a postmodern ERP environment with discipline and commitment. Several items should be included on an organization’s checklist:

Stakeholder Involvement

As is often the case when making enterprise-level decisions with organization-wide impact, a team of stakeholders should be involved. Since several different systems will require integration into a core system, stakeholders from the impacted departments should have input into what processes are most important to their area. Focus on business process management as early as possible.

ERP System Evaluation

Since the notion of a postmodern ERP environment means dealing with several distinct solutions, a thorough understanding of what each provider offers – and doesn’t offer – is paramount. It’s also necessary to understand how warranties and SLAs will be impacted if integration requires a great deal of customization. If customization voids certain SLAs, the organization must determine if their in-house support team is capable of addressing issues as they arise. Finally, if significant changes are made to SaaS solutions that have been meticulously integrated into a core system, a significant upgrade to that solution might require another intricate integration.

Total Cost of Ownership Analysis

As mentioned earlier, some postmodern ERP systems may be cost-prohibitive. The total costs must be weighed against other solutions that might be more balance sheet-friendly. The overall cost of doing nothing should also be weighed against such a transition.

What’s Your Business Strategy?

Each organization’s approach to postmodern ERP will look different. It’s not important that an organization move to a pure postmodern ERP environment. What’s important is each organization configures a solution that suits their unique needs.

If you’re considering a postmodern ERP approach, our ERP consultants can help you weigh the costs and benefits. We will assist you in understanding your business strategy and ensuring organizational alignment before you make any technology decisions.

 

*Gartner, IT Glossary: Postmodern ERP, https://www.gartner.com/it-glossary/postmodern-erp, 2019

5 Benefits of ERP Software for Manufacturing Organizations

5 Benefits of ERP Software for Manufacturing Organizations

Manufacturing organizations today are increasingly focused on streamlining their operations to drive profits, increase margins and deliver high quality to customers in a timely fashion. While striving to remain competitive, some manufacturing organizations use every tool imaginable except the one tool that can truly help them: ERP software.

A robust ERP system helps organizations properly integrate and streamline interdependent departments. For most companies, it’s very important. For manufacturers, it’s vital.

Understanding Manufacturing ERP Software

Early attempts at developing an enterprise resource planning system can be traced back to the 1940s with the advent of calculating machines. This effort evolved into an early version of an ERP system in the 1960s through a collaboration between tractor manufacturer J.I. Case and IBM. The challenge at that time was to get a better handle on planning and scheduling materials for complex manufacturing operations. By the 1970s, companies such as JD Edwards, Lawson Software, SAP and Oracle were building ERP systems.

SAP vs. Oracle Case Study

SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.

Today, ERP solutions are helping companies in various industries improve efficiency and help managers deliver on the promise of increased profits. Our clients in the manufacturing industry have seen many benefits from implementing enterprise software:

1. ERP Software Integrates Your Supply Chain

Effectively managing the inflow and outflow of materials is vital to any manufacturing organization.

In addition to managing materials, a robust ERP solution can manage a global supply chain that requires an understanding of multiple languages and currencies. Every country does business differently. For example, some countries incorporate a value-added tax while others don’t. Rather than having staff focus on the minutia of manually managing every detail of every transaction, you can implement an ERP system to automate operations. As a result, staff is freed up to focus on higher-value work.

2. ERP Software Improves Production Scheduling

To ensure materials coming into the organization are used when ordered and excess inventory does not accumulate, those materials must be planned into production. Enterprise software not only helps manage the procurement, pricing and payment of raw materials, it also helps manage scheduling of staff as well as machine operation and maintenance to maximize production schedules.

Some of our manufacturing clients use an engineer-to-order process where the order is placed prior to the product being designed, engineered and finished. These organizations benefit from ERP solutions that incorporate just-in-time inventory and an automated ordering system for customers. Depending on the items being produced and supply chain capability, a customer could place a tailored order on Monday and have the final product delivered by Friday – all with little to no waste.

A manufacturing ERP implementation also can help you utilize a just-in sequencing process, where materials are ordered and utilized in a production schedule as they arrive. If your system has serial genealogy functionality, you can trace the location and constituent components of completed goods to build complex products at scale.

The manual intervention and ensuing paperwork would be unmanageable without automation of these processes.

3. ERP Software Improves the Customer Experience

Many enterprise systems allow customers to access a customer portal and inquire about product availability, delivery and price. This data can then be used to dictate production schedules. When a customer can easily place orders and have them quickly delivered, that customer will be more inclined to be loyal to your organization.

We always recommend that our manufacturing clients not allow customers to place orders by phone. Organizations with millions or billions of dollars in revenue and an extensive global supply chain require automation.

4. ERP Software Removes Silos in Your Financial Operations

A manufacturer can be both a customer and a supplier. In these cases, it’s important to implement an integrated system with the modules necessary to manage both sides of the business. When evaluating ERP vendors, look for a system that manages the order-to-cash process for the supplier side, as well as the procure-to-pay process for the customer side. This is especially helpful for organizations that have incorporated a shared services model, where management of customer and supplier functions is managed centrally.  

Most suppliers prefer to be paid as quickly as possible, while most customers wish to hold onto their cash for as long as possible. An organization with separate supplier and customer financial operations can be disconnected from this financial philosophy. An ERP system, especially if deployed in a shared services department, can alleviate siloed mentality and integrate decision making.  

5. ERP Software Helps You Manage Staff and Other Resources

No manufacturing organization, no matter how much automation is introduced, can adequately function without appropriate staffing. An ERP solution can help with staffing issues, such as scheduling, hourly wages, time off/vacation, skill set, etc.

When managing a particular margin for products being shipped to a customer, a manufacturer with an enterprise system might only schedule certain staff to handle certain production lines. Without an ERP system, an organization might allow any staff at any hourly wage to operate any line, which might throw off and endanger margins, profits and overall staff availability.

ERP is Essential for Manufacturing Operations

During the ERP selection process, manufacturers may be overwhelmed by choices. However, focusing on finding a system that helps you achieve these five benefits is a good place to start. If you’re considering implementing a manufacturing ERP solution, be sure to contact us to help you develop a digital strategy and select the best system to meet your organization’s unique needs.

Transitioning to New ERP Software When Your Current System is Sunsetting

Transitioning to New ERP Software When Your Current System is Sunsetting

You’ve been using a reliable ERP solution for more than five years. Everyone from the CEO to the IT manager is happy with the current solution. Then, it happens. Your ERP vendor makes an earthshattering announcement: the product you’re using will be phased out within four years.

If you’re in a similar situation, you’re probably wondering how to transition to a new system. Before you make any decisions, you’ll want to read this post to learn about the potential risks of ERP transitions.

Why ERP Vendors Sunset Products

A vendor may have 30 different systems they’ve built or acquired over the years. Some of these are older applications. Consolidating these products and moving them to the cloud is one way for vendors to simplify their product offerings. It also allows vendors to reallocate funds to what they believe will be most profitable in the future.

SAP vs. Oracle Case Study

SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.

How ERP Vendors Sunset Products

The process of retiring an ERP system can take several years – sometimes up to eight. During this time, a vendor cuts back on their implementation resources, removes technical support and reduces R&D funding. The product may still have new releases but these are not major. They are bug fixes or minor tweaking of the IP. If the product is moving to the cloud, the vendor will take best practices from this product and combine it with best practices from other products.

How to Transition to a New ERP System

Here are four tips for responding to the phasing out of your ERP system:

1. Understand the Vendor’s Sunsetting Plan for Your Product

It’s important to know what the sunsetting looks like in terms of timing and support. There are several questions you should ask your vendor:

  • Will the phasing out be immediate (3 to 6 months) or will it be completed over a longer period of time (18 months)?
  • Will support for issues, such as bugs and security patches, still be available? If so, for how long?
  • Will new features still be added to the software or has the final feature already been added?

2. Involve Stakeholders in the Decision-making Process

Your transition team should include stakeholders from every department that will be affected by the change. The team will need to make decisions about how much to invest in the current ERP software in the interim. Most organizations decide to invest in fewer upgrades and less technical configuration. Each stakeholder should have input commensurate with their use of the ERP system.

3. Develop a Transition Plan

Does your current ERP vendor offer a comparable solution that your organization could migrate to, or will you make a wholesale transition to another vendor’s solution? While your vendor may offer you discounts for transitioning to their cloud offering, it usually comes out to be a similar cost as moving to another vendor.

Besides cost, another important factor for many organizations is ease of transition. However, the transition to your vendor’s cloud offering won’t necessarily be easier than the transition to another vendors’ product. In many cases, an upgrade is just as extensive as a full ERP implementation.

Whichever path you choose, you should ensure the new ERP solution aligns with your business requirements and organizational strategy. If you haven’t looked at your business processes in a while, you may want to spend time on business process reengineering before selecting a new system. This takes time, so don’t abandon your current solution too quickly.

Many organizations think a new system means more functionality, but this isn’t always the case. Some cloud ERP solutions are still being developed and may not have all the functionality you need.

4. Prepare Your Employees

As with any ERP implementation, employees need to be informed of upcoming changes. Personalized communication and training are essential.

While the new ERP solution offered by your current vendor may have familiar features, don’t discount the possibility that a different vendor might offer a solution that is more user-friendly. Either way, it’s important to invest in change management before selecting and implementing new enterprise software.

Challenges of Transitioning to New ERP Software

A mid-sized agricultural distributor was using an old version of Microsoft Dynamics GP for accounting and finance. The organization knew this product was on the sunset path, so they implemented a new system without engaging an ERP consultant.

The organization eventually discovered that the new system did not have the right functionality. As a result, they invested in extensive customization. They also implemented niche solutions for warehouse management, transportation management, advanced forecasting and demand planning. It wasn’t long before they decided to hire an ERP consultant.

The organization hired us to help find a single solution to replace their best-of-breed solution. The hurried transition off GP had created a mess of disparate solutions.

How did this happen? The organization had replaced GP too quickly. If they had taken their time and sought third-party guidance earlier, they would not be in a position of needing another replacement so soon after the first.

When transitioning off an old ERP, be sure to implement a solution that will last your organization at least five

Is Your ERP System Sunsetting?

If you’ve just discovered your ERP system is being retired, don’t panic. Vendors’ sunsetting timeframes are long on purpose. They know they have a large install base, and they know it takes organizations significant time to assess and transition to new solutions.

You have enough time to find a solution that aligns with your digital strategy.

Panorama Consulting Solutions Hires New ERP Expert

Panorama Consulting Solutions Hires New ERP Expert

Craig Wright

Panorama Consulting Solutions, the world’s leading independent ERP consulting firm, recently hired Craig Wright as Manager within Client Services. Wright is experienced with ERP implementations, especially those involving Microsoft Dynamics products.

Wright also has led organizations through software selection and partner selection. He has served clients in the service, retail, e-commerce and manufacturing industries.

“I’m looking forward to working with Panorama on global projects across a variety of industries,” said Wright. “In my new position, I will manage teams to complete projects on budget and on schedule.”

While Wright has extensive consulting experience, he also has been in his clients’ shoes as the implementing organization. This has contributed to his expertise in strategic planning, operations management, project management, team building, process improvement, vendor sourcing and software development cycles.

“I enjoy collaborating with stakeholders at all levels of the organization,” said Wright. “I strive to build relationships and enable organizations to address technical pain points.”

In his most recent position, Wright assisted with redesigning business processes while managing implementations of new enterprise systems. Wright’s approach to ERP projects aligns with Panorama’s vision, which is to strategically deploy technology, so it aligns with each organization’s business goals.

Schedule a Free 30-minute Consultation With an ERP Software Selection Expert!

Realistic Expectations: The Truth About ERP Selection

Realistic Expectations: The Truth About ERP Selection

As you begin ERP selection, you’re probably wondering how long the process takes. If you want to set realistic expectations, you need to plan for some of the overlooked aspects of ERP selection. This includes defining organizational goals, developing an IT strategy, evaluating deployment options, defining business processes and reviewing statements of work.

5 Overlooked Selection Activities

Defining Organizational Goals

Many organizations decide to evaluate ERP systems because their current system cannot scale to support the company’s growth. However, this reason alone doesn’t justify an ERP investment. You must be able to articulate how a new ERP system aligns with your organizational goals.

While enabling business growth may seem like a legitimate goal, it’s not specific and measurable enough. Consider goals such as improving data visibility or improving the customer experience. These goals are legitimate because you can measure the return on investment.

Before evaluating ERP systems, you should develop a business case to justify the investment and to estimate business benefits and return on investment. (You can use our ROI Calculator for these initial estimates). Defining your goals and developing a business case ensures you realize the full potential of ERP software. It also ensures organizational alignment.

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What are the 6 secrets to digital transformation that are helping organizations build competitive advantage?

Developing an IT Strategy

Once you understand your organization’s overall strategy and goals, you can develop an IT strategy. Now, you have a lens through which to evaluate your current enterprise systems and infrastructure. Determine what’s working and what needs to change if you are going to pursue new organizational goals.

Understanding your current state is essential as you’ll need to determine how new ERP software will integrate with your current IT infrastructure. For example, a best-of-breed solution may require many more integrations to your existing systems than a single ERP solution. Additional software integrations are worth the investment if a best-of-breed strategy aligns with your organization’s long-term goals. In fact, a standalone CRM system may have more robust functionality than a CRM application within a single ERP system.

When selecting best-of-breed ERP software, one mistake many organizations make is looking for software for one particular functional area without considering other functional areas. While all your business functions may not be in need of improvement at this current juncture, they likely will require new technology in the future. The functional area you’re focusing on now needs technology that will align with technology you implement in the future. If you define your long-term IT strategy, you will know what to look for in a standalone CRM system or HCM system.

The final step in developing an IT strategy is defining key performance indicators (KPIs). This will help you measure your return on investment throughout your ERP implementation. It’s also important to develop a benefits realization plan.

Evaluating Deployment Options

While evaluating deployment options is part of developing an IT strategy, it deserves to be mentioned separately. There are some important market trends of which you should be aware.

Lately, ERP vendors have increased their investments in cloud and SaaS ERP. As a result, many organizations who’ve been partial to on-premise software are now considering moving to the cloud.

Different deployment options each have their risks and benefits. Your decision should depend on your organization’s unique needs and goals. While cloud and SaaS solutions can be easier to deploy, they can limit your flexibility. ERP vendors may claim they will only support cloud solutions in the near future, but we have found this is purely a sales tactic. Cloud ERP is more profitable for vendors, so they provide higher compensation to sales reps who successfully sell cloud technology.

The truth is, on-premise software isn’t dead. We work with several VARs and system integrators that still sell and support on-premise solutions. These solutions are viable. In fact, some have ten- to twenty-year roadmaps, which is great news for their large install bases. As you’re evaluating deployment options, be sure to take the cloud sales hype with a grain of salt.

Many organizations choose cloud deployment for some but not all their business functions. This is called hybrid deployment. In these situations, organizations keep their back-office functions on-premise and implement cloud solutions for functions like sales and marketing.

Defining Your Business Processes

How can you know what enterprise technology you need without knowing what business processes it needs to support? You can’t. That’s why it’s important to define your business processes before selecting ERP software.

Start by mapping your current processes and looking for pain points. Involve all departments and ensure managers seek input from their teams. This collaborative approach results in process improvements that align with your organizational goals. Your future state will be a combination of optimized and standardized processes from which you can define business requirements. Prioritize these requirements so you can evaluate the functionality of various enterprise systems and determine which systems are most effective at addressing your highest-priority requirements.

Business process reengineering is a complex activity that can increase your selection timeframe. However, you will make up for this time during implementation since you won’t have to spend time defining your processes after selection.

Reviewing Statements of Work

Once you have statements of work from your top vendors, you may think the worst is behind you. Unfortunately, one of the most challenging tasks of selection remains: You must compare cost estimates that each make different assumptions about your implementation approach and desired level of customization.

When reviewing statements of work, you should ensure that the estimates include essentials, such as support and maintenance fees. You don’t want your system to go down just because you didn’t keep it updated. You also don’t want a security breach.

As you can imagine, this process is confusing and time consuming. Many organizations hire an independent ERP consultant to analyze statements of work and negotiate with vendors.

How Long Does ERP Selection Take?

These five activities don’t encompass the entire ERP selection process. ERP selection also requires you to conduct organizational readiness assessments, develop a data management strategy and attend ERP vendor demos, among other things.

All these activities can add up to a selection process that takes a minimum of fourteen weeks. Larger organizations with multiple locations typically need at least sixteen weeks to select the right system.

Now that you have realistic expectations, you can find the right expert to assist you. Look for an ERP consultant that focuses on all the necessary success factors of ERP selection.

Panorama Consulting Solutions Selected as One of the Ten Fastest Growing Technology Solution Providers

Panorama Consulting Solutions Selected as One of the Ten Fastest Growing Technology Solution Providers

The Technology Headlines selected Panorama as one of the ten fastest growing digital technology solution providers for 2019.

Organizations today have more digital technology choices than ever before. Many organizations seek guidance from experts, like Panorama, that have experience across a wide variety of ERP systems.

Instead of providing technology directly to organizations, Panorama provides strategies for selecting and implementing technology. Their ERP consultants guide organizations in aligning technology with people and processes.

“Panorama is growing its customer base by focusing on the market’s evolving needs,” said Vanessa Davison, Managing Partner of Panorama. “Organizations are feeling the pressure to grow through strategic M&As and keep up with technology advancements.”

Since organizations are focusing on the customer experience, value steam optimization and worker enablement, so is Panorama. While the firm still focuses on ERP, its approach has become more top-down in nature, focusing on strategy alignment before technology selection.

“We realized the need to expand our service offerings to integrate people, processes and technology,” said Davison. “We saw that the most successful ERP initiatives were aligned with organization’s business strategies.”

The feature article on Panorama’s transformation can be found here: https://www.thetechnologyheadlines.com/magazine/subscription/digitalv-opl/vol-4-issue-4/#features/15.

About The Technology Headlines

The Technology Headlines is a knowledge platform for industry leaders and professionals to share their experiences, ideas and advice within the enterprise IT community. They are committed to their readership base, which consists of CIOs, CXOs and CMOs of some of the fastest-growing companies.

Schedule a Free 30-minute Consultation With a Digital Transformation Expert!

7 Common Questions About ERP Software

7 Common Questions About ERP Software

You know you need new ERP software, but before you dive in, you should understand the basics of this often-misused technology. Once you understand the basics, you can develop an ERP strategy.

What is ERP software?

Enterprise resource planning (ERP) software is used by organizations to integrate and organize the data necessary for front office and back office operations. ERP software integrates organizations’ key operations, including the manufacturing, distribution, financial and human resources, into one software system.

When properly implemented, an ERP solution increases organizational efficiency, performance and profitability. However, ERP implementations are challenging and often require an ERP consultant to manage the software selection, implementation, process management and organizational change. A large enterprise software implementation is particularly difficult when multiple, global locations are involved. Strong project management is key to achieving an integrated enterprise.

What are the most popular ERP vendors?

SAP, Oracle, Microsoft Dynamics and Infor are among the most popular ERP vendors. One of the most searched terms on Google is “SAP vs. Oracle.” That should tell you something about the popularity of these vendors.

Niche software vendors are also popular, especially for smaller organizations or organizations looking for industry-specific functionality. Niche products are designed for specific industries or business functions. For example, Syspro, IQMS and Plex are specifically built for the manufacturing industry.

While you may want to select a well-known enterprise resource planning system, the best solution depends on your unique business needs. A better question is, “What are the best ERP vendors for my future-state processes and organizational goals?”

SAP vs. Oracle Case Study

SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.

What kind of organizations use ERP software?

ERP software is beneficial to organizations regardless of size or industry. In recent years, small- to mid-sized organizations have fueled most of the growth in the ERP industry. While large enterprises dominated ERP usage in the past, niche solutions have made it possible for smaller organizations to implement ERP software.

Organizations pursuing digital transformation often implement ERP software to enable their digital strategies. These organizations use technology to create new business and operating models. Their goal in implementing new technology is to improve data insights and the customer experience.

What is the difference between ERP and CRM software?

Customer relationship management (CRM) software is a type of enterprise software that automates the sales and marketing functions of an organization. Many vendors include CRM software in their full suite of solutions, but some organizations take a best-of-breed approach. They’ll implement a CRM system from another vendor and integrate it with their main system.

CRM software provides real-time data on lead behavior and demographics allowing organizations to personalize their communication with leads and customers. CRM functionality enables organizations to maximize the benefits of their ERP implementations. Improving the customer experience is a common reason organizations implement software solutions.

What is manufacturing resource planning (MRP II) software?

MRP software is included in most ERP systems. While ERP automates the entire supply chain, manufacturing resource planning focuses on the manufacturing processes involved in product conception through production planning. For example, when you need to purchase raw materials to build a product, MRP software allows you to create an accurate bill of materials.

An MRP system can be purchased as a standalone system or as part of a full ERP system. Some organizations take a best-of-breed approach when it comes to the individual modules within an MRP system. For example, they may look for a specialized solution for a function like materials costing.

How much does ERP software cost?

ERP software for larger organizations tends to cost more than niche software. However, even the larger vendors offer point solutions that can be implemented individually. Organizations can save money by only implementing the functionality they need instead of implementing a full suite of solutions.

Licensing costs also depend on the deployment model. While cloud computing may be cheaper in the short-term, it is more expensive than on-premise software in the long-term. Cloud and SaaS ERP is subscription-based so you pay per user or per module. If you plan to implement software in phases, be sure you’re not paying for all licenses upfront.

Maintenance, customization and resources are other costs to consider. You’ll need resources for configuration, data migration and implementation. Beyond these technical components, you’ll need to budget for business process reengineering and change management. The ideal ratio of software costs to service costs is 2:3.

If a vendor’s proposal seems unreasonable, you can negotiate a better price by hiring an independent enterprise software consultant. An ERP selection consultant can facilitate apples-to-apples comparisons of vendors’ statements of work, so you know your points of leverage. Some ERP consultants save clients as much as 30-60% of what they would have paid otherwise.

While ERP software is expensive, cost shouldn’t be your main concern when deciding whether to initiate an ERP implementation. You likely will recoup your costs within three years due to the business benefits you achieved.

What are some of the risks associated with ERP software?

While ERP has the potential to provide numerous business benefits, it can also be a risky proposition. If not managed properly, ERP projects can cost more and take longer than expected. They can also cause operational disruption and employee resistance.

Organizations assume the most risk when they approach their ERP project from a technical perspective instead of business perspective. If you don’t align new technology with your people and processes, you may not realize expected business benefits. You can’t improve data visibility if your ERP system can’t support optimized processes. You also can’t improve the customer experience if your employees don’t know how to perform optimized processes. Other than ERP failure, the biggest risk of ERP implementation is a low ROI.

A Business Case for ERP Software

Once you’ve recognized your need for new ERP software, you should define what kind of technology you need based on your digital strategy. This will help you develop a business case convincing executives to make the investment. Be sure to highlight not only benefits of ERP software but also the costs and risks. With a strong business case, you’ll have the executive support necessary for a successful ERP selection.

Water for People Announces New Additions to Board of Directors

Water for People Announces New Additions to Board of Directors

DENVER (January 16, 2019) – Water For People, a global nonprofit working to develop lasting quality water and sanitation services in nine countries, is pleased to welcome Vanessa Davidson, Katy Keim, and Matthew Ostrower to the Board of Directors.

“Water For People is honored to welcome these three accomplished individuals to our Board,” said Eleanor Allen, CEO of Water For People. “I’m looking forward to working with the new members. Their expertise, skills, and knowledge will help Water For People continue to grow. They will be key players in advancing Water For People’s efforts to implement our strategy and increase our impact.”

Vanessa Davison Vanessa is the Managing Partner at Panorama Consulting Solutions, which helps government and business clients achieve digital business transformations. She brings a proven management track record with over 20 years of experience. She’s led multiple mergers & acquisitions and turn-around projects helping organizations achieve radical transformation and increase net profits. She has also served as a policy advisor to develop and implement strategies for effective citizen engagement and interaction. Vanessa has graduate certificates from Harvard Business School and the Graduate School of Political Management at George Washington University. She holds a B.S. in Rhetoric and Legal Studies from the University of California at Berkeley. Vanessa has served on various non-profits boards.

Katy Keim Katy is the Chief Executive Officer at LQ Digital, a digital marketing agency. Prior to joining LQ, she served as the Chief Marketing Officer and Head of Business Development and Alliances at Lithium Technologies. Before joining Lithium, she served as Executive Vice President, Marketing of ServiceSource Corporation. Katy has over 20 years of experience in business-to-business (B2B) marketing and software as a service (SaaS). She holds an M.B.A from the J.L. Kellogg Graduate School of Management at Northwestern University, where she was an Austin Scholar, and a B.A. degree in History from the University of Virginia. She was a trustee to the Redwood Day School for many years.

Matthew Ostrower Matthew is the Chief Financial Officer of SITE Centers, an owner and manager of open-air shopping centers. He has over 20 years of experience in real estate. Prior to joining SITE Centers, he served as Chief Financial Officer of Equity One Inc. Matthew also served as Managing Director and Associate Director of Research, among other positions, at Morgan Stanley. He holds a dual M.S. degree in Real Estate and City Planning from Massachusetts Institute of Technology and a B.A. in History from Tufts University. Matthew has served on various corporate boards.

About Water For People Water For People is a global nonprofit dedicated to promoting the development of high-quality drinking water and sanitation services, accessible to all, and sustained by strong communities, businesses and governments. We want every family, clinic and school to have lasting access to safe water and sanitation for generations to come. We call this impact model Everyone Forever.

This press release was originally posted here.

How to Avoid ERP Failure

How to Avoid ERP Failure

ERP failures are all over social media these days – from the SAP failure at National Grid to MillerCoors’ recent ERP lawsuit. How do you avoid the same mistakes made by these high-profile organizations?

Most mistakes made during ERP implementation don’t become evident until later – usually when it’s too late. With an understanding of common implementation mistakes, you can develop a project plan that prevents ERP failure.

Our experience as ERP expert witnesses has shown us how some of the biggest ERP failures transpire. In most cases, the projects involved very little change management and business process reengineering. Instead, organizations focused on finding the top ERP systems based on what their competitors were using. These organizations implemented new ERP software but did not improve business processes. Ultimately, the project failed.

Here are nine mistakes that could mean your ERP project will fail to meet expectations:

Common ERP Implementation Mistakes

1. Not Involving Executives

Your executive team should be involved in key project decisions. We’re not just talking about budget approval. We’re talking about ongoing decisions about project goals and changes to business processes.

2. Treating the Project Like a Technology Initiative

The most successful ERP implementations are treated like digital transformations. Instead of losing sleep over SAP vs. Oracle, focus on people and processes. Think of ERP software as an enabler of change.

The Beginner’s Guide to Digital Transformation

What are the 6 secrets to digital transformation that are helping organizations build competitive advantage?

3. Not Developing a Business Case

You won’t achieve what you don’t measure. In addition to justifying the ERP investment, a business case can help you measure business benefits during and after implementation. It aligns stakeholders around project goals and sets realistic expectations. Do you want to improve your organization’s customer service? Include this in your business case by quantifying the improvements you expect.

4. Not Establishing Strong Project Governance

ERP project governance ensures the project team makes decisions aligned with the project goals. Use a project charter to assign certain team members the responsibility of approving requests, such as customization requests. Executives and other employees may make requests that increase project scope and cost. If you have strong project controls, you will only approve requests that align with the organizational vision. This will reduce the risk of budget and timeline overruns.

5. Setting Unrealistic Expectations

Most organizations spend more time, money and resources on ERP implementation than they expected. They expect implementation will cost as much as their ERP vendor or systems integrator claims. However, most vendors don’t account for costs, such as customized training and communication.

6. Adhering to Budget and Timeline Expectations

Even the most realistic expectations may need adjustment throughout the project. For example, change resistance could be a bigger issue than anticipated. While you want to stick to your original budget, you also want people to adopt optimized processes. In cases like this, where you can justify the long-term gains, you must be willing to adjust your budget.

7. Allowing ERP Software to Define Your Future Processes

While most backend processes can be defined by ERP system functionality, other processes should be redesigned before software selection. For example, if you want to improve your supply chain, you should identify pain points during your requirement gathering workshops. Clear business requirements ensure your chosen software solutions align with your organizational goals. These requirements give ERP vendors a framework for their software demonstrations.

8. Neglecting Change Management

Most organizations don’t understand the impact end-users can have on ERP success. As a result, they don’t invest in change management activities, such as regular communication. To avoid this mistake, focus on overcoming change resistance. Develop a change management plan that includes a sponsorship roadmap, coaching plan and training plan.

9. Misusing ERP Consultants

While ERP consultants are helpful for guiding you in ERP best practices, too much reliance on consultants can backfire. Find the right balance by frequently seeking advice while ensuring your organization has the final say on important decisions. Your ERP consultant should help you develop a center of excellence so you’re not dependent on consultants in the long term.

How to Assess ERP Risks

Avoiding these mistakes will help you avoid ERP implementation failure. However, detecting these mistakes isn’t always easy. Small mistakes often aren’t noticeable until they accumulate into bigger problems. If you’re immersed in the project details, you may not be able to objectively assess risk.

Here are three tips for assessing project risks:

1. Find Unbiased, Third-party Resources

It’s important to involve someone outside of your organization as their view will be objective. This person should have experience conducting risk assessments for projects similar to yours. Assessments should be conducted regularly to identify probability, severity and impact.

2. View Potential Risks From All Perspectives

There are all different types of risks, so it’s important to assess your project through many different lenses. Risks can relate to people, processes or technology. Whatever framework you use, it should provide a comprehensive analysis of your project.

3. Develop a Risk Mitigation Plan

Most risk assessments identify more risks than you can address with existing resources. Prioritize risks so you can focus on those posing the most threat to your project. For these high priority risks, create a risk mitigation plan and contingency plan.

Avoiding ERP Failure

Developing a project plan that doesn’t commit the common mistakes made by most organizations will help you achieve ERP success. However, even with an effective plan, you will experience issues along the way. That’s why it’s important to conduct risk assessments throughout your project. The sooner you detect risks, the sooner you can adapt your project plan to mitigate these risks. For a thorough risk assessment, consider hiring an ERP consultant to benefit from their lessons learned.

6 ERP Selection Criteria

6 ERP Selection Criteria

How do you decide which ERP system to implement when internal bias and vendor enthusiasm threaten to sway you? The best way to evaluate ERP systems is to weigh the strengths and weaknesses of each according to the following six criteria.

ERP Selection Criteria

1. Deployment Options

Most Tier I ERP vendors are heavily investing in cloud technology, but functionality is still limited compared to many on-premise solutions. This doesn’t mean every organization should select an on-premise solution. In the future, your ERP vendor may stop developing or even supporting their on-premise products. At that point, you’ll have to transition to the cloud, which is more complex and time-consuming than vendors claim.

While vendors are heavily investing in their cloud offerings and providing more robust functionality, the novelty of the cloud is still intimidating to many organizations. No one wants to be among the first to take the leap. They want a long list of references from companies of similar size and industry. A vendor’s cloud implementation resume for large organizations may be smaller than you expect.

SAP vs. Oracle Case Study

SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.

2. Scalability

Software scalability refers to a system’s ability to handle an increasing amount of work and increasing number of users.

Some ERP vendors target large organizations with complex operations, but do you know which products and deployment models can continuously scale to support your growing business? If your customer base increases, the software should be able to handle an increasing number of users and transactions. It should continue to provide real-time data despite an increase in data volume.

Scalability can be expensive for some on-premise solutions. You might need to purchase additional servers to support the increased workload. It’s important to ask vendors what their products can support out-of-the-box and if they can be scaled.

3. Technical Fit

ERP vendors have different functional strengths that make them well-suited for certain industries. While industry focus is a strong indicator of technical fit, your business requirements should have the final say.

If you take the time to map your step-by-step processes and define your ERP requirements, you can ask vendors to demonstrate specific functionality. You’re not expecting too much by asking a vendor to demo their ERP system based on your requirements list rather than presenting a canned sales demo. Sharing your business requirements with vendors and allowing access to subject matter experts ensures vendors fully understand your business.

While no ERP system can address every possible business requirement, you should look for a system that addresses your highest priority requirements. In addition, you should determine which processes should be standardized based on ERP functionality, and which processes are competitive differentiators that could require software customization.

4. References

Vendors will make many claims about their system’s capabilities and ease of use. If you want to validate these claims, you should request references, so you can ask previous customers about their experience.

What functionality did they implement, and did they achieve the desired results? Did the vendor offer ongoing support and training?

References should be from organizations similar to your own that have implemented similar functionality. If you’re considering cloud ERP, ask for references that have deployed their software in the cloud.

5. Return on Investment

While total cost of ownership is a common consideration during ERP software selection, return on investment (ROI) is even more important. If you choose an ERP system based on ROI rather than total cost of ownership, your ERP project will result in increased business benefits.

Developing a business case will help you quantify the benefits you expect. This will guide you in improving your processes and defining your business requirements. Your ERP system will be more likely to deliver a high ROI if it’s configured based on optimized processes.

If you’re comparing the ROI of several different ERP systems, you may find Panorama’s ROI Calculator useful.

6. Product Viability

Do you know the long-term outlook of the ERP software you’re evaluating? While SAP and Oracle aren’t likely to go out of business any time soon, they may stop supporting certain products.

It’s also worth knowing where a vendor plans to invest their R&D in the future, as it’s your responsibility to select a product that will support your organization in the long-term.

You should conduct industry research to determine if a software product is on par with its competition. If not, the vendor may be planning to discontinue the product. In the short-term, product stagnation hurts your business as you’ll spend a fortune on customization just to remain innovative.

Other Selection Considerations

Before beginning the ERP selection process, you should define a digital strategy. What are the pain points of your current IT infrastructure, and what needs to change to support your organizational objectives?

While an ERP implementation can bring much needed change, the only way to enable long-term, large-scale change is through business process reengineering and change management. Even if you select one of the top ERP systems, you won’t transform your organization unless you enable change by focusing on your people and processes.

SAP vs. Oracle: Which ERP System is Right for You?

SAP vs. Oracle: Which ERP System is Right for You?

The SAP vs. Oracle debate is common among large, complex organizations. Clients often ask us, “which is the better ERP system?” Of course, as an independent ERP consultant, we determine the best fit for our clients based on their unique business requirements. Nonetheless, we’d like to provide a comparison of SAP and Oracle based on industry benchmarks, client experience and vendor demo scores.

A Brief Overview of SAP and Oracle

SAP primarily builds its products from the ground up rather than through acquisition. The vendor targets organizations with at least $1 billion in annual revenue. SAP ERP software has deep functionality, so it requires a very technical, time-consuming implementation.

Fun Fact: SAP S/4HANA Cash Application enables real time, intelligent invoice-matching powered by machine learning.

Oracle’s primary strength is acquiring product lines that can provide flexible functionality to a variety of industry niches. However, niche functionality is still transitioning from EBS and JD Edwards into Oracle’s newer products. Oracle targets organizations with at least $750 million in annual revenue.

Fun Fact: Oracle Business Intelligence 12c provides seamless analytics across cloud and on-premise solutions.

Both SAP and Oracle provide a full business suite of solutions, including HCM software, CRM software, SCM software, etc. Both vendors were featured in our manufacturing report and distribution report on the top ERP systems for those industries. The vendors in these reports have robust supply chain management functionality and inventory management functionality. They also offer strong production management software.

ERP Industry Benchmarks

When evaluating ERP vendors, it can be helpful to consider industry benchmarks and independent research. Panorama’s 2019 Clash of the Titans report provides benchmarks on some of the challenges organizations experience when implementing SAP or Oracle:

ERP Implementation Duration

According to our report, SAP implementations last around 14.7 months, while Oracle implementations take about 12 months. One possible reason that SAP implementations take longer is because its clients are typically global and complex organizations. These organizations choose SAP because of its scalability and robust functionality. Global implementations naturally require a longer time commitment due to the number of locations and decisions about standardization vs. localization.

Operational Disruption

ERP implementations can cause operational disruptions, such as the inability to manufacture or ship products.

Disruptions that occur during SAP implementations last about 128.5 days, while disruptions that occur during Oracle implementations last about 121.7 days. This might reflect the fact that SAP works with large organizations with complex, global operations. An operational disruption at a large organization can affect multiple locations, which can take more time and effort to resolve.

To reduce the risk of operational disruption, organizations should take a phased implementation approach. It’s also wise to conduct multiple conference room pilots before go-live.

Internal vs. External Resources

Resource allocation is one of the most common struggles for organizations implementing enterprise software. While ERP vendors typically recommend at least eight to twelve full-time internal resources, this isn’t feasible for most organizations. Many organizations heavily rely on external resources from the vendor and systems integrator. Unfortunately, this increases implementation costs.

Organizations implementing Oracle use slightly more internal resources than organizations implementing SAP. In both cases, respondent organizations reported that their team was almost an even split between internal and external resources.

Complex customization is a major reason why organizations rely on external resources. Oracle is a flexible solution that typically requires simple customization and configuration that can be done in-house.

Role of ERP Software in Organizations’ Digital Strategies

More than half of SAP customers reported that their ERP project played a significant role in their digital strategies. However, this was true for less than half of Oracle customers.

Oracle’s marketing strategy seems to focus on promoting specific functionality, such as finance. This might attract more organizations looking to automate particular processes and fewer organizations looking to transform their entire operating model.

Summary of Results

SAP vs. Oracle Case Study

SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.

SAP and Oracle both provide robust ERP systems that can transform your organization. These benchmarks don’t prove one vendor is better than the other, but rather highlight challenges organizations may face when working with these vendors.

Diving deeper into these challenges, it’s apparent that they’re not caused by technical shortcomings. Both of these vendors have rich functionality providing value to organizations that understand how enterprise resource planning software aligns with their goals.

Panorama Client Experience With SAP and Oracle

Based on our experience evaluating and implementing these ERP solutions for clients, we’ve gleaned some interesting insights:

Deployment Options

SAP and Oracle both have products with multiple deployment options. They typically encourage our clients to consider cloud-based technology even if they’ve expressed interest in on-premise technology.

Focusing on cloud ERP is a smart move for SAP and Oracle as the market is increasingly demanding flexible deployment options. However, we’ve found that neither SAP nor Oracle have very many references for cloud implementations at large, complex organizations.

Vendor Viability

While SAP and Oracle aren’t likely to go out of business any time soon, they occasionally discontinue certain products.

SAP S/4HANA is a fairly new platform for SAP. The product has strong R&D funding as does Oracle ERP Cloud. However, R&D spending on Oracle EBS on-premise, is waning as the product is moving exclusively to the cloud. It’s difficult to find technical resources to implement EBS on-premise as most Oracle system integrators are focused on the cloud.

Want to learn more? Our SAP vs. Oracle white paper features a case study on a client in the distribution industry.

Demo Scores

We regularly coordinate ERP vendor demonstrations for clients. After each demo, clients score functionality on a scale from 1 to 5. The highest score a vendor can receive is a 5. The following metrics are based on clients’ ratings of SAP and Oracle functionality during the last two years:

SAP and Oracle Scored Closely in These Areas

Demand Forecasting – (SAP) 2.3 / (Oracle) 2.2

Industry Intelligence – IBM partnered with SAP to create a Cognitive Demand Forecasting Solution for the retail industry. The solution can be integrated into SAP S/4HANA and the SAP Customer Activity Repository. Oracle Demand Management Cloud is a supply chain management solution that accurately predicts customer demand for a broad range of industries.

Material Requirements Planning – (SAP) 1.8 / (Oracle) 1.9

Industry Intelligence – SAP recently updated its material requirements planning (MRP) functionality within SAP S/4HANA. Oracle NetSuite also has recent updates to its MRP functionality.

Fixed Asset Management – (SAP) 3.3 / (Oracle) 3.3

Industry Intelligence – SAP Business One has a fixed asset management function that eliminates the need for repetitive manual data entry. Oracle NetSuite Fixed Asset Management automates asset acquisition, depreciation, revaluation and retirement.

E-Commerce  (SAP) 2.2 / (Oracle) 2.2

Industry Intelligence – SAP Upscale Commerce allows manufacturers and merchants to quickly launch “pop-up” e-commerce stores. Oracle Commerce On-premise, has likely stopped releasing updates. However, Oracle Commerce Cloud is frequently updated, with its last update this month.

SAP Scored Higher in These Areas

Multi-Currency – (SAP) 3.0 / (Oracle) 2.7

Industry Intelligence – SAP ECC has improved precision in currency conversion of foreign exchange rates.

Audit Management – (SAP) 3.8 / (Oracle) 3.4

Industry Intelligence – SAP Audit Management instantly captures audit documentation while providing drag-and-drop tools. You can access the application through mobile devices.

User-Defined Dashboards – (SAP) 3.9 / (Oracle) 1.4

Industry Intelligence – Not all BI vendors provide user-friendly dashboards. However, SAP BusinessObjects allows you to create interactive, role-based dashboards accessible from any device. An alternative is SAP Analytics Cloud, which allows you to easily create predictive models and integrate them into workflows.

Oracle Scored Higher in These Areas

Workflow Configuration – (SAP) 2.9 / (Oracle) 3.3

Industry Intelligence – Oracle has a new set of artificial intelligence applications that automate processes within its cloud suite.

Customer Contract Management – (SAP) 3.0 / (Oracle) 3.7

Industry Intelligence – Oracle Project Contract Billing Cloud provides pre-built templates and automates project billing. The application ensures contracts are compliant with project billing requirements.

Purchasing – (SAP) 2.8 / (Oracle) 3.3

Industry Intelligence – Oracle Purchasing Cloud automates routine transactions, such as invoice validation. The application fully integrates with accounts payable functionality.

Quality Assurance – (SAP) 2.1 / (Oracle) 3.1

Industry Intelligence – Oracle Product Lifecycle Management Cloud allows you to define inspection plans by connecting product design standards and quality specifications.

While these scores are just averages of more detailed metrics, they provide a sense of the perceived strengths and weaknesses of each ERP system. Demo scores are one of several factors to consider during an evaluation of SAP and Oracle.

The Final Decision: Oracle vs. SAP

Comparing Oracle and SAP requires an in-depth understanding of software functionality, deployment options and vendor and product viability. An informed decision also requires business process reengineering and requirements definition prior to selection. Armed with this insight, an organization can decide whether SAP, Oracle or another system altogether best fits their business needs.

Schedule a Free 30-minute Consultation With an ERP Software Selection Expert!

How to Improve Your Sales Processes and Boost Your Revenue

How to Improve Your Sales Processes and Boost Your Revenue

Improving sales isn’t about bringing in better salespeople. Instead, you need to understand how you generate leads and convert those leads into sales. In other words, improving sales is about improving your business processes.

Think About Your Sales Funnel

The first step to improving your sales processes is documenting them. Your sales funnel is good place to start. Document how you attract leads and eventually convert them into customers.

How many steps are in your sales process and what are they? More importantly, what purpose do they serve? Answering these questions will make it much easier for you to improve your processes.

Consider using value stream mapping, a technique that focuses on removing waste and identifying opportunities for improvement.

Establish KPIs

Key performance indicators (KPIs) are metrics that can provide you with tangible goals for improving your sales processes. You need to establish KPIs for each step in your sales funnel and measure your conversion rates over time.

When setting up targets, make sure you’re being realistic, and allow some flexibility to make changes along the way.

Automate Some of Your Processes

The next step in your journey to optimize your sales processes is to get the right tools. More specifically, you’re going to need a CRM system – or an ERP system with CRM functionality.

A CRM system can make your sales team more efficient. For example, it can track who is responding to your marketing material, and help you identify which leads are more likely to turn into customers. You also can learn about people’s demographics and interest profiles and use this information to help you sift through your leads and move those less likely to turn into sales towards the bottom of the list.

CRM systems put all your data in one place and make it easy for your team to share information. This ensures organizational alignment, which is critical to digital transformation.

Determine How You’re Going to Improve

There are generally two ways to improve your sales:

  • Increase the volume of each sale
  • Increase the number of customers

Typically, you should be able to make improvements in both areas. Consider offering some promotions that bundle different products together or use your CRM software to send follow up emails to previous customers.

To improve your conversion rate, you can do some A/B testing in your CRM system to find out what content is most effective.

Start Optimizing Today

Improving your sales processes to boost revenues is a long process, but it’s one that is well worth undertaking. It will help you improve margins in a sustainable way, so your business can continue growing and maintain its competitive advantage.

About the Author: Kevin Conner is the founder of several successful startups. His current focus is Broadband Search, a service dedicated to helping people find the best value internet service provider in their area. These businesses have given him the opportunity to work closely with many different sales teams, giving him an insider’s perspective on what works and what doesn’t.

Note: The inclusion of guest posts on the Panorama website does not imply endorsement of any specific product or service. Panorama is, and always will remain, completely independent and vendor-neutral. If you are interested in guest blogging opportunities, click to read more about our submission guidelines.

6 Ways to Mitigate Software Implementation Risks

6 Ways to Mitigate Software Implementation Risks

Software implementations carry significant risks, including budget and duration overruns and implementation failures. Often, these risks can be mitigated with proper planning at the beginning of the project. Instead of making decisions based on fear, you should feel confident you’re addressing the potential pitfalls of ERP projects.

Here are six ways to mitigate risk before beginning the software implementation process:

Understand Your Business Strategy Objectives

Clarifying your business strategy requires collaboration among all stakeholders. During these discussions, define what customer success looks like and determine what’s working and what’s not. Most importantly, clearly articulate your objectives – do you want to create new business models or generate new revenue using ERP software?

These discussions will help you achieve organizational alignment. Ultimately, executives and middle management should be aligned around what changes are needed to improve your organization’s competitive advantage.

With organizational alignment, you can reduce the risk of selecting the wrong software system. When you know your long term goals, you know what technology your organization needs.

The Beginner’s Guide to Digital Transformation

What are the 6 secrets to digital transformation that are helping organizations build competitive advantage?

Set Realistic Expectations

ERP failure is often caused by unrealistic timelines and budgets. Understanding what benchmarks are realistic for your industry and company size will help you set realistic expectations. While you may need to adjust expectations throughout the project, starting with a realistic estimate will make these adjustments less surprising to executives.

ERP vendors may not have a realistic view of the resources and internal requirements necessary for a successful software implementation. It’s up to you to create a realistic software implementation plan based on your organization’s unique situation. This is an area where independent ERP consultants can be helpful.

Prepare Employees for Organizational Change

It is human nature to resist change. Change resistance causes implementation delays, quality problems and reduced productivity. If employees don’t adapt to change, your digital strategy will not lead to lasting business transformation.

Obtaining buy-in from executives first is a good way to obtain buy-in from team members and employees. If executives are excited for change, this attitude will be contagious. You can obtain buy-in from all stakeholders by communicating the nature of upcoming changes and the reason for change. Communication should be guided by a change management plan, which is informed by readiness assessments and user acceptance testing.

If your employees aren’t using new software day to day, you will have to postpone go live until they accept change. However, if you obtain buy-in early, you reduce the risk of project delays. The sooner employees start using software, the sooner you’ll realize business benefits.

Optimize Your Business Processes

An ERP implementation is a good opportunity to optimize your business processes. While most back-office processes can be optimized based on standard software functionality, some processes should be redesigned independent of software. Processes that provide competitive advantage shouldn’t be constrained by an ERP vendor’s “best practices.”

Optimizing your processes before ERP selection minimizes risk because you’re ensuring you select software that meets your current and future needs. Optimized processes help you develop demo scripts for ERP vendors to ensure they focus on your unique needs. If you were to select an ERP system without knowledge of your future-state processes, the software might require extensive customization.

Why bother with business process reengineering? Employees at most organizations work in silos and have different ways of performing similar processes. This creates duplication of effort and makes it difficult to gather and analyze data. Improving the customer experience via software implementation requires real-time data, so you should break down silos as much as possible.

Plan for Data Migration

With every software implementation, there is the risk that ERP software will not enable the organization’s strategic objectives. To mitigate this risk, reliable and actionable data is essential.

As soon as you select a software application, you should start preparing for data migration. Most legacy data is not ready for new systems. Data is usually spread across multiple sources with various structures and formats.

To account for this complexity, you should document and establish a data strategy. For example, you will need to cleanse data to resolve duplicate data and other common data quality issues. You also should define future nomenclature for items, item descriptions, units of measure, etc.

Successful data migration requires involvement from four key groups: data owners, the functional team, the data migration team and the project team.

Limit Software Customization

Once you start down the path of software customization, it’s difficult to stop. You might receive customization requests even after you’ve made it clear there will be no further changes. After the final round of customization, you should only approve customization requests that truly benefit your competitive advantage.

Strong project governance and project management ensure the implementation team doesn’t over-customize the ERP software. Investing in business process reengineering also is a good strategy for limiting last-minute customization.

Technology-focused Projects are Inherently Risky

There is a distinct difference between technology-focused and business-focused projects. Technology-focused projects neglect activities that align people and processes with new technology. Business-focused projects, on the other hand, focus on change management and business process management. Guess which type of project is less risky.

4 Tips for Finding the Right ERP Consultant

4 Tips for Finding the Right ERP Consultant

ERP implementations are frequently run by project managers with little ERP implementation experience. Many of these project managers refuse to contract with ERP consultants. As a result, organizations struggle to differentiate between various ERP vendor proposals. When they do finally implement an ERP system, they struggle to realize the full benefits of digital technology.

Clearly, these project managers could use third-party guidance. However, finding a reliable implementation partner is no easy task. Here are four tips for finding a trusted partner for your ERP implementation:

1. Ensure the ERP Consultant is Technology Agnostic

An independent ERP consultant has no financial ties to a particular ERP vendor or ERP system. The implementation partner is only interested in the client’s digital transformation success.

The Beginner’s Guide to Digital Transformation

What are the 6 secrets to digital transformation that are helping organizations build competitive advantage?

Preferred partners, on the other hand, are tied to specific vendors. In other words, a preferred partner’s revenue model depends on selling or servicing particular systems. This is typically the case with any VAR or large consulting firm specializing in just a few ERP systems. When it comes to smaller systems, it is the vendors themselves who sell and implement these systems.

While you may want a large ERP system, like SAP or Oracle, you shouldn’t rule out other systems that meet your business requirements. You’ll never know what you’re missing unless you hire an ERP consultant with the freedom to recommend any system.

Another benefit of hiring an independent ERP consultant like Panorama Consulting? These firms typically have a proven vendor negotiation methodology developed from years of experience with hundreds of ERP vendors.

2. Understand the ERP Consultant’s Methodology

When evaluating ERP consulting firms, you should understand their methodologies and where those methodologies come from. Many consulting firms use canned methodologies from various business training organizations. Few consulting firms have taken the time to leverage their learning into their own methodologies.

Your consultant’s methodologies should holistically focus on people, processes and technology. As more organizations pursue digital transformation rather than traditional ERP implementations, the need for a holistic approach is becoming clearer.

You should also consider whether the consultant’s methodology is flexible enough to fit your needs. For example, some organizations need a business process management approach that focuses on improving individual processes. Others need a business process management approach that focuses on streamlining end-to-end processes. Panorama has expertise in both approaches.

The truth is, methodologies should evolve as technology evolves. Organizations now expect more from their technology and want an innovative implementation partner.

3. Ensure the ERP Consultant has a Wide Breadth of Industry Experience

A key part of every request for proposal is the section on “prior industry experience.” You might find the consulting firm has experience with organizations similar to yours. However, consultants that specialize in only one market can be myopic in their focus.

The ideal ERP consulting firm leverages best practices from many industries. Its consultants are operational experts with hands-on experience tackling the same challenges their clients are facing.

4. Determine the Level of Diversity Within the Consulting Team

People with different backgrounds approach problems from different perspectives. This diversity can help you build competitive advantage. ERP project managers know this and staff their teams with employees from different departments while ensuring they have different skill sets. Why haven’t ERP consulting firms followed suit?

Many consultants bring the same team of resources to each pitch and presentation, regardless of cultural fit. Everyone on the team has worked in the same handful of companies and views the world through the same eyes. Where are the differing opinions and skills necessary to transform your organization? Where is the global understanding needed to improve your competitive advantage?

The top ERP consultants use diverse project resources who collaborate face-to-face to help each organization achieve its strategic vision.

Who Will You Hire?

For those who have never evaluated ERP consultants, the sheer amount of information can quickly prove overwhelming. These tips should help you understand what factors to consider when interviewing and hiring an implementation partner.

Will you hire the consulting firm that uses a predictable methodology and recommends a predictable ERP vendor? Or will you hire the consulting firm that thinks outside the box?

Panorama’s team thinks outside the box. We are technology-agnostic and adapt our approach to your unique needs. Schedule a free consultation to learn more about our flexible and integrated approach.

 

How to Use Change Management to Increase Your ERP ROI

How to Use Change Management to Increase Your ERP ROI

Ensuring a high ROI on your ERP implementation is no easy task. Many organizations have tried to accelerate their projects by implementing out-of-the-box ERP software, minimizing process changes and cutting change management from their budgets. While this may result in higher financial returns in the short-term, it does nothing to position your organization for long-term growth.

So how do you maximize ERP ROI without reducing your project budget to the bare necessities? One answer is organizational change management. In other words, your employees will determine your ROI.

The Human Factors That Influence ROI

  • Speed of Adoption​ – How quickly are employees adopting new technology, business processes and job roles?​
  • Ultimate Utilization​ – How many employees are using the ERP system and demonstrating buy-in?
  • Proficiency​ – How well are employees performing their jobs with the new ERP system?​

If one of these factors is negatively impacting your ERP project, you may want to conduct an ADKAR (Awareness, Desire, Knowledge, Ability, Reinforcement) Assessment. Evaluating how well you’re meeting employees’ needs will help you develop a change management plan, which is a key pre-implementation activity.

What Employees Need During a Change Initiative

  • Awareness of the need for change
  • Desire to make the change happen
  • Knowledge about how to change
  • Ability to implement new skills and behaviors
  • Reinforcement to retain the change once it has been made

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Desire is one of the key components of ADKAR that organizations overlook. They see change as a mandate that employees will follow whether or not they desire it. While this may be the case with some employees, software usage isn’t the ultimate goal. Employees must be proficient with new software for your organization to realize business benefits, but they are unlikely to become proficient without the desire to change.

Reluctant software users are almost as bad as employees who refuse adoption altogether. It’s important to begin change management activities before ERP selection, so you can proactively build desire among employees and give them more time to process the changes. While SAP and Oracle may be infinitely better than your old ERP system, employees may still be reluctant to adopt a new system if you don’t give them reasons to desire change.

Another aspect of ADKAR that many organizations forget to address is employees’ need for reinforcement. When employees revert to old processes, this may indicate the need for reinforcement. The best way to reinforce change is through recurrent training and frequent communication. Our experience as a software implementation expert witness has revealed that a lack of communication is a leading cause of ERP implementation failure.

It’s helpful to think of ADKAR as sequential. You cannot meet every need simultaneously, and each employee will go through the process at a different pace. Managers should be the first to complete the ADKAR process followed by the employees they supervise.

How to Be a Change Leader

  1. Prepare yourself for change​ – What changes will impact your team and how? Why are these changes being made? Answering these questions is the first step to becoming a change leader.
  2. Adapt to the change that is happening to you​ – Just because you’re a manager doesn’t mean you like all the proposed changes. You should share your concerns​ but ultimately commit to supporting change.
  3. Develop competencies to manage change​ – A manager should have the competencies to take on the roles of a communicator, liaison, advocate, resistance manager and coach.

If your organization is experiencing low productivity, high turnover and low morale as a result of organizational changes, the role of coach will be essential to your digital strategy. Managers who assume this role significantly impact how employees perceive change. By listening to employees’ concerns and using ADKAR, these managers are able to identify barriers to change and develop plans to address them. Executives can also play the role of coach. In fact, they can be some of the most effective coaches because of their level of influence.

6 Tips for Coaching Employees

  • Remove barriers – Barriers to change may relate to family, personal issues, physical limitations or money. Coaches should fully understand the individual situation of each employee to determine how to remove barriers.
  • Build desire by providing choices – Employees need to know in simple and clear terms what their choices are and what consequences they face for making a particular choice. This puts a level of control back into the hands of employees.
  • Create hope – Employees are more open to change when you frame it as an opportunity for a better future. Coaches can create desire for change among employees by expressing their own excitement and enthusiasm. While this tactic is effective, it can be misused if coaches create false hope and don’t believe in the change themselves.
  • Convert the strongest dissenters – By focusing their energy on the most vocal dissenters, coaches can reduce the spread of negativity. Another reason that converting vocal dissenters is worthwhile is because they may be some of the most vocal advocates when converted.
  • Highlight the tangible benefits – Case studies and testimonials can tangibly demonstrate the benefits of change. Conducting pilot programs and sharing the successful outcomes is also useful for generating buy-in.
  • Use money or power – This tactic works well with mid-level and senior managers that are critical about the success of the ERP project. Offering higher pay in exchange for project support can be worth the investment.

Aiming for a Higher ERP ROI

While many organizations aim for short-term cost savings, some organizations understand the importance of long-term ROI. They expect more from their ERP software because they know its true value lies at the intersection of people, processes and technology. They know that technology alone cannot deliver long-term ROI.

However, this is easier said than done. If you know the true value of ERP software but need a little guidance to achieve it, hiring an ERP consultant is great investment.

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5 Benefits of Business Process Management

5 Benefits of Business Process Management

Many organizations begin ERP selection without a solid foundation of business process management. When they look at the mass of ERP systems to choose from, they have no idea where to start because they don’t know what technology will enable their business processes or competitive advantage.

Clearly, business process management is important. At the most basic level, business process management helps you define business requirements that you can submit to your long-list or short-list ERP vendors. However, the value of business process management goes beyond business requirements:

Competitive Advantage

Misalignment between processes and strategy makes it difficult to deliver customer value. Business process management gives you the opportunity to design your processes to support your digital strategy and competitive advantage. Business design sessions bring together stakeholders from across the organization to promote strategic alignment and find opportunities to improve your competitive advantage.

You can protect your competitive advantage and minimize software customization by viewing processes through three lenses. Backoffice processes, like invoicing or procurement, can usually leverage out-of-the-box software functionality. Other processes are industry differentiators. These will guide your choice of ERP software since some ERP systems may not support niche functionality. Finally, there are processes that provide competitive advantage, such as product development or ecommerce. These may require software customization. While expensive, customization for the sake of competitive advantage is always worthwhile.

SAP vs. Oracle vs. Microsoft Dynamics vs. Infor

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Employee Buy-in

Defining your business processes allows you to identify organizational changes and communicate them to employees. Imagine telling employees, “there will be change,” without being able to outline specific process changes. This would not elicit buy-in.

Business process management also helps you understand roles and responsibilities as well as changes to organizational structure. This understanding facilitates change management activities as it enables you to develop a targeted communication plan.

Another way to elicit buy-in from employees is to involve them in business design sessions. When employees are allowed input on the changes made to their own processes, they will naturally support these changes and encourage others to support them, as well.

Organizational Alignment

When we say that business process management can lead to organizational alignment, we are talking about a certain approach to business process management. One approach relies on functional thinking, which is a way of thinking about processes in terms of specialization. The other approach relies on end-to-end process thinking, which looks at the entire value chain, including the intended purpose of each process and hand-offs between functions. The latter approach leads to organizational alignment.

Another name for this approach is value chain mapping. What does it look like? It’s all about breaking down functional silos and gaining end-to-end process understanding, visibility and control. You bring together various stakeholders to look for ways to increase efficiency across functional areas and not just within functional areas. By integrating processes across silos, you ensure everyone is working toward the same goals.

While many ERP consultants take a functional approach to business process mapping, Panorama uses value chain mapping. Make sure your ERP consultant takes this integrated approach.

Fewer Workarounds

Ideally, business process management will remove 90% or more of the workarounds your employees use to complete tasks. Employees use workarounds when processes are poorly defined. Sometimes, the current technology cannot support efficient processes anyway.

When mapping your business processes, be sure to differentiate between workarounds and actual processes. You don’t want to include workarounds in the business requirements you submit to ERP vendors as each requirement may add additional implementation costs. You can remove workarounds by designing new processes that negate the need for extra steps.

Another cause of workarounds is a lack of effective employee training. Fortunately, an ERP implementation is a great opportunity to train employees. You can use process documentation to design customized training materials. Training should be recurrent enough to support long-term retention and customized enough to address each employee’s unique processes.

Continuous Improvement

Business process management provides a foundation for building a center of excellence, which allows you to continuously improve. During business design sessions, you can develop key performance indicators (KPIs) to regularly measure performance improvements and project cost savings, such as decreased turnover.

While most organizations only measure improvements immediately after go-live, many benefits are achieved overtime, so you should continue to measure improvements years after go-live. This is especially true if you have a center of excellence since you will always be improving processes.

While continuous improvement is essential, it can be mismanaged. It’s important to involve the IT department in process changes as your ERP system should continually be configured to support new processes. If your technology cannot support these processes, employees will use workarounds and create new inefficiencies.

What is Your Business Process Management Approach?

An end-to-end process mindset can help your organization realize the benefits of business process management. But how many organizations use value chain mapping? According to a recent study by the American Productivity & Quality Center, the biggest challenge organizations experience with end-to-end process thinking is convincing executives of its value.

How can you overcome this challenge? Understanding the benefits of value chain mapping and being able to clearly articulate them will help you obtain buy-in.

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6 Tips for Assessing ERP Implementation Risks

6 Tips for Assessing ERP Implementation Risks

What would you do if your ERP implementation went over-budget? What if it caused an operational disruption? You would have to react quickly and deduce the reasons for failure. Once you get your project back on track, you’d have to make up for lost time.

This scenario is probably making your stomach churn. No one wants to waste time and money. That’s why many organizations take a proactive approach to risk mitigation. They develop a risk management plan before selecting ERP software. They also assess their project plan to ensure it has the right activities and right level of detail, and they perform continual assessments throughout their project.

Why Assess Your ERP Implementation?

  • You’ll have a comprehensive view of your project activities, performance and risks​.
  • You can detect errors early and proactively prevent errors.
  • You’ll minimize implementation risk and cost.

How to Assess Your ERP Implementation

Conduct Stage Gate Reviews

Stage gate reviews ensure the quality and completeness of your project plan. At the end of each implementation stage, the executive team and project team should determine if every deliverable for that stage is complete before moving on to the next stage.

This is also the time to assess the quality of work. Are you addressing business aspects, such as change management, or are you just focusing on technical aspects? What methodology and templates are you using? As you identify risks, you can include them to your risk management plan.

Stage gate reviews can reduce your likelihood of needing project recovery services, which is a last resort for many organizations. Even organizations pursuing digital transformation can inadvertently skip key project activities and find themselves in need of project recovery.

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Assess Your Project Management and Governance

Effective project management can mitigate many project risks. A good project manager knows who’s in charge of managing the project budget and timeline and has a good understanding of the roles and responsibilities of project team members. If this doesn’t sound like your project, it’s not too late to develop strong project governance. Panorama’s ERP consultants provide project auditing services that help organizations stay on-budget and realize expected business benefits. 

Focus on Organizational Change Management

When assessing your project plan, you might notice it’s a little heavy on technical activities and little light on people-related activities. Do you have a plan for identifying and mitigating change resistance? Do you understand the impact of change on each department and individual employees?

Your project plan should include change management activities that promote two-way communication and drive awareness of project goals. Communication works best when it’s informed by employees’ needs and concerns. By investigating the reasons for change resistance and determining the skillsets employees lack, you can develop a change management plan that addresses the entire organization – at the department and individual level.

Focus on Business Process Reengineering

Your project plan may be lacking a focus on business processes. If so, business process reengineering may be a good addition to your project plan. Business process reengineering ensures a new ERP system has the functionality to support your organization’s goals. Involving subject matter experts helps you determine business requirements and identify opportunities for process improvement.

For every process you improve or redesign, change management becomes more essential, so be sure your project plan considers the interdependency between business process reengineering and organizational change management. For example, you’ll need to document the change impacts of each redesigned process.

Assess Your Data Migration Plan

Organizations that develop a data strategy prior to implementing ERP software are more successful with data migration. The process is still arduous, but it doesn’t cause operational disruption. These organizations spend time defining the scope of data conversion and assessing data cleanliness.

A best practice for data migration is setting milestones and conducting multiple conference room pilots. Aim to have 25% of your data converted and cleansed for the first conference room pilot, 50-75% for the second and 100% for the third.

Assess Your Level of Customization

Software customization is costly, so it’s important to plan for it early in the project to avoid going over budget. While assessing your project governance around customization, you may find a lack of project controls.

Good project governance for customization includes predefined customization limits and a formal approval process for change orders. Executives should have the final say when it comes to additional customization. They will decide if it’s worth the extra cost by investigating the reasons behind the change order – did it originate from employees’ resistance to process changes or is it aligned with the organization’s digital strategy and competitive advantage?

What if You Identify Major Risks?

While assessing your ERP implementation, you may find holes in your project plan. It’s not uncommon for organizations to skip organizational change and business process management in order to accelerate their implementation. Even organizations pursuing digital transformation tend to overlook certain change management activities.

Fortunately, revising a project plan isn’t difficult if the project is still in its early phases. Most executives will not object to more project controls around customization. Some may object to organizational change management, but developing a business case can help you show the value of change readiness.

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4 Data Security Tips for Your ERP Implementation

4 Data Security Tips for Your ERP Implementation

New digital technologies, like AI an IoT, are augmenting the business intelligence provided by ERP software. While this business intelligence helps organizations improve the customer experience, it also presents new data security challenges. With great business intelligence comes great responsibility.

Better customer intelligence is generally beneficial to both the organization and the customer, but sometimes, it can be a burden. For example, a data breach can cost your organization millions in legal fees and lost business. You may also lose customers if they feel their privacy is threatened, not by a security breach, but by how you choose to use their personal data. Mitigating these risks requires an understanding of potential security threats and applicable compliance issues, such as HIPPA and GDPR.

How can you be proactive in identifying risks while still supporting revenue-generating initiatives across your organization? Here are four tips for enabling an innovative, but vigilant, ERP implementation team:

Evaluate your organization’s culture.

A customer-centric culture promotes data security because it encourages employees to listen to customers’ data privacy concerns and share them with executives. Let’s say you’ve implemented a new CRM system, and several customers are expressing privacy concerns. Your ERP implementation team should be the liaison between customer service reps and executives to establish a data management process and define security standards.

It’s important to develop a change management strategy that promotes a culture where data security is the responsibility of everyone in the organization. ERP software integrates data across the organization, so several departments likely have access to customer data. Improved data access is essential to digital transformation, so restricting data access isn’t the answer – better security is.

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Understand the role of the chief information security officer (CISO).

Your CISO can enable your digital strategy by leading cultural changes, such as encouraging open communication and prioritizing education. In terms of education, CISOs should regularly host cyber security trainings and provide educational materials in a variety of formats multiple times per year. Cyber security training is also an essential pre-implementation activity.

Open communication is especially important between the CISO and other executives. By scheduling regular meetings with privacy and legal teams, CISOs can build strong relationships across the organization. A foundation of trust makes it easier for CISOs to prove the value of data security by presenting credible data and suggesting possible next steps. This proactive approach is enabled by predictive analytics – CISOs should use business intelligence to protect business intelligence.

Develop strong governance processes.

Your CISO needs complete visibility into the organization’s supply chain and ERP selection process, so they can evaluate new technology from a data security perspective. By developing a vendor management program, CISOs can keep tabs on various ERP vendors and their associated security risks. Predictive analytics is useful here as well. It enables CISOs to quickly detect when an implemented system violates the organization’s security profile. Even the top ERP systems in your industry may have vulnerabilities.

Strong governance processes also help ensure legal compliance, especially with the International Organization for Standardization’s (ISO’s) IT security management standards. A security solution, like HyTrust, can serve as a compliance litmus test.

Be especially wary of IoT security.

The internet of things (IoT) plays a major role in ERP implementations for many organizations. Industry analysts predict that IoT and ERP will become an increasingly popular combination. IoT improves data insights and operational efficiency, so it’s not hard to see why organizations are drawn to it. If you’re considering integrating IoT with your ERP system, there are several security concerns of which to be aware.

IoT devices are vulnerable to cyber attacks because they communicate with other internet-connected devices, making them prime targets for hackers who want access to multiple data sources. IoT devices aren’t only a convenient target, but they’re an easy target – most organizations aren’t prepared for an attack and don’t have adequate protections in place. They don’t realize that a device managed by a third party may not have the same level of security as technology hosted on-premise.

A lack of due diligence on the part of the IoT provider is another reason hackers target IoT. Hackers know that many IoT providers haven’t taken the time to enhance their security as they were too eager to get their devices to market before competitors.

How can a CISO protect customer data stored and/or collected by an IoT device? One option is implementing an IoT device management platform, such as Amazon Web Services. These platforms enable you to install crucial software updates on all your IoT devices. Your ERP project team can also protect data by designing optimized business processes that reduce errors.

Convincing Your Boss to Invest in ERP Data Security

It’s not easy to prove the ROI of cyber security. Justifying the investment, requires an understanding of the threat landscape, attack probability and potential losses. With this information, you or your CISO can convince executives that ongoing cyber security is necessary to support the organization’s goals.

The implementation of a new ERP system is a great opportunity to discuss cyber security with executives. New technology brings new security threats which need to be addressed if you want to realize value from business intelligence and customer data. Consider hiring an ERP consultant to help you develop a cyber security business case.

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Top 6 Reasons for ERP Failure

Top 6 Reasons for ERP Failure

When recovering from a failed ERP implementation, the most common question organizations have is, “Who is at fault?” Organizations struggle to answer this question as the project involved many stakeholders, from the project team to the ERP consultant to the ERP vendor. A better question to ask is, “What were the root causes of failure in the overall project execution?”

We’ve learned several lessons from helping organizations with ERP project recovery and ERP litigation. Following are six common reasons for ERP failure:

Technical Focus Instead of Business Focus

The most successful organizations view their ERP implementations as business transformations rather than technology projects. They understand that a new ERP system has much more impact on the business than a Windows upgrade. ERP implementations have a significant impact on employees, business processes and the organization’s overall strategy. However, many ERP consultants are more focused on technology than people and processes. In contrast, our research shows that software functionality is actually one of the least important criteria for ERP success. So, stop thinking so much about SAP vs. Oracle, and start thinking about people and processes.

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Unrealistic Expectations

Embarking on an ERP implementation with unrealistic expectations is often the beginning of ERP implementation failure. Some ERP vendors lowball implementation cost and duration, which forces organizations to cut corners or absorb unexpected costs. Project plans should be realistic and not overly-aggressive. How can you tell if your plan is realistic? Start by determining the critical success factors that will make or break your project. What has worked for other organizations of similar size and industry? What challenges do organizations usually encounter? Chances are you will find that change management and business process reengineering are critical success factors that ERP vendors overlook. The recent SAP failure at Lidl demonstrates the importance of realistic expectations. The retailer defined strategic goals at the beginning of the project but didn’t consider the success factors necessary to achieve these goals. Seven years and 500M Euro later, it became clear that the budget for a successful implementation was more than the company could afford.

Lack of Executive Buy-in

The executive team may have approved the project budget, but their job is far from over. They need to form an executive steering committee to clarify the overall digital strategy and make decisions about resource allocation, timeline, budget and benefits realization. Executive involvement ensures the ERP implementation doesn’t become a technology project but fits into the organization’s overall strategy. Organizations that use ERP software to enable a long-term digital strategy are more likely to realize benefits, such as improved customer service and sustainable competitive advantage.

Insufficient Business Process Reengineering

Some ERP vendors will say you don’t need to focus on business process management because their software is built with industry best practices and can be implemented out of the box. While best practices may be appropriate for some areas of your organization, they may erase your competitive advantage in other areas. Focusing on business process reengineering prior to selecting an ERP system helps you design future-state processes that will determine your functional requirements. Today’s ERP systems are far too flexible to provide clear direction on how to run your business. Organizations that fall into this trap end up automating their existing processes rather than optimizing them for efficiency and competitive advantage.

Lack of Change Management

If there’s one thing that’s sure to prevent ERP failure, it’s organizational change management. In each of the 30+ ERP lawsuits for which we’ve testified or written expert reports, change management issues contributed to project failure. These organizations didn’t build a change management team and viewed change management as simply an end-user training exercise. They could have invested in organizational assessments, employee communications and customized training, which would have ensured that their employees effectively used the new ERP software and followed new processes and procedures. You can’t force employees to embrace change; it’s their choice and they may choose to resist it. Usually, this is subtle and non-malicious, but it can still undermine your ERP implementation.

Too Much Software Customization

Most organizations begin ERP implementations expecting little to no software customization, but in our experience, most clients end up needing at least moderate customization. While some customization is always necessary, customization gets dangerous when you customize functionality that should be standardized. For example, many back-office processes are not competitive differentiators, so standard software functionality is usually sufficient. If employees are pressuring you to customize processes like this, it’s a sign of change resistance. Decrease the resistance instead of increasing the customization.

Hiring Inexperienced Resources

Your systems integrator and your ERP consultant should both have relevant ERP experience within your industry. This goes back to the point about realistic expectations. How will you know what’s required for success unless you review lessons learned from similar organizations? An ERP consultant with industry-specific experience understands the challenges your organization might face and can ensure you have access to the right expertise. National Grid recently experienced an SAP failure due to the inexperience of its systems integrator. The systems integrator did not have experience implementing SAP in the US utility industry, so their work caused technical defects within the system that led to significant operational disruption. Systems integrators can easily misrepresent their capabilities, so it’s important to ask for relevant references.

How to Prevent ERP Failure

You can prevent ERP failure by looking for warning signs. If any of the above issues sound familiar, it’s not too late to change course. If you haven’t yet begun ERP implementation, you can avoid these six mistakes by developing a strategic and realistic implementation plan.

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How to Prepare Your Organization to Select ERP Software

How to Prepare Your Organization to Select ERP Software

When organizations decide to implement ERP software, they often jump right into ERP selection without taking the time to prepare. They assume they can select the right technology by simply evaluating software features and benefits.

However, there are many activities that should precede ERP selection. Before you start thinking about ERP vendors or perusing top ERP systems lists, consider focusing on these seven activities:

 

Ensuring Organizational Alignment

The key to a successful ERP selection is ensuring that stakeholders across the organization understand and agree with the organization’s strategy objectives. Then, you can consider how you might use technology to achieve objectives, such as improving the customer experience, creating new business models or generating new revenue. This isn’t the time to focus on specific technologies but to establish a foundation that ultimately will help you evaluate ERP vendors based on their ability to enable your strategy.

The Beginner’s Guide to Digital Transformation

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Developing a Business Case

What business benefits do you expect to realize from new ERP software? What are the expected costs? Knowing the answers to these questions is critical to justifying an ERP investment when executives ask about ROI. To really win them over, you should outline exactly how new technology will enable your organization’s strategy objectives. Most ERP failures can be prevented by ensuring stakeholders understand technology’s role in digital transformation.

 

Mitigating Change Resistance

As soon as you’ve made the decision to implement new ERP software, you need to inform employees. You may not know what specific technologies will be involved, but it’s never too soon to start communicating about the overall goals of the future ERP implementation. By evaluating your organizational culture and employees’ openness to change, you can develop an organizational change management strategy that helps employees embrace change. Encouraging employee buy-in is not just about increasing system usage. Employee buy-in is critical long before implementation. For example, employees can provide useful input during the selection process. Building enthusiasm before selection can maximize their future engagement.

 

Defining Business Requirements

Many organizations do not have clearly-defined processes, but as they embark on their ERP project, they realize the necessity of business process mapping. Documenting current business processes helps you prioritize functional requirements and identify opportunities for improvement. While no ERP system will address every business requirement, process mapping gives you an idea of which requirements are most important. Process mapping also helps you understand who owns processes and data, so you know who to involve in the selection process. ​

 

Transforming Business Processes

While some processes may only need incremental improvements, processes related to your competitive advantage may need a complete overhaul. In other words, they need business process reengineering. This is an approach to business design that focuses on breaking down functional silos and providing end-to-end process understanding. It involves thinking about the purpose of each process and the hand-offs between functions. Ultimately, this approach builds process efficiencies that will guide your selection of ERP software. If a system can’t support your optimized processes, then it’s not right for your organization.

 

Understanding Deployment Options

Do you want to house ERP software within your IT department or host it externally? Complex organizations that need heavy IT control, gravitate toward on-premise deployment, while organizations that need less control generally outsource their IT functions. Here’s some of the terminology you might encounter as you’re evaluating deployment options:

Cloud​ ERP

Software hosted in an external environment that is either single tenant or multi-tenant

 

SaaS ERP

Software managed by a specific vendor in a multi-tenant cloud environment

 

On-premise ERP

Software hosted within your organization​

 

Hybrid​ Cloud

A combination of on-premise hosting and cloud hosting

 

Managed Services​

All platforms and technologies hosted by external provider

 

Developing an IT Strategy

In addition to deployment options, there are several other IT strategy decisions to make before ERP selection. For example, you’ll need to determine an integration strategy – do you want a single ERP system or several best-of-breed systems? While best-of-breed ERP systems can help you build competitive advantage, they also create technical complexities, integration challenges and data issues. Many organizations implement single ERP systems since they enable standardization, which can reduce change resistance. However, single ERP systems don’t allow you the flexibility to choose the best software for each of your functional areas. This means you might need more software customization, which is costly.

 

Selecting an ERP System

These seven activities will help you establish a foundation from which you can effectively evaluate ERP vendors. Now you have the necessary information to analyze the functional and technical fit of any digital technology on the market. You know what criteria are most important to your organization, so you can narrow down your potential options until you find the technology that supports your digital strategy and improves your competitive advantage.

Schedule a Free 30-minute Consultation With an ERP Software Selection Expert!