Lean Six Sigma is a phrase that encompasses lean manufacturing and six sigma process improvements into one overall management strategy. In order to understand how your company should embrace these principles, you must first understand the components of Lean Six Sigma and business process reengineering, particularly in the context of an ERP implementation.
Efficiency and quality cover a broad spectrum within the realm of manufacturing. We’ll use the example of hand-made products produced one-at-a-time by a single individual as the least efficient and most error-prone form of manufacturing. In contrast, we’ll use semi-conductor manufacturing, with its highly automated and digitized processes, extreme precision and repeatability as the high end of the spectrum. All manufacturing falls somewhere between the two, and where your company falls will determine the cost effectiveness of embracing Lean Six Sigma protocols.
Since roughly 50% of the efficiency gains for any lean project will come from organizational and layout modifications, it’s a good idea to take a look at how people and materials currently move within your manufacturing processes. Some things to look for include:
Physical Plant
Do raw materials enter the line and move along a straight path to their finished state?
How often are materials handled from the time they enter the manufacturing process?
How often are materials manipulated by people vs. machines?
Does your manufacturing facility have enough space?
Human Resources
Do you currently use people for tasks where machines could be substituted?
Do employees have cross-functional skill sets (i.e., do they have the capability to perform other tasks if their primary job is offline for any reason?)
Digitization
Your company’s current level of digitization is a good indicator of the gains to be realized by adopting a Lean Six Sigma approach. If your company’s functional groups (marketing, sales, accounting, etc.) use paper, have independent computer systems or don’t communicate directly with one another, you’re missing out on opportunities to increase efficiency and organizational readiness.
The goal of adopting a Lean Six Sigma strategy for your company is not about reducing defects to 3.4 million per widget – it’s about customer satisfaction. Well-designed manufacturing processes produce better products at lower cost while generating fewer complaints and product returns. Before implementing a new ERP system, organizations should adopt the Lean Six Sigma principles above and ensure that they are following a strong business process reengineering methodology.
This webinar clip covers two of the top ten predictions for the ERP industry as presented by ERP experts, Eric Kimberling of Panorama and Michael Krigsman of ZDNet and CxOTalk. This is the final installment of this mini series.
One of the most common challenges for entrepreneurs, CEO’s and other executives is the age-old dilemma: how much time should you spend working “on” your business instead of “in” it. Companies of all sizes, industries and geographies tend to struggle with finding the right balance.
Michael Gerber was one of the first to articulate this common challenge in his book The E-Myth Revisited. To summarize the general dilemma: executives at organizations often get consumed with “doing” the work rather than “building” a business that enables the work to get done. Although the book focuses more on this challenge in the context of startups and small businesses – where this potential pitfall is especially prevalent – it is something that companies and organizations of all sizes face.
For example, if a business hasn’t built appropriate business processes, defined organizational roles and responsibilities – along with other aspects of business infrastructure required to scale a business – the organization is more likely to experience stress associated with lack of business process clarity. In this type of environment, executives spend more of their time putting out fires, handling crises and managing exceptions instead of spending their time on the strategic aspect of “building” their business.
On the other hand, executives that spend more of their time working on their businesses tend to experience less organizational crises, stress and confusion. In addition, their business operations tend to run more smoothly and predictably. Perhaps most importantly – at least to most of our clients – is that these types of businesses are highly scalable and enable faster growth than their less effective counterparts. In short, these executives have taken the time to build a well-oiled machine, and as a result they spend less of their time managing problems and struggling with scalability.
This philosophy is especially important when considering how to manage your operations and IT infrastructure. Implementing a more effective ERP system is a way of working on the business and creating that consistency, predictability and scalability that successful organizations are vying for. Many executives have solved the struggle with the “fires” caused by outdated legacy systems and broken business processes by installing ERP software; however, simply implementing new enterprise systems isn’t enough for those that really want to work on their businesses. Too often, executives think that the ERP software itself will be the silver bullet for improving their business operations.
In addition to addressing their enterprise software, executives must also facilitate business process reengineering as a way to optimize their operations, deliver better results and create a foundation for future growth. The more successful organizations devote the time, energy and resources required to thoroughly improve their businesses – often times before they implement new ERP software. If they move too quickly they run a high risk of “paving the cow paths” or implementing software that simply automates their already broken, inefficient and non-scalable business operations.
Finally, effective organizational change management is crucial when working on your business, whether as part of or independent of an ERP implementation. Clearly defined roles and responsibilities, clear communication and understanding along with performance measures are all critical success factors while building a scalable business. Again, too often we see executives under the impression that simply implementing a new ERP system will fix those problems, but if anything, they exacerbate those organizational “people” issues while simultaneously undermining effectiveness and scalability along the way.
While it may sound easier said than done, working on your business rather than in it will determine your organization’s success and growth in the future. However, once you get your ducks in a row, life becomes quite a bit easier, less stressful and more effective for you, your employees and your customers.
According to our 2014 ERP Report: OCM, 60% of organizations experienced operational disruptions beyond one month after go-live. Did your organization experience operational disruptions at go-live, and if so, how long? Take a moment to vote in our poll and then check back to review the overall results.
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To learn how organizational change management can help prevent operational disruptions at go-live, download our 2014 ERP Report: OCM.
This webinar clip covers two of the top ten predictions for the ERP industry as presented by ERP experts, Eric Kimberling of Panorama and Michael Krigsman of ZDNet and CxOTalk. Check back next Thursday for the next installment of this mini series.
A few weeks ago I had an experience with the local DMV which has led me to believe that their current systems are less effective than a Viking battle helmet with the horns on the inside. The dealership told me to go to the DMV, promising that all of the appropriate paper work had already been transferred there. I walk into the dreaded building of sorrow and deceit, hoping everything goes smoothly. When I explain my situation to the clerk, she tells me the dealership never sent over the paperwork. My palm goes straight to my face. DMV: 1 David: 0.
Turns out, the paperwork had been sent to the central DMV office but was then sent to the wrong branch, lost and was never entered into the system. The clerk spent over four hours hunting it down and manually reentering everything. As I stood there waiting, I realized I was “that guy;” the guy no one likes because he’s holding up the line. The whole situation could have been an episode straight out of Seinfeld.
Why doesn’t the DMV have an online portal where the dealership enters the data in order to alleviate some – or most – of the hassle for the citizen? Why doesn’t the DMV track incoming documents so there is less chance of losing them? Why does a process that should take 15 minutes take 15 days?
The answer is technology and selecting the right system to provide a positive return on citizenship (ROC). In addition to functional fit, a system’s ability to increase ROC is an important criterion for your agency to consider when selecting software. If the DMV was to a launch an e-Government initiative, everyone’s DMV experience could be comparable to sitting on the beach, drinking a Piña colada out of a pineapple. While this may be a bit of an exaggeration, it is no exaggeration to say that citizens demand a lot from their government.
Selecting and implementing new technology in the public sector is extremely difficult as most government agencies are comprised of more departments than Costco Wholesale, each with a variety of requirements. With this in mind, here are three crucial steps to selecting the right software for your organization:
1. Requirements gathering: A successful project manager should collaborate with representatives from each department to gather a list of specific requirements. Then they must organize those requirements to determine a list of “must haves” that are essential to achieving a positive ROC.
2.Request for proposal development: The RFP process ensures that your agency is being transparent while gathering bids from ERP vendors. An RFP should be brief and to–the-point. It is designed to identify the most important requirements and to weed out ERP systems that would require extensive amounts of customization. Ideally, the selected system will require minimal customization.
3. Analyze the options: Your agency should narrow down the RFP responses to two or three vendors by conducting follow-up meetings. Have the short-listed vendors provide software demos to show how their system will support your agency’s e-Government initiative, and in turn, how it will help you serve citizens.
While the public sector’s technology budget isn’t exactly a facsimile of Warren Buffet’s investment portfolio, agencies have to do the best with what they have because citizens’ expectations are high, and the possibility of a highly-publicized ERP failure is always a dark cloud hovering over project managers.
The right technology can have a significant impact on citizens’ interaction with their government. Many agencies recognize the importance of a thorough software selection. Engaging an independent and innovative consultant to help your agency with its selection and implementation will ensure ERP success and a positive return on citizenship.
Written by David Ovitsky, Associate Business Analyst at Panorama Consulting Solutions.
Business process reengineering is a critical component of ERP implementations in any industry. Given the massive changes and turbulence sweeping energy-related companies across the globe, these elements are especially important in the oil and gas industry.
Oil prices have dropped to less than half of their prices just a few months ago, which has led to a significant shakeup in the energy industry. Exploration and production energy companies are closing facilitates to reduce supply, manufacturers and other suppliers with the goal to become more efficient against the current backdrop of free-falling prices for oil and natural gas.
Every industry has its own challenges and changes. These can include a weak global economy, regulatory changes, increasing competition or consolidation among industry players. Through these challenges we have gathered that the lessons of the energy industry are applicable to any industry or company going through changes.
Below are a few concepts to keep in mind for the oil and gas industry – or any other industry experiencing significant changes and obstacles:
Business process reengineering should focus on both top-line revenue growth and cost containment. Too often, energy companies and those in other industries put too much focus on top-line growth OR cost containment when they should be focused on BOTH. For example, just a few months ago, energy companies had a surplus of revenue pouring in. Fast forward three months, and now they are scrambling to find ways to scale back operations and contain costs to deal with these economic realities. These companies should not forget about additional ways to leverage more top-line growth, especially in an environment with a shrinking market. Effective business process reengineering will look at both sides of the business benefits equation.
Process improvement should touch all major areas within a company. Just as process definition and improvements should focus on revenue growth and cost containment, it should also address multiple areas within your company. As integrated as most companies are – whether in energy or other unrelated industries – business processes shouldn’t be addressed in isolation. Instead, they should be addressed in an integrated way so that the efforts are able to generate more “bang for the buck” and deliver a solid return on investment (ROI). This approach also ensures that inefficiencies aren’t simply shifted from one functional area or business process to another, which is typically the case when business processes are improved in isolation.
Business process reengineering efforts should precede any ERP implementation or IT initiative. Too many organizations – including those in the oil, gas and energy industry – fall into the “implement a new ERP system and the process improvements will come naturally” trap. In order to get the full business benefits of a new ERP system, it is important to define and even implement many of the process changes prior to selecting and implementing a new ERP, CRM, SCADA, fixed asset or mobile workforce management system. This is something we covered in more detail in a past blog: Five Reasons Why Business Process Reengineering Should Happen Before Your ERP Implementation.
Align organizational change management with your process reengineering efforts. Defined business process improvements are meaningless if they aren’t implemented and if employees aren’t adopting them. For this reason, organizational change management activities should enable the desired changes from a people perspective. For example, detailed business processes by department or workgroup should be defined and communicated in a targeted fashion well before end-user training. In addition, your organizational change activities should include more tangible performance metrics and KPIs to track the improvements over time. You can learn more about our recommended organizational change management strategy and playbook by viewing our on-demand webinar.
While these lessons are not necessarily unique to the oil and gas industry, this vertical underscores some of these industry-agnostic lessons that are useful to anyone considering business process reengineering or an ERP software initiative.
Process manufacturers from many industries can improve their productivity and profitability by using ERP software. Fully integrated ERP software links a company’s data and helps to organize the entire manufacturing process.
ERP software allows for the sharing of real-time information between many departments and provides company leaders with a single source from which to access company-wide data. There are a number of areas where ERP software is particularly useful.
1. Manufacturing: Using ERP software to manage the manufacturing process allows all of your important data to be accessed in real-time. This helps in eliminating costly errors, speeding up production and greatly minimizing the possibility of production delays.
ERP software tracks available inventory, orders and the production process. It also allows for production planning and keeps histories of past product runs. Recipes and formulas can be created and managed using the same software.
2. Inventory: ERP software allows manufacturers to track their inventory from the time that it’s ordered until it’s delivered to the customer in its new form. Production planning is simplified by having a clear picture of the amount and types of raw materials that are available. ERP software also facilitates the ordering of necessary supplies.
An inventory system helps track important details about the raw materials such as lot numbers, serial numbers and production line information. This helps manufacturers meet recordkeeping requirements and is invaluable during a recall or audit. ERP software also allows the manufacturer to run detailed reports.
3. Quality: Integrated quality control systems help manufacturers ensure they are providing high quality products to their customers. Quality is tracked throughout the production process. ERP software allows for mid-run quality checks making it possible to correct errors as they arise instead of finding them later.
If there is a problem during production, ERP software can keep a history of which materials and equipment were used. This information allows for adjustments to be made in the future.
4. Sales: ERP software helps organize the sales process. The support begins with customer resource management functionality allowing sales teams to keep detailed records about customer contacts, including who was contacted, when they were contacted and the result of the sales call.
The software will also assist with creating quotes and doing order entry. Because the ERP software is fully integrated, each sale can be followed from the point of initial contact through delivery to the customer.
5. Financials: ERP software makes it easier for manufacturers to effectively manage their financials. The core software may include: a general ledger, accounts payable, accounts receivable and purchase orders. Past, current and future transactions can be entered anytime. Entering future data gives manufacturers the ability to do cost forecasting for future jobs.
Since ERP software is fully integrated, manufacturers can keep a close watch on the financial health of their company. It is designed to simplify recordkeeping while allowing tighter process controls and more robust reporting.
Written by Karly J. Peters, Marketing Manager at ProcessPro.
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.
This webinar clip covers two of the top ten predictions for the ERP industry as presented by ERP experts, Eric Kimberling of Panorama and Michael Krigsman of ZDNet and CxOTalk. Check back next Thursday for the next installment of this mini series.
The global design of an ERP system needs to consider standardization, business benefits and the integration of political cultural differences within an organization.
From an IT perspective, before engaging an organization in global design, it is important to define a framework of how IT plans to drive change with the new ERP system and how the system will be supported. In essence, align IT before beginning an ERP implementation. This will often entail hiring additional resources and adjusting the existing IT structure.
Organizations and IT departments often walk into global design without agreeing on a framework for the alignment of the key components. This often results in time delays, cost overruns and frustration.
The items that should be addressed prior to the software implementer’s arrival include:
1. Establish a balance. With a goal of standardization, take the first step to balance your organization’s landscape. Different departments will have different levels of complexity; therefore, it is best to group departments by complexity to assist in the implementation rollout plan.
2. Obtain senior management buy-in. Senior management should have buy-in to the following reporting structures:
Sales reporting by product lines and customer types
Inventory reporting by product lines and customer types (if applicable)
COA for consolidation and the level of structure required by head office with a balance of autonomy at the local level
Ensure that these reporting structures are signed off by senior management to avoid rehashing the discussions during implementation.
3. Address the key operational components of forecasting and inventory management that drive the flow of inventory. This will increase alignment regarding the following questions:
How will sales and inventory forecasts be determined and by whom?
How will DRP and MRP run between facilities?
What will the facility and warehouse structure be?
4. Ensure accurate data management. Data management is the last core item that will integrate the entire organization. Many organizations have a smorgasbord of data due to acquisitions, mergers and quirky historical management decisions. Data management should involve definition of the following:
Who owns the data?
How will the data be cleansed?
What are the IT and business user roles?
Reporting requirements and data management will provide your foundation for data warehousing. From a cultural perspective, data management will encourage teams to work together and help your organization address issues before the software implementers arrive. By addressing these items before the software implementers arrive, your team can have a clear vision for implementation instead of hashing out your vision in front of the software implementers.
This webinar clip covers two of the top ten predictions for the ERP industry as presented by ERP experts, Eric Kimberling of Panorama and Michael Krigsman of ZDNet and CxOTalk. Check back next Thursday for the next installment of this mini series.
This webinar clip covers two of the top ten predictions for the ERP industry as presented by ERP experts, Eric Kimberling of Panorama and Michael Krigsman of ZDNet and CxOTalk. Check back next Thursday for the next installment of this mini series.
ERP implementations are challenging propositions for companies looking to adopt new enterprise systems. This fact is true for companies of all sizes, industries and levels of complexity, but is especially true for small businesses.
The good news is that small businesses have a number of options to choose from when evaluating potential ERP systems. Traditional ERP vendors are moving downstream to find more sources of customers and revenue in the small business segment, while a host of upstarts and best-of-breed solutions are providing niche solutions for smaller organizations.
Unfortunately, along with these options comes the reality that small businesses are often times not well-equipped to manage the complexities and challenges of ERP implementations. More specifically, they habitually lack the bandwidth, skills and experience to make these initiatives successful. More often than not, these smaller organizations fall prey to the various traps of ERP implementations, such as budget overruns, slippages to project timelines and lack of business benefits realized.
Below are five of the most common mistakes that we see small businesses make when trying to manage ERP implementations for their organizations:
Mistakenly thinking that their ERP implementation will be simple and cheap. According to our experience and research, small businesses are just as likely as Fortune 500 companies to spend too much time and money on their implementations without realizing the expected business benefits. ERP implementation pitfalls don’t discriminate, meaning that the same challenges that haunt large, multi-national organizations create problems for smaller businesses as well. No ERP implementation is simple or cheap – not even for the smallest of organizations.
Unrealistic implementation expectations. In addition to thinking that ERP implementations are simple or cheap, small businesses often have unrealistic expectations in other areas as well. For example, they often think that they won’t need as many resources to make their projects successful or that they won’t need to spend much time reengineering business processes. However these thoughts couldn’t be further from the truth, so it is vital for any size business to take the time to make sure they have realistic expectations related to implementation time, budget, resources and critical activities in order to be successful.
Failing to focus on the future state of the business. The first two challenges typically result in a third challenge, which is to gloss over the future state of the business. Since most small businesses implement new ERP systems because they want to scale for future growth, it is important for them to adequately define business processes and requirements that will take them into the future rather than simply “paving the cowpaths” and automating business processes as they are now.
Neglecting organizational change management. Change is hard, even for employees of the smallest, nimblest and most entrepreneurial businesses. In fact, change related to ERP software can be even harder for smaller and more innovative organizations since they are used to being nimble, but not used to adopting the discipline typically required by ERP systems. For these reasons, it is important to not overlook organizational change management. Critical project activities such as training, communications and organizational readiness may not take as much time or effort as they do for large companies, but they are still important nevertheless.
Outsourcing the ERP implementation to ERP consultants. Most smaller organizations we work with are very lean with very little extra bandwidth to take on the requirements of an ERP implementation. With this backdrop it can be very tempting to call in the ERP consultants to take care of everything. While this may sound good in theory – and your ERP consultants may like the idea as well since it means more money for them in the short-term – your project will not succeed without a minimum level of involvement and commitment from your own executives and team members. There is no magic formula for the right mix of internal and external resources on your project, but it is important to have some sort of balance.
To be fair, small businesses aren’t the only ones to make these five mistakes. However, these challenges seem to be more common and more pronounced among small- and mid-sized organizations, so it is important to keep these pitfalls in mind as you prepare for your ERP implementation.
According to our 2014 ERP Report, 83% of respondents employed the services of an ERP consulting firm during their ERP project. The areas where the consulting firms provided guidance varied from ERP Selection to Benefits Realization. Where did a consulting firm provide guidance for your organization’s ERP project? Take a moment to vote in our poll and then check back to review the overall results.
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If you would like to learn more about how Panorama can help make your ERP project a success, please visit our ERP Services page.
Recovering from a failing project is an incredibly difficult process. It can require a change in project scope, a hard look at requirements, an introduction of new methodologies and clear project controls. In some extreme situations, the project team and consultants may need to be replaced.
After a sobering, no holds barred assessment; the following actions must be taken.
1. Reexamine the ERP Software. Determining if the ERP software was originally a good fit for the organization is the first step to recovery. The recovery team must determine if the project team evaluated the ERP options appropriately or chose specific software based on invalid assumptions. While the software is often the immediate culprit, often times it is merely a symptom of the real failure issues: failure to provide adequate change management and/or clinging to outdated processes.
2. Reorganize the ERP Project with the Experts. A failing ERP implementation shares many characteristics of bankruptcy. Reorganization, refocus and accountability are necessary actions to begin the road to recovery. An independent set of eyes can avoid the blamestorming game, move the project into results-oriented brainstorming and ultimately get back on track.
3. Identify, Educate and Provide the Resources to Move Forward. While it is tempting to throw the failure out the back window, walking away does not solve issues that required an ERP implementation in the first place. In fact, simply trying to erase the ERP system will do nothing but derail future effectiveness, agility and return on citizenship (ROC) that are still required by the government. The right resources are likely inside the organization and can be refocused on the revived ERP implementation with the right mix of leadership, change management and backing. One thing seems abundantly clear: there are still a great deal of ERP and other software projects running off the rails. Blaming and rebooting ERP vendors is only one fix in a broader ecosystem that includes the government customers and the system integrators. Solving this problem requires close coordination and an independent catalyst to keep them on track, on time and on budget.
Over the years, our team has had the good fortune of working with some of the world’s most innovative and well-respected companies in the world. Within our portfolio of 300+ client organizations, two have been featured as case studies of effective innovation in Clayton Christensen’s classic book The Innovator’s Dilemma.
The fact that these innovation-minded organizations hired us to manage their ERP initiatives begs an important question: how do innovative companies manage their ERP implementations differently than more average organizations? Not surprisingly this is because they manage their projects much differently than most.
Here are three ways that innovative ERP implementations differ from the norm:
1. They aren’t overly concerned with hard and fast budgets and timeframes. This may sound like blasphemy to the CFOs reading this entry, but this is an important differentiator for innovative versus average implementations. While the average company sticks to their budget and project plan come hell or high water, more innovative companies recognize that there’s a lot that they don’t know when they first establish their project plans and budgets. In addition, these advanced companies also recognize that flexibility is important to achieving truly leapfrog improvements to their business models.
Advanced ERP software functionality such as advanced mobility and analytics typically does not get implemented until later in the implementation cycle. Unfortunately, most companies run out of the time and money required obtain these advanced functions, but more innovative organizations ensure that they find the resources to implement these important business processes.
2. They are more likely to explore creative and alternative implementation strategies. According to our 2014 ERP Report, most ERP implementations deploy a phased strategy rather than a big-bang approach. While this may be no surprise to most, the innovative-minded companies we have worked with tend to explore more creative and effective ways to implement their ERP systems. For example, some will deploy a more iterative, agile implementation approach rather than more typical waterfall methodologies. These agile approaches can enable quicker realized functionality when compared to more standardized approaches.
3. They focus on post-implementation benefits realization. While most companies implement ERP systems for technology sake or are forced to because their legacy systems have become outdated, more innovative organizations tend to have more business-focused justifications that drive their overall ERP implementations. This philosophy helps direct the focus of the project team throughout the implementation, such as how they handle business process management and organizational change management.
This business focus shows how their ERP systems are managed after implementation. Forward-thinking organizations define specific performance measures and target levels of performance that they expect to see from their ERP implementations. This disciplined approach is more likely to translate to tangible and measurable business benefits in the long-term.
Innovative companies may not find their ERP implementations to be slam-dunk easy wins, but they do tend to be more effective and successful in their initiatives. Learn more by downloading An Expert’s Guide to ERP Success.
There are many facets of an ERP implementation that can affect timeline, which is why it has become an important factor in any ERP project. According to our 2014 ERP Report, over 73% of companies had duration overages during their ERP projects. Did your company complete its ERP implementation within its original timeline? Take a moment to vote in our poll and then check back to review the overall results.
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If you would like to see how Panorama can help make your next ERP implementation a success, check out our ERP Implementation page.
Convincing executives of the merits of a new ERP system can be an uphill battle for many organizations. While employees closer to the front lines feel the pains of outdated legacy systems, executives often need a more tangible justification for new ERP software.
Many of our clients fight this internal battle for months – or even years – before getting the executive buy-in and support they need for an ERP implementation. Too often, operational inefficiency becomes overwhelming before the organization decides to make a change.
Here are five ways to convince your boss to invest in new ERP software:
Quantify the negative impact that your current processes and systems are having on your business. Anecdotal examples and people’s intangible frustration with the status quo typically isn’t enough to convince most executive teams that a new ERP system is necessary. Instead, executives want to see the dollars. You should quantify the negative impact that the current state is having on the business. For example, what percentage of customer orders is missed because of an inability to forecast demand, manage inventory or track orders? Better yet, how does this metric compare to your competitors? This type of quantitative ammunition will make a more compelling case for your cause.
Focus on quantifiable potential business benefits. Just as you want to quantify the negative impact current systems are having on your business, you also want to quantify the positive business benefits that a new system will have on the operations going forward. Nothing sells executives on potential investments as much as a solid return on investment analysis.
Provide independent and third-party validation that new ERP software will help your business. While the above will help strengthen your case, having the same analysis be conducted and delivered by an independent third-party is even more powerful. ERP consultants and others with extensive ERP implementation experience can be helpful for identifying potential system alternatives and benefits as well as helping define the most realistic roadmap going forward. Side note: make sure that the third-party you leverage is truly independent and not aligned with any ERP vendors.
Demonstrate what you will do to reduce the risk of the project. Not much scares executives more than risk, so it is safe to assume that most of your higher-ups have read the horror stories about Hershey, Avon, Waste Management, Marin County and all of the other high-profile companies that failed miserably in their implementations. Rather than trying to hide from the risk, highlight your risk management plan to identify and mitigate risks as they arise. It may help to go one step further and identify risks that you and your consultants see early on and share your plan to mitigate existing risks.
Underscore the change management activities you plan to leverage to make the project successful. Most executives understand that an ERP implementation won’t be successful without effective organizational change management. Instituting a focus on change management will help proactively mitigate the ERP implementation risks that most organizations face.
Not every boss or executive can be sold on a new ERP system – and some are too risk adverse to do anything until the organization can simply no longer function in the current state – but by addressing these selling points, you may be able to pave the way to new ERP software for your entire organization.
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There are many facets of an ERP implementation that can affect budget, which is why it has become an important factor in any ERP project. According to our 2014 ERP Report, over 52% of companies went over budget during their ERP projects. Did your company complete its ERP implementation within is original budget? Take a moment to vote in our poll and then check back to review overall results.
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If you would like to see how Panorama can help make your next ERP implementation a success, check out our ERP Implementation page.
Improving business processes has always been a key reason executives spend so much time, money and heartache perfecting their ERP implementations. Whether they are working to increase service to their customers, become more efficient and/or increase top-line revenue growth, most organizations look for some sort of tangible improvements to their businesses. With that said, business process reengineering is typically the only way to achieve these benefits.
However, something happens along the way to undermine those potential business benefits. After the ERP implementation goes live, most companies find that their business processes aren’t quite as efficient as they thought they would be. And to add insult to injury, business processes somehow end up looking a lot like the way things looked before their ERP implementations.
In our recently published 2014 ERP Business Process Management Report, we found that 100% of respondents had some sort of material operational disruption at the time of go live. After looking into this, we found that this disruption was largely due to poorly defined business processes. These disruptions are not of the usual “employees aren’t quite as productive” variety either. They are more significant, such as not being able to ship product or close the books with the new ERP system.
Below are just a few more examples of statistics we found in our 2014 BPM Report:
Of the companies experiencing operational disruptions, 60% lasted at least one month or more.
Roughly two out of three (63%) of organizations said that they experienced difficulty adjusting to new business processes.
Only 47% changed their business processes to leverage functionality of the new ERP system. The remainder automated existing processes, changed the software to fit their desired business processes, and/or didn’t focus on business processes during implementation.
The good news? An overwhelming majority (87%) either improved key business processes or all of them.
A key factor when dealing with project timeline and budgetary overruns was due to business process reengineering challenges.
So what does this all mean for those of us about to embark on a new ERP implementation? Here are three things to keep in mind to help ensure that you achieve the best business process reengineering results possible:
Recognize that not all your business processes are created equal. Many of our clients feel overwhelmed by the sheer number of business processes and sub-processes that need to be documented, analyzed and improved. Rather than be stunned into inaction, we have found that it is more effective to prioritize your business processes and focus on reengineering those that are going to deliver the most bang for your buck. For example, an engineer-to-order manufacturer is more likely to realize significant business benefits from reengineering their product configuration business processes than they are analyzing their accounts payable processes. This will help ensure that you get the benefit of business process reengineering without having to derail the momentum of your project by overanalyzing your operations.
Integrate your business process reengineering and organizational change management activities. New and improved business process documentation doesn’t mean much if your people aren’t executing the envisioned operations. Rather than treat business process reengineering and organizational change management as two separate silos within your project plan and team, we have found it much more beneficial to integrate those activities. For example, the same people defining the new business processes should also be the ones defining the impacts of the new business processes on your various departments and workgroups. This is the most efficient and effective way to get the biggest bang for your buck in your business process reengineering and organizational change management activities.
Ensure your project plan includes enough time and resources to properly account for business process reengineering. Most project teams don’t ignore business process work because they want to. Instead, they often simply don’t have the time to address this and all of the other important project activities. However, those teams that are working within a more realistic and comprehensive project plan are more likely to tackle this important area – and their projects are exponentially more likely to succeed and deliver measurable business benefits as a result. Make sure you have a realistic plan to begin with and you will be one step ahead of most ERP implementations from the start.
Lost ERP business benefits and inefficient business processes don’t necessarily need to be a foregone conclusion. Companies that have realistic expectations and plan the right way from the get-go are more likely to dedicate the time and focus on these important business process reengineering activities throughout their ERP implementations – and they are typically more successful as a result.
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The 2020 ERP Report summarizes Panorama’s independent research into ERP customers’ selection and implementation decisions and their project results. Based on this data and our client experience, we provide insights into the most important ERP success factors for organizations desiring more than just a technology implementation.
Our 2020 Top 10 ERP Vendors Report highlights the vendors that our ERP experts have found to be strong in functionality across a variety of industries, including manufacturing and distribution, professional services, retail and more.
Looking for ERP selection advice? Our report provides that, as well!
SAP, Oracle, Microsoft and Infor each have a large market share, especially when it comes to targeting enterprise-level organizations. This report analyzes some of the notable differences between these four ERP vendors. These differences may help guide organizations in their ERP selection decisions.
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.
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Deciding between SAP and Oracle is difficult. This the client needed software that would position their organization for continued growth, but internal bias put functional fit in the back seat. Ultimately, Panorama’s independence and expertise gave the client the insight necessary to make an objective decision.
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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.
Panorama Consulting needs the contact information you provide to us to contact you about our products and services. You may unsubscribe from these communications at any time. For information on how to unsubscribe, as well as our privacy practices and commitment to protecting your privacy, check out our Privacy Policy.
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.
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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.
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Lean Six Sigma is a phrase that encompasses lean manufacturing and six sigma process improvements into one overall management strategy. In order to understand how your company should embrace these principles, you must first understand the components of Lean Six Sigma and business process reengineering, particularly in the context of an ERP implementation.
Improving business processes has always been a key reason executives spend so much time, money and heartache perfecting their ERP implementations. Whether they are working to increase service to their customers, become more efficient and/or increase top-line revenue growth, most organizations look for some sort of tangible improvements to their businesses. With that said, 
