Managing an ERP implementation is no walk in the park. ERP failure is a very possible threat. If you think it can’t happen to your organization, think again. According to our 2018 research, 28% of organizations claim that their ERP implementations failed. With global ERP implementations, the risks are even greater. Global organizations face challenges such as language barriers, time zone differences, differing regulations and cultural differences.
As a result, global organizations have unique considerations when crafting an IT strategy and ERP project plan. Here are six tips to help you prepare for a successful global ERP implementation:
Before selecting ERP software, it is important to determine whether your organization needs to redesign any of its business processes to maximize operational efficiency on a global scale. Business process reengineering is especially challenging for global organizations because a process that works for one branch of the organization may not work for another. For example, taxation structures vary from country to country. While one country may tax profits equally, another country may employ a progressive tax rate on profits. Furthermore, accounting methods may vary from one country to the next, making standardization difficult.
Addressing these country-to-country differences requires organizations to confer with stakeholders at every location. During these sessions, you should not only determine what processes should be improved, but you also should consider what processes should be standardized versus localized. Only after the future state is documented across all locations, should you submit your business requirements to ERP vendors.
Poor business process reengineering is one of the most significant differentiators between global ERP success and failure. Our consultants take a proactive approach to process improvement, which allows our clients to achieve increased efficiency and integration across locations.
What are the 6 secrets to digital transformation that are helping organizations build competitive advantage?
Implementing an ERP system one location at a time can make operational disruptions more manageable. Issues can be addressed in smaller batches and thus be avoided in consecutive phases. An alternative to this phased approach is the “big bang” approach, where an organization goes live with all modules and locations at once. We don’t recommend this approach for large, global organizations.
What’s wrong with the “big bang” approach? Consider this case study: In 1999, Hershey rolled out its ERP system using a “big bang” approach. The company ignored suggestions to implement over a period of 48 months, insisting they could do it in 30 months. Unfortunately, they were implementing three new ERP systems, which multiplied their likelihood of failure. Ultimately, errors in the ERP implementation caused them to miss over $100 million in orders. Today, the Hershey case serves as an example of global ERP failure.
Carefully selecting ERP software generally saves time and money in the long term. However, in the short term, it can consume plenty of time and resources, especially when looking for an ERP system that can address global needs.
One aspect of ERP selection where global organizations should be especially diligent is checking references. Has the vendor has worked with global organizations in the same industry as yours? Additionally, it is important to ensure the vendor’s ERP software supports global variables, such as currency and regulatory differences.
Resistance to change is a natural reaction for most employees. At Panorama, we develop organizational change management plans to reduce this change resistance. As a result, our clients experience higher adoption rates and maximize their business benefits.
One of the factors that affects user adoption within global organizations is process standardization. For example, employees at certain locations may find it difficult to accept new standards of product nomenclature or new credit management policies.
In our experience, global ERP implementations require an intense focus on change management. This means conducting focus groups to understand employees’ pain points and using creative tactics to engage employees throughout the project. Change management also involves the development of a communications plan to build employee awareness, desire, knowledge and ability regarding organizational changes.
Many executives view an ERP implementation as secondary to running their business. As a result, they allocate minimal resources to the project, and these resources usually don’t have an influential role within the organization.
Allocating influential team members to the project ensures that new technology and processes align with the corporate strategy. These individuals are more capable of providing the input that ERP consultants need to build a digital strategy and implementation plan.
Often, organizations get hung up on fancy new software features while losing sight of actual performance. So, how will you quantify success or failure?
With global ERP implementations, it’s important to develop standardized performance metrics while consulting with department heads to determine individual performance metrics pertaining to each branch. These metrics should be well-defined and quantifiable.
Ultimately, determine what metrics move your company forward and begin tracking them after implementing your new ERP system to gauge ERP success or ERP failure.
Rolling out a new ERP system on a global scale involves many unique considerations. Should you standardize your processes, or keep them unique to each location? Does every location have adequate internet connectivity to support the software? Does your preferred ERP system support multiple languages and currencies?
Without answers to these questions, your organization might be heading towards ERP failure. However, our ERP consultants can analyze every aspect of your business to position you for a successful ERP implementation on a global scale.
Like the nervous system, ERP software delivers critical data from a variety of sources to a centralized hub where the information is analyzed. No one thinks twice about the nervous system when it’s working properly, but if it begins to break down, it has our full attention. Similarly, when an ERP implementation goes awry, it captures our attention, as it can negatively impact the organization’s supply chain and other critical business functions.
Many large organizations have struggled with implementing ERP software. Think Waste Management’s failed implementation of an SAP ERP system and Nike’s disaster with i2’s “software glitch.” While these high-profile ERP failures should serve as lessons learned, organizations don’t always take advantage of the insights.
To ensure you are aware of the potential pitfalls of implementing your ERP solution, we’ve outlined five mistakes to avoid:
Organizations often find themselves dissatisfied with their current financial, supply chain management or human resources management systems and decide that a completely new ERP solution is the answer to their dissatisfaction. While a new system is warranted in many cases, there are instances where a refinement of the existing system might be what’s really needed.
We’re all familiar with the notion that sometimes our eyes are too big for our stomach. The same can be applied to the decision to implement a new ERP system. Falling in love with live demos, sales pitches and the perceived successes of other organizations can lead you to the conclusion that a new system is the answer to all your problems.
Prior to implementing a new system, we recommend establishing a task force to determine whether a new system is necessary. It may also be worth engaging an independent consulting firm, like Panorama Consulting Solutions, to give you an unbiased opinion as to whether a new system is the best choice for your organization’s needs.
What are the 6 secrets to digital transformation that are helping organizations build competitive advantage?
Companies that have decided to move forward with an ERP implementation often get mesmerized by software features. This can occur when the project team doesn’t properly identify the organization’s core needs. In addition, project scope may not be well-defined and financial requirements may be unclear.
When planning for implementation, your organization should have clearly-defined objectives. Also, you should define key performance indicators as well as a project budget and timeline. This will ensure there is consensus around what success looks like.
Just because an ERP project plan has been created doesn’t mean it will be effective. Many an ERP implementation has run aground because of insufficient planning. The person responsible for the planning was ill equipped to handle that responsibility. Bad planning often involves overly-optimistic timelines as well as a lack of business process reengineering and organizational change management.
When preparing for an ERP implementation, your organization should incorporate high-level strategic planning as well as meticulous planning at the detailed level. All phases of planning should consider every impacted department and every employee group. In addition, you should develop a contingency plan in anticipation of potential problems.
Assigning critical staff to your ERP project without careful planning can be a recipe for disaster. Positions can be difficult to adequately backfill, meaning resources may only have part-time involvement in the project. The result is a lack of focus and commitment leading to inadequate data migration and an inability to maintain deadlines.
Proper allocation of resources is vital, and your organization must understand the internal commitment necessary to ensure success. Building a strong project team will reduce your chance of ERP failure.
The growing reliance on extensive ERP systems and the rising number of third-party modules has led to increased software customization. Customization can create extremely complex systems and extend your project scope. This is not to say all customization should be avoided, but it’s not realistic to view an ERP system as a solution that meets all needs in every situation.
Your organization must build strong project governance to ensure customization does not get out of control. Relying on capable project managers will help control scope creep and reduce the chance of cost overruns.
Investing in ERP implementation planning and ensuring organizational alignment will help you avoid ERP failure. Panorama’s ERP consultants can help you develop an implementation plan that accounts for all critical project activities and mitigates common project 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:
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.
What are the 6 secrets to digital transformation that are helping organizations build competitive advantage?
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.
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.
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.
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.
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.
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.
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:
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.
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.
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.
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.
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.
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.
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.
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.
What are the 6 secrets to digital transformation that are helping organizations build competitive advantage?
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.
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.
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.
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.
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?
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.
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:
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.
What are the 6 secrets to digital transformation that are helping organizations build competitive advantage?
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.
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.
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.
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.
Ultimately, every project comes down to one thing: the potential ROI. Here are eight tips for developing a business case to convince executives to invest in new technology:
Are your employees spending too much time on mundane, repetitive processes? Present that information in terms of lost productivity and labor costs. Are you continually missing deadlines? Calculate the penalties you’ve had to pay as a result. Sound financial reasoning sets your recommendation off on the right foot.
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.
“Organizations don’t prosper,” notes Harvard Business Review, “unless managers in the middle ranks . . . identify and promote the need for change.”
Executives don’t always see the day-to-day issues that impede productivity, but they do have the responsibility to listen to and solve their organization’s challenges. Presented with sound reasoning, a business case for an ERP implementation can convince executives to invest in technology that enables transformation.
An ERP implementation can be daunting for any organization, but it is especially challenging on a global scale. Global organizations typically want to standardize business processes across international operations, but they also need the flexibility to serve diverse customers, employees, economies and regulatory bodies.
The decision to globalize or localize isn’t black and white. Every organization has different operational, organizational, cultural, regulatory and financial considerations. Let’s discuss some of the pros and cons of standardization and differentiation. We’ll also provide tips on how to balance globalization with localization.
International organizations, particularly those that acquire other companies, often have non-standardized business processes. Standardization allows these organization to scale for growth by consolidating business processes. Consistent processes drive operational efficiency and enable global visibility into operations. Financial reporting, for example, is faster and easier when processes are standardized.
While standardization can require a large investment in business process reengineering, you’ll ensure that all processes at all locations are designed to bring you competitive advantage. Global organizations lean toward standardization when they want to deliver quality goods or services with a high degree of predictability.
A balance between globalization and localization becomes even more important when you consider organizational change management. The need for organizational change management at global locations typically increases the more you standardize your processes. While standardization may save money in the long term, you’ll need to invest in extensive organizational change management in the short term. This means more than end-user training. It also involves communicating change impacts and project status updates.
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.
The most challenging aspect of a global digital transformation might be aligning corporate culture around a singular goal. You must account for cultural differences and language differences.
Executive support is especially important during global ERP projects as local entities may be extremely resistant to globalized processes. People can’t embrace what they don’t understand, so you must communicate the reasons for transformation and how it will benefit employees and the organization as a whole.
Organizational readiness assessments are also critical to global projects. You can assess risk by analyzing your organizational attributes as well as the characteristics of proposed changes.
Does globalizing your business processes reduce the amount of ERP software customization you’ll need? Sometimes, but not always.
While you may be standardizing your processes based on a global standard, you’re not necessarily standardizing your processes based on software functionality. However, there is typically an overlap between globalized processes and processes that are standardized based on software functionality, as they both mostly involve non-value add processes. It’s probably safe to say that more globalization usually equals less customization (but more organizational change management).
Another strategy for reducing customization is to allow flexibility in each location’s choice of software and ERP vendor. This can make globalization more difficult than usual but not impossible.
This may be your first global ERP implementation, but it’s not ours. Our ERP consultants understand the challenges of both globalization and localization and how to find the right balance based your organization’s unique objectives.
Many organizations begin ERP implementation with the goal of selecting ERP software that will bring a high ROI and measurable business benefits. They soon realize the project is much more complex than they expected, and the benefits are much more elusive.
So, how do you set realistic expectations for the selection and implementation process? The first step is understanding the scope of change and the role technology will play in your ERP project. At one end of the change spectrum, technology is used to support existing processes. At the other, technology enables process redesign and supports changes to an organization’s business model.
In the latter case, technology is not the focus of the project. Instead, the project team focuses on transitioning people and processes. Before selecting technology, the organization defines a corporate strategy and technology strategy and designs new business processes to support their vision. Reengineered business processes mean new roles and responsibilities for employees. Both business process reengineering and organizational change management account for significant time, budget and resources. If you’re at the other end of the change spectrum, your expectations will look very different.
Still not sure what level of change your project entails? Ask yourself why you’re implementing new technology in the first place. Maybe you’re changing your business model or expanding into new markets. If so, your ERP project could be more aptly called a business transformation, as you will experience significant changes to not only your technology but also your people and processes.
Once you’ve determined the scope of change, you can begin developing a business case. Some organizations use business cases to justify their investments. Others use business cases to estimate their return on investment. In both cases, you will need realistic expectations.
By benchmarking against technology transformations at similar organizations, you can ensure you’re setting achievable goals. Executives, the project team and other stakeholders should have a clear understanding of the expected timeline, budget, resource allocation and benefits realization. If issues arise, they should be informed so they can readjust their expectations. It’s normal for slight adjustments to occur throughout the project.
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.
The total cost of ownership of an ERP system can be difficult to determine. Don’t assume that smaller vendors will be substantially cheaper than large vendors. The cost depends on several factors, such as level of customization. Also, don’t assume that cloud solutions will be less expensive than on-premise solutions. The cloud may be cheaper upfront, but more expensive over time.
The project timeline can also be difficult to estimate. Sometimes, years can go by before you realize all expected business benefits. The project itself can take years, so add a few years on to this, and you have your benefits realization timeline. The selection phase can take up to six months.
To make matters more difficult, the budget and timeline are both subject to change. During the span of a technology transformation, you will undergo normal organizational changes unrelated to the project, such as staff turnover. You should take this into account when developing a project plan.
Some changes to budget and timeline are avoidable, however. Accounting for all project activities upfront will help you avoid surprises. Here’s a partial list of overlooked activities to include in your project plan:
When your organization needs new ERP software, it’s tempting to just focus on technology. In many cases, CIOs are expected to do so. However, if you want to set realistic expectations, you must account for the people and process aspects of technology transformation. These account for significant time, money and resources.
You should also develop a business case to give executives an idea of the ROI and business benefits they should expect – and articulate the benefits realization timeframe. Most importantly, you should understand why you’re implementing new ERP software, so you can determine the scope of change.
Panorama’s next ERP Boot Camp is just around the corner on May 22nd-23rd in Chicago, Illinois. Boot Camp is two days of intensive, interactive ERP education in an informal setting. The subject material covers everything from software selection to implementation to organizational change management. We ensure guests walk away with a robust understanding of what constitutes ERP project success. Still not convinced that ERP Boot Camp is necessary for you and your team? Read on for other reasons to attend:
Too many teams go into an ERP implementation with little or no ERP project management background. An ERP implementation can be a defining point in your career — don’t you want to be armed with all the information you need to make it a success?
Panorama instructors are ERP consultants with boots-on-the-ground experience. They will discuss the variables that can mean the difference between success and failure. Their goal is to provide best practices on everything from negotiation to licensing to customization . . . and more.
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.
Forget giant auditoriums. Panorama’s ERP Boot Camp is an intimate, collegial experience with plenty of time for interaction, networking and relationship-building. Presenters are accessible, and presentations are interactive. We limit attendance to ensure a small group format. If you are looking for personalized training, you have found the right place.
One of the most challenging tasks for a project manager is to cut through all the hype to discover what their ERP software truly can provide. Because our instructors are independent consultants, they are not afraid to give you the real story on software selection and implementation. Our collective opinion is based on hundreds of ERP implementations.
Panorama’s expertise in salvaging failed ERP implementations and our expert witness work in ERP lawsuits gives us an unparalleled breadth of knowledge to help you avoid pitfalls and build a framework for ERP success. If you are still on the fence, consider this: Is an ERP implementation really something you can do without proper training? You become licensed before flying an airplane and certified before diving in the ocean. Why assume an ERP implementation would be any less risky?
Equifax, Yahoo, Uber. 2017 was the year where no data seemed safe. How secure is your ERP?
There have been improvements in cyber security in recent years, but ERP systems are still highly vulnerable to attacks. In fact, 89% of experts in the field of cybersecurity anticipate increased attacks against ERP systems in the future [1]. Of that number, 33% expect to see a significant increase in attacks. It is easy to see why it is so important for businesses of every size to invest in cybersecurity as part of their ERP.
Attackers are intent on taking the quickest and easiest route to the most valuable data. They are well aware that ERP systems are likely to have this data and can have multiple weak points of entry. It is not unusual to find companies that have no plan in place to safeguard their confidential data.
There are additional reasons why ERPs are a favorite target of attackers. One is businesses are not aware of their risk because they tend to put off regular cyber security audits. The result is potential problem areas aren’t identified. Thus no security measures are taken to fix the problem and prevent an incident. This is particularly true for cloud-based ERPs that are often accessed by multiple users over different platforms. You should be especially aware if you are using an outdated or legacy ERP. They often simply can’t stand up to new-age security threats.
It is a common misconception that hackers are only interested in attacking ERP systems of large corporations. The truth is that over 70% of cyber attacks are made against businesses that employ less than 100 people [2]. One reason for this is because small businesses often rely solely on the ERP vendor to provide cybersecurity.
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.
Software updates are usually done to fix any weak spots or bugs the developer has identified. If you are not automatically updating your ERP software, you are increasing your system’s vulnerability.
Routinely updating your anti-malware and antivirus software equally important. This will ensure security patches are implemented as soon as they are provided. When patches are not applied, vulnerable areas serve as an entry point for hackers.
If you have employees that telecommute, encryption can help protect your data.
Private clouds are a bit more expensive, but they tend to have more stringent safety measures and fewer points of entry for hackers. Plus, private clouds are usually easier to monitor, making it easier to identify and deflect possible attacks.
Finally be certain that your employees know the importance of cybersecurity. If you have not already educated employees on what they can do to mitigate risk, do so immediately. The top two causes of cybersecurity breaches are negligent employees and inadequate passwords [3].
Require they create strong passwords that are long and use multiple characters. Encourage employees to change their passwords regularly. Employees should never use the same password for multiple accounts.
ERP vendors can provide ongoing maintenance and support but your organization’s best bet for fighting cybercrime is hiring an independent ERP consultant who recognizes the importance of contingency planning and developing a solid IT strategy.
Enterprise resource planning, or ERP, can be a daunting phrase and an even more daunting process especially for the novice user. When trying anything new, it can be confusing and maybe even a little scary. However, it is important to push past the fear because the benefits of ERP can be overwhelming! The process of implementing ERP Software can be difficult, even for experienced users so keep in mind the following things when implementing ERP:
ERP software integrates many functions and departments all into one system platform for easier tracking and organization. Obviously, there is much more to it, but at a basic level it is the system or systems that keep a company running. Originally created to help manufacturing companies keep track of massive amounts of inventory and invoicing, ERP is now used across multiple industries for multiple jobs. The uses are endless, as well as the options. Larger companies could not run or scale successfully without effective ERP systems.
Now knowing what ERP is used for, at least at a basic level, a novice user should be starting to think about what ERP can do for them. An ERP consultant, someone with a background in both business and technology, can help guide a novice user through the process of ERP implementation, including the initial choosing of the software. For example, whether the novice user is at a large company or a small company and how robust the functionality needs to be, can be great questions to answer during the initial phases of developing a business specific ERP strategy.
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.
Once the software choices have been determined and chosen, ERP implementation can begin. The process can be long and tedious, and this is where an ERP consultant will come in handy. ERP implementations can take from months to years, depending on the size and complexity of the company. For example, a company with multiple locations or currencies is commonly a longer and more difficult implementation. In no way does a novice user have to go through implementation alone. Aside from a consultant, a novice user can also rely on resources such as Panorama’s educational ERP Boot Camp, webinars, white paper studies and more. Implementation needs a clear plan and competent knowledgeable players to work well and stay on track. Many first time ERP implementations go over budget and take longer than expected for a myriad of reasons.
As ERP is such a wide topic, novice users are encouraged to do as much research as they can to get up to speed. Again, there are a variety of resources from which to choose. An ERP Consultant is often the best bet to help with mapping and planning as well as making sure the project stays on track. Also, when looking at ERP costs, remember that it is an investment meant to save a company money and time in the long term, so don’t be so concerned with sticker shock. Your ERP “investment” should make your company more efficient and able to compete in your marketplace.
Investing in ERP software can make a huge difference in the profit and functionality of a company when executed well. ERP Software was built with the idea of saving money for companies via efficiencies and automation. Duplication of tasks are often eliminated. Increased customer satisfaction should be a by-product. This should lead to increased ROI and profits and the ability for companies to grow without adding bodies. As mentioned above, an independent ERP consultant can be of significant help. They do this every day for a living.
We work with many clients who implement new ERP software simply because they “have to.” In my experience, this isn’t a good enough reason to move forward – not if you want your initiative to succeed and deliver a competitive and transformative advantage to your organization.
On one hand, it makes sense that you may need to do something with the outdated legacy system you’ve outgrown. Perhaps the system is no longer being supported by the software vendor. Or, it could be you’ve customized the solution so much that it’s not realistic to keep using it. Or, you’ve simply outgrown the current system and can’t scale to meet your future growth objectives.
ERP software typically can do much more than simply replace your old technology. Most current software has grown leaps and bounds in overall functionality, such as in advanced planning, business intelligence, analytics, artificial intelligence and a host of other areas that can enhance your competitive advantage. However, this functionality is likely to get watered down – or worse yet, not leveraged at all if your primary goal is to simply replace your current system.
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.
ERP implementations are difficult and often tricky to begin with. The degree of difficulty grows exponentially when you don’t have clear direction and goals for the project. Consider two projects: one with the goal of replacing an outdated legacy system and another with a mission of improving the customer experience to better compete with competitors. Which one do think is more likely to deliver a greater return on investment and fuel growth?
With that in mind, it’s important to step back and define a clear vision for your ERP or digital transformation project. What exactly are you trying to accomplish? What business improvements do you expect? How will modern technology help you realize those improvements? How will your project governance align with those goals during implementation? These are just a few of the plethora of questions you’ll need to ask yourself (and your team) to succeed.
You’ll also want to clearly define the expected business benefits and improved efficiencies in great detail. Your business case should be more than just a means to justify the project; it should also provide a way to track and manage benefits going forward. Think of it as a living, breathing benefits realization plan that has significance and doesn’t sit on the shelf collecting dust after the project begins. This is one of the best ways to ensure you realize the full benefit potential and ROI of your investment.
Besides longer-term benefits, a focus on bigger picture goals also ensures that your ERP implementation or digital transformation goes well. All too often, companies with a “replace the old system” mentality get lost during implementation. They don’t have clarity when making critical decisions, such as how to streamline business processes, how to define scope, whether to customize and a host of other issues. Without a clear vision of what you are trying to accomplish, you’re shooting in the dark when making these decisions.
How can you ensure that you’re focusing on gaining lasting competitive advantage as opposed to replacing an old system? The easiest way is to start during your implementation planning process. Ensure these questions are answered and integrated into your implementation strategy, project charter and overall project approach. The balance of benefits like improved workflow and integrated processes must equal better customer satisfaction. This is something that independent ERP consultants such as Panorama can help with.
Learn more by downloading, Seven Pre-implementation Steps for a Successful Implementation.
In a world that is constantly changing, ERP software has also had to evolve to meet customers’ needs and stay competitive. There have been significant changes over the last five years with some being more of an improvement than others. Here’s a quick look at some top improvements to ERP software since 2013.
Without a doubt, one of the biggest improvements to ERP software involves a company’s ability to switch to the cloud. There are several reasons companies have had such a positive response to the cloud. For example, it offers greater security by frequently testing for vulnerabilities and making certain data is securely backed up with a disaster recovery plan in place. The cloud also offers anywhere access to information by partners, staff, and customers and eliminates the need to purchase additional storage/server hardware. As a bonus, the up-front costs tend to be less expensive[1]. In fact, in Panorama’s most recent 2018 ERP Report shows cloud deployments increased to 85%. This was a surprising increase from the previous year which shows more and more companies are taking advantage of this type of ERP software system for their business.
Over the last five years, more and more small businesses have adopted ERP systems. The reason for this is simple. There have never been more ERP software options. From niche and industry-specific software to software geared specifically to small businesses. Whether on-premise or cloud solutions, small businesses have tons of options to choose from. They even have the ability to customize their solution. This has led to more small and medium-sized businesses to consider implementing ERP software.
Vendors have made every effort to shorten integration periods. For example, interfaces are cleaner, faster and more accurate. At the same time, the introduction of simpler applications has not only reduced integration times, but also decreased setup costs and improved effectiveness. Check out the video “How to Develop the Right ERP Strategy for Your Organization” to help with this process.
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.
Security is an increasing concern for both individuals and companies, especially since data breaches have become increasingly sophisticated. This is why ERP vendors have put so much time and effort into offering top-notch data protection with highly advanced permission protocols, encryption and high-quality firewalls.
As SaaS (software as a service) applications and cloud solutions have merged into existing ERP systems, they have given businesses the ability to run operations using a single, end-to-end platform. This has eradicated the need for different systems and greatly enhanced interconnectedness between various departments. This has resulted in instantaneous department communication, quicker response times and operations that are quicker overall. For many companies, this has led to a substantial boost in both production and revenue.
In recent years, there has been a huge push to incorporate big data into ERP software. The reason for this is simple. Big data has the potential to be a game changer by improving information density, providing greater predictive analytics to potentially uncover hidden patterns and shortening decision making processes. Plus, it allows companies to effectively track incredibly detailed production data, which has resulted in enhanced processes, productivity and overall quality.
As you begin your journey to select and implement ERP software for your company, there are several factors to consider. As you get started, it’s important to have selection criteria to help you choose the ERP option that is the best fit for your business. Below are five things you don’t want to overlook in your ERP software selection:
The biggest reason you might be considering a new ERP system is to help you achieve your business goals in terms of growth and efficiency. This should be the central focus of your selection process, as well as increasing customer satisfaction.
However, there are other important aspects to consider when making your selection as well. Considerations like company size, number of locations and annual revenue are important factors when considering various ERP software. Look for software that has worked for other businesses with a similar profile to yours for maximum success.
You’re probably already considering the functionality of potential ERP software in your decision-making process. But don’t forget to consider the underlying technology as well. Technology changes so rapidly that an ERP software using newer technologies may benefit you in the long run.
It’s also important to consider how the technology of your potential ERP system will mesh with the technology strategies and preferences already in place with your IT department. This will make an ERP implementation a much smoother process.
Cost is always a major concern when considering your ERP selection, and it should be. There are ERP software options at a variety of price points, so it’s important to consider your budget when assessing options.
Make sure you factor vendor fees into your bottom line. Get the scoop on annual support fees and implementation costs, and make sure that’s a part of the conversation when considering the overall cost and value of an ERP system.
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.
When assessing how a potential ERP system might work with your business, make sure you look at best practices in your specific industry. ERP systems all provide support for business areas that are utilized across the board, like accounting and marketing. But not every option is going to offer you the best fit for all the daily functions your business uses. Be sure to consider all the unique and specific needs of your business when trying to find the best ERP system for you.
The people involved in your ERP software selection process will be key to a successful implementation. You want to make sure that you are going to be well supported by a potential vendor.
When trying to determine whether you’ll receive maximum support, consider all the support systems a vendor has to offer. This means everything from consulting and implementation, to user groups and phone support. Having the right kind of support will maximize the success of your implementation.
There are so many factors to consider during the ERP selection process that it’s easy to overlook some of these important things. Make sure to add these areas of focus to your list if you want to choose the best ERP system for your business.
My last blog covered 10 things that contribute to ERP failure or success. After reading this list, you may wonder what you can be doing differently to ensure your ERP implementation is successful.
Most poor decisions made during a project don’t become evident until later – often after it’s too late – so it’s important to recognize some of the risks and common pitfalls that less experienced practitioners often fall prey to. With a solid understanding of these risks, you’ll be able make more effective decisions that are more likely to lead to success and are less likely to undermine your ERP initiative.
Below are five decisions that may be jeopardizing your ERP implementation without you even knowing it:
Sometimes no decision can result in a poor decision, as is often the case with organizational change management. Executives and project teams don’t always recognize the need or importance for change management. Worse yet, some decide not to invest the time and resources required to ensure that this critical success factor is properly addressed. If you’re not actively focusing your team and resources on organizational change and its impacts, then your decision is actively undermining your chances for success.
While detailed transactional workflows will largely be dependent on the software being implemented, it is a mistake not to define your desired business processes and workflows to some degree. If you think about your business processes in the context of how they should operate regardless of technology, it will give you a clear direction on how your new software should be configured and implemented. Most modern ERP systems are far too flexible to assume they will provide a “silver bullet” in defining your future state processes.
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.
Some executives and IT heads assume they can handle these sorts of ERP and digital transformations themselves. Others assume they can completely outsource the initiative to outside ERP consultants. Either extreme is ill-advised, so it’s important to find the right balance. You need to leverage outside help along the way, but you also need to ensure that your team owns the project and its results. This is the only way to ensure a sustainable solution that doesn’t require consultants for the long term.
ERP project governance and controls are at least as important as the project manager you put in place – if not more so. These controls ensure that the project team stays focused. There will be requests that increase scope (think customization requests) so the management of time and cost must be deliberate ensuring the project stays on track for the long haul. This should be included as part of your charter during the early stages of your transformation.
To use a common saying, “executives are often guilty of stepping over dollars to pick up pennies.” In other words, they focus too much on containing short-term implementation costs, even if the end result is higher long-term costs after implementation. This risk is further complicated by the fact most budget and time estimates are unrealistic or arbitrary to begin with, so adhering to them can be extremely risky.
Making good decisions also requires a strong diverse project team with skill sets that complement each other. Forming a winning team takes thought and commitment. I once worked alongside a project team that recruited team members by specifying that they only wanted internal members that would be “desperately missed” by their departments. Their goal was to form an “A” team. This initiative had project team charter and had planned for backfilling. You have often heard me say that ERP initiatives should not belong only to the IT department.
In this blog we’ve talked about some of the decisions and details that will be crucial to the result of your project. While executive oversight is imperative, adding the outside perspective of an independent consultant is a best practice to help alleviate risk while adding knowledge.
As one of the oldest and top enterprise software companies, Oracle has developed an extensive portfolio of business software applications. Therefore, it should be no surprise that it is one of the most widely used and researched ERPs. Whether you are familiar with Oracle ERP Software or just beginning to consider what they have to offer, this will help you see how they compare with other ERP providers.
Most ERP providers work to add features via in-house software development. Oracle has chosen primarily to acquire top software companies and incorporate their products into existing Oracle software. Over the past few years, Oracle has made multiple billion-dollar transactions. For example, in 2016 they purchased NetSuite for $9.3 billion. In 2017 they purchased Aconex, one of the world’s top construction management platforms, for $1.2 billion [1]. Thanks to these strategic acquisitions, Oracle has managed to appeal to a wide variety of niches, giving them the opportunity to gain new customers.
While other ERPs started transitioning to the cloud early on, Oracle lagged way behind. Oracle’s focus on pushing a traditional on-premise ERP system has cost them significantly. In 2017, Oracle’s cloud revenue was listed at $5.6 billion, while Amazon’s cloud revenue was $17.5 billion and IBM’s was $17.0 billion. Oracle continues to try to make up for their late entry [2].
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.
According to data made available through Clash of the Titans 2017, Oracle’s implementation period averages 24.5 months. This is about one month longer than Microsoft Dynamics at 23.6 months [3]. SAP is 23.1 months, while Infor’s implementation period is a much shorter 15.3 months. There are several possible reasons, including an initial project scope expansion, resource constraints or technical issues. Another reason might be training issues. Oracle’s software has the reputation of being less user-friendly than other ERPs.
Partially due to their history of making huge acquisitions of software developers in every possible niche, Oracle has managed to develop ERP applications for almost every industry. Regardless of company size or existing business challenges, Oracle can usually provide a solution. Oracle is used by professional service providers, healthcare companies, local and state governments, nonprofit agencies, and public and private schools. Other ERPs are designed only for specific niches or companies of a certain size.
Oracle has developed a reputation for being serious about security. However, they are not resting on their laurels. Currently, Oracle is in process of acquiring Zenedge in an effort to give their firewall security an even greater boost [4]. Zenedge’s Distributed Denial of Services (DDoS) mitigation and Web Application Firewall (WAF) are used by thousands of companies all over the world to ensure their system is protected from a potentially malicious attack. This protection will now extend to all Oracle Apps.
[1] https://www.investopedia.com/articles/insights/081816/top-8-companies-owned-oracle-orcl.asp
[2] https://www.forbes.com/sites/bobevans1/2018/02/05/why-microsoft-is-ruling-the-cloud-ibm-is-matching-amazon-and-google-is-15-billion-behind/#207025ae1dc1
[3] https://www.panorama-consulting.com/comparison-between-sap-oracle-and-microsoft-dynamics/
[4] https://www.pymnts.com/news/partnerships-acquisitions/2018/oracle-boosts-firewall-security-with-zenedge-acquisition/
Implementing an ERP system for your business can be a daunting and time-consuming task. However, choosing the right ERP consultant can make the process go a lot smoother and provide you with much needed ongoing support. Here are some of the ways the right “independent” ERP consultant can improve your ERP project.
The experience and expertise in implementing an ERP system is perhaps the biggest way an ERP consultant can help you. Your ERP consultant will know the best practices for implementing your program. They do it every day! They’ll also help you stay on time and on budget. They will also view your project from an outside perspective which can be valuable. It’s important to ensure that the consultant you choose fits your culture and is independent. Truly independent consultants are not software resellers and they do not receive compensation from software companies.
To make the most of your ERP consultant’s expertise, be sure to choose a consultant who has experience implementing ERP software in your specific industry or with other similar businesses. A good consultant will also suggest best practices from outside of your industry that could be of help to your business if incorporated.
Every project has unique needs and once the initial plan and strategy is done, the day-to-day details start. Some people need a lot of guidance while some need assistance when problems or questions pop up. An experienced consultant will have shepherded multiple ERP projects while most companies have not. Whatever your specific situation is, let your ERP consultant know your level of experience so he or she knows how to meet your needs. Also let your ERP consultant know how you like to communicate and share the communication plan that’s been drafted for the project.
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.
You probably have project managers in your company, but they also have other responsibilities. ERP consultants can manage all facets of the ERP implementation process to ensure a timely and cost-effective result. The ERP consultant will also help your company set/validate realistic goals, budgets and deadlines.
A consultant will understand industry standards and best practices and will help you negotiate your ERP software costs with vendors. Consultants often have established relationships with vendors and can help expedite the process. Consultants also have your best interests in mind. Typically, a consultant can negotiate a lower overall software package price on your behalf.
You may task your consultant with help validating a software that you have chosen or hire them to lead a more comprehensive software selection process. Ultimately, they will help you ask the right questions to ensure you are getting the best product fit for your business.
Your ERP consultant can also provide you with unbiased opinions about what’s working or not working regarding your business processes. This expert outsider’s perspective can be invaluable throughout your implementation project. Most companies and employees have personal biases, based on their job roles and how things have been done in the past. Business process improvement should also be tackled before the implementation begins.
Your ERP consultant will help you meet your objectives and keep your team on track. It can be easy to lose focus with all the excitement of a new system. But your ERP consultant will keep your decisions in line with the big picture and company goals for the new system.
Your consultant will also help you address any insufficiencies in your business operations (think redundancies) and help ensure that your overall process for doing business is optimized.
Implementing an ERP system can mean big changes for your business. These changes can be overwhelming for your team and the rest of your workforce. An ERP consultant can help usher in these changes. Employees are often worried about job loss or having to learn new duties or routines.
An ERP consultant can help with training and provide resources to make sure your workforce is ready and able to make changes to their daily routines. Your consultant can also act as a mediator when differences of opinion will undoubtedly arise. Having someone to help manage the human element of your ERP implementation is important. A common cause of ERP implementation failures is not dedicating enough time, money and resources to ensure that employees understand and are supportive of upcoming system changes.
As you can see, choosing the right ERP consultant can improve many facets of your ERP software selection and implementation process. Finding a truly independent consultant like Panorama Consulting Solutions may be one of your biggest challenges.
Lets say you work at a large-scale manufacturing company…..
In most manufacturing companies, the top three expenses are: salaries / employee pay, facility cost and material cost. An ERP system can help alleviate at least two of those major costs. By lessening a major overhead cost, ERP software is a great investment which will continue to help save money both in the long-term and short-term.
The average investment for a newly implemented ERP system for 10 users can be around $30,000 to $40,000. The cost can fluctuate, depending on amount of users, customization, ERP brand and overall need.
Aside from cost of the software, there should also be time accounted for time employees to learn the new system as well as the initial time for the implementation to occur.
The ERP system which you and your company decide to implement should be known beforehand so that you can map out an appropriate strategy. If you’re not completely sure what you need, this can best be determined by working with your ERP consultant. He or she can help you determine an overall digital transformation strategy, goals of implementation and common pain points which ERP can help to address. Most ERP Consultants at Panorama have a background in both business and technology plus have many years in a multitude of industries.
For skilled labor, the hourly cost can vary but the national average for a variety of skilled labor positions can be between $17 to $25 per hour according to the Bureau of Labor Statistics. In manufacturing, having skilled labor is key.
Assuming that all workers in your facility earn hourly pay that is somewhere within this range, these costs can add, especially if many of them regularly work overtime. Not to mention if your manufacturing company is large and you have 1,000, 10,000 or 100,000 laborers. Regular overtime can put strain on company budgets not to mention it indicates that there is some inefficiency somewhere.
With ERP implementation, your employees can more easily track jobs, material and track efficiency which can cut down on overtime while improving efficiency.
In some cases, ERP implementation can help companies save up to 20% in labor costs while making employee efficiency go up as well.
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.
With ERP software, many functions are combined all on one platform which means that employees can spend less time researching questions for clients, less time switching between individual systems and less time tracking down invoices and payments. These sorts of admin costs can eat up a lot of time which is usually superfluously spent time anyway.
In some cases, admin costs can be reduced by 10% and again make for more efficient operations as well as lessening employee stress by allowing them to constructively use their time.
Along with staff and salary-based cost savings, ERP also helps employees track material costs as well as helps with material planning. It is not uncommon for a manufacturing operation to order too much or too little material to fulfill an order. If too much material is ordered then it may just sit in a corner unused. If too little material is ordered, the cost of ordering more on quick demand can get expensive.
ERP software can help with material planning and inventory tracking and save, on average, 10 to 15%.
Clearly, the savings that ERP can provide outweighs the initial investment required to start its implementation. Shaving these percentages from your facility helps save both money and time not to mention will make for happier employees who no longer need to spend their time inefficiently.
Today we published our brand new 2018 ERP Software Report, which summarizes the results from nearly 300 recent ERP implementations across the globe. While the data tells a similar story to years past, it also contains a few surprises.
First, it’s important to understand where we gathered the data. The average company in our sample generates $439 million USD in annual revenue, with a majority of organizations based in North America. Organizations in the study were in industries of all types, ranging from manufacturers, retail and distribution companies, construction firms, and a range of other industry verticals.
We summarized and analyzed this broad data set to arrive at some conclusions regarding trends in the industry, challenges companies face when implementing new ERP software, and lessons learned. This is the twelfth consecutive year that we have conducted the annual study.
Some results aren’t surprising to those of us that have been in the industry for a while. Others were a big surprise to the Panorama team and I.
Here are five surprising takeaways from this year’s ERP Software Report:
We saw a very large increase in cloud ERP software adoption this year compared to past years, with this year’s mix of SaaS and cloud deployments increasing to 85%, compared to 15% on-premise deployments. While this number may not be striking on the surface, it is a big difference from last year’s data, which showed less than 50% of organizations were deploying cloud and SaaS solutions.
The fact that the leading ERP vendors are pushing SAP S4/HANA, Oracle Cloud, and Microsoft Dynamics 365 cloud solutions so aggressively may finally be paying off for them. So, which is more surprising: the fact that cloud and SaaS adoption has reached 85%, or the fact that last year’s number was so low?
Past years have shown that the average total ERP implementation costs anywhere from 4% to 5% of a company’s annual revenue. This number includes a project’s all-in costs, including software licenses, implementation costs, hardware upgrades, organizational change management, training, backfilling internal resources, and any other costs associated with the transformation.
This year, that number decreased to 3.6% of annual revenue. While this may sound positive on the surface, it actually reveals a flaw in our data: since most deployments are cloud solutions (see point #1 above), initial costs are naturally going to be lower. However, our implementation cost data only captures the initial implementation costs – not the ongoing costs. In most cases, cloud deployment costs less money up front, but can increase longer-term outlays due to higher annual subscription costs. It is important to take this data with a grain of salt.
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.
Despite lower up-front costs, ERP implementation durations are increasing. While the total average duration increased a relatively innocuous 16.9 to 17.4 months, those that took longer than expected increased from 59% to 79%. Again, this can be largely attributed to the increase in cloud deployments, which creates a false sense of implementation speed and ease and results in unrealistic expectations along the way.
Operational disruptions saw a similar increase. Those that experienced a material disruption following go-live – such as being unable to ship product or close the books – increased from 56% to 66% last year. This isn’t comforting to most executives and points to some of the lingering deficiencies in the abilities of most ERP consultants’ and vendors’ ability to manage implementations well.
Customer satisfaction with their chosen and implemented ERP software increased to 68% this year. However, satisfaction with their overall implementations plummeted from 81% to 42%, which suggests that more companies are either struggling with their deployments and/or managing to unrealistic expectations surrounding those initiatives. Thought leadership such as Ten Tips to a Successful ERP Implementation, provide guidance on how to manage your digital transformation to success.
For the second straight year, organizational change management was atop the list of top reasons why projects took longer or cost more money than expected. Ironically, many organizations think they will actually save time and money by cutting this important corner, but our research tells a different story. You are more likely to find that you have underinvested in managing organizational change, and those that do find that they implement faster, less expensively, and with a higher ROI than those that don’t.
These five “surprises” may or may not be surprises to you. They also just barely scratch the surface of the many lessons and takeaways outlined in this 40-page report, so I encourage you to download the complete 2018 ERP Report to learn more, click on the button below.
Download the guide
Organizations today are not just implementing ERP software – they’re leveraging ERP software as part of their digital strategies and holistically addressing people, processes and technology.
Panorama Offers an initial Free Consultation on your ERP project. Fill out the form to claim yours!
Fill out the form to access the report.
SAP, Oracle, Microsoft Dynamics and Infor each provide robust ERP systems that can transform your organization. The data points in this report highlight common challenges that implementing organizations face when working with each of these ERP vendors.
Panorama Consulting Solutions developed the 2019 Top 10 Manufacturing ERP Systems Report to analyze the strengths of the Tier I and Tier II ERP systems best suited for the manufacturing industry.
Panorama Consulting Solutions developed the 2019 Top 10 Manufacturing ERP Systems Report to analyze the strengths of the Tier I and Tier II ERP systems best suited for the manufacturing industry.
Panorama’s 2018 ERP Report reveals best practices and lessons learned from nearly 300 organizations across the globe that have recently implemented new ERP systems, including SAP S4/HANA, Oracle Cloud, Microsoft Dynamics, and Infor CloudSuite.
Now that you have decided it is time to invest in ERP Software, it is time to make a huge decision that could greatly impact your business’s success and growth. Which Enterprise Resource Planning (ERP) software system should you opt to use? Use this guide to your ERP software selection.
Download the guide
The ERP systems featured in this report were chosen based on the strength of their manufacturing functionality as well as the amount of research and development invested in these products. We include top ERP systems for not just large companies but companies of all sizes.
The ERP systems featured in this report were chosen based on the strength of their distribution functionality as well as the amount of research and development invested in these products.
Fill out the form to access the report.
SAP, Oracle, Microsoft Dynamics and Infor each provide robust ERP systems that can transform your organization. The data points in this report highlight common challenges that implementing organizations face when working with each of these ERP vendors.