Cloud ERP and on-premise ERP each have their benefits. The best choice for you will depend on your organization’s structure and business strategy.
While this post focuses on the benefits of cloud ERP, it is by no means superior to on-premise software or hybrid cloud environments. The benefits you realize from any technology will depend on your project execution before, during and after implementation.
Here is a technology-agnostic perspective on the reasons some organizations choose to implement cloud ERP:
1. Better Business Intelligence
Cloud technology allows organizations to access data remotely without complex technical configuration or robust IT staffing. Over the past two years, the number of organizations deploying business intelligence (BI) in the cloud has doubled. Cloud BI adoption is especially prevalent among sales and marketing departments as they rely on real-time data to understand and improve the customer journey.
When it comes to data access and data storage, cloud ERP has several advantages over on-premise ERP. Cloud technology is more scalable for storing large amounts of data and can provide access to data gathered by IoT technology.
While researching cloud ERP systems, you’ll likely run across many lists of “top ERP systems.” These lists are often based on the amount of research and development vendors are investing in their products. The most innovative ERP vendors are heavily investing in cloud BI.
SAP vs. Oracle Case Study
SAP and Oracle both invest heavily in cloud technology. However, our client was skeptical about cloud scalability and unsure if the products were mature and proven.
Cloud ERP systems are faster to implement than on-premise ERP systems. The technical environment for cloud technology can be configured in as little as 24 hours.
This gives organizations more time to focus on the business side of transformation. Change management and business process management require the same time and resources whether you’re implementing cloud or on-premise ERP.
3. Ability to Focus on Your Core Competencies
Many organizations lack sufficient IT staffing or cannot afford the same resources and infrastructure as cloud providers. While an organization may be decently skilled at IT, it’s not necessarily its core competency.
Cloud technology allows organizations to outsource their IT function and focus on their core business. Retailers, for example, typically like to dedicate more focus to the customer experience than IT maintenance.
4. Cost Savings
The initial cost of cloud technology is lower than on-premise technology. While subscription costs add up over time, many CFOs are more concerned about minimizing capital expenditures than reducing operating costs. These CFOs may opt for a multi-tenant cloud to minimize long-term costs.
For smaller organizations, the long-term cost of cloud ERP may actually be less expensive than on-premise ERP – the fixed infrastructure costs of on-premise ERP can’t be spread over enough volume to justify the cost.
5. End User Buy In
Cloud technology tends to be more modern and easier to use than on-premise software, so employees may be quicker to embrace it. This does not mean organizations won’t need end-user training and a communications plan. It just means they might experience less resistance. Some organizational cultures are more accepting of cloud ERP than others.
In any technology initiative you should communicate with employees about the benefits of new technology, emphasizing how their jobs will become easier. Are you implementing robotic process automation in conjunction with cloud technology? Focus on how these bots will streamline menial tasks and enable employees to work more efficiently.
6. Strong Data Security
To avoid security breaches, many organizations turn to cloud ERP as cloud vendors tend to have very secure hosting environments. Some CIOs still worry about the security of the cloud, but they don’t realize how vigilant cloud ERP vendors can be when it comes to security because the stakes are so high. Cloud vendors have a lot to lose – with multiple customers, they are popular targets for security breaches. This may sound like a disadvantage, but in many cases, it forces vendors to develop sophisticated security.
Cloud ERP Best Practices
While there are very compelling reasons to implement cloud ERP, all technology initiatives entail significant risk. Before jumping into a cloud implementation, you should first understand your business strategy and digital strategy. The deployment model you choose should align with these strategies.
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Manufacturing organizations today have more than 200 different manufacturing ERP software solutions to choose from. To help navigate this challenge, we developed a report highlighting what we believe to be the top 12 manufacturing ERP systems based on our experience and research. The report includes Tier I, II and III ERP systems as well as niche applications. We discuss considerations such as user experience, cultural fit and functional strengths and weaknesses.
Before you download the report, here’s a quick overview of some of the highlights from the Tier I ERP vendors:
As one of the largest vendors in our report, SAP makes large investments in research and development. SAP has recently invested in its manufacturing execution system (MES) by leveraging artificial intelligence. When tracking defects, for example, the MES system provides near real-time information by relying on the Internet of Things (IoT).
Another strength of SAP is the ability to configure and centrally manage a hierarchy of resource reason codes across plants.
One thing to consider when evaluating SAP is the systems’ complexity. In our experience, implementation durations can range from nine months to more than 18 months, depending on complexity as well as the rollout methodology.
Top 12 Manufacturing ERP Systems Report
Discover the strengths of the Tier I, II and III ERP systems and niche applications best suited for the manufacturing industry.
Infor is another large ERP vendor that is consistently developing innovative products. Infor’s products for process manufacturers are designed to increase operational efficiencies by allowing easy adjustments to formulas before and during production.
Earlier this year, Infor enhanced its supply chain management (SCM) functionality to leverage digital technologies, such as big data, machine learning and IoT. The SCM system can be purchased as part of a full suite of solutions.
While both Infor LN and Infor M3 provide deep out-of-the-box functionality, organizations may need to implement an additional Infor product to access more advanced functionality.
Oracle also invests heavily in manufacturing ERP software. Oracle’s warehouse management system (WMS), providing cloud-based inventory management and warehouse management, leverages innovative technology, such as IoT and mobility. The WMS system can easily integrate with other business applications.
Oracle’s manufacturing products use artificial intelligence and predictive analytics to rapidly identify issues, pinpoint the root causes and predict events before they occur.
While Oracle’s cloud applications consolidate best practices from their various business applications, Oracle’s cloud functionality is not yet as rich and deep in functionality as historical JD Edwards or EBS functionality.
Microsoft Dynamics solutions have a familiar user interface and suit organizations of all sizes. Microsoft Dynamics D365 Enterprise enables data and resource integration across various departments and locations. The solution has been redeveloped as a pure SaaS model, but also can be deployed on-premise or hosted in the cloud. In terms of field service functionality, Microsoft Dynamics employs IoT technology to improve response times and operational efficiency.
This October, Dynamics 365 for Sales will be enabled with artificial intelligence, which will give manufacturers better visibility into their supply chain. Dynamics D365 continues its reliance on a partner ecosystem to develop niche functionality. Partners are currently in the process of understanding niche IP development for the new version of Microsoft Dynamics.
The Ideal Manufacturing ERP Software
The ideal manufacturing solution should address the entire supply chain, from product inception to customer delivery. It should have functionality to track suppliers, materials, production costs, maintenance and customer relationships. Ultimately, it should increase operational efficiency and provide full visibility into manufacturing processes and business data. Transforming your manufacturing organization requires technology that drives efficiency and enables full supply chain visibility.
While it’s helpful to compare the strengths of various ERP systems, the best solution for your business depends on your unique needs and situation. We hope this report helps you evaluate the solutions we’ve deemed the most viable manufacturing ERP vendors in the market.
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If you’re a large, complex organization evaluating ERP software, you’re likely considering Tier I vendors like SAP, Oracle and Microsoft Dynamics. How do you decide between these three viable options when internal bias and vendor enthusiasm threaten to sway you?
The best way to evaluate ERP systems is to weigh the strengths and weaknesses of each according to the following six criteria.
ERP Evaluation Criteria
1. Deployment Options
Many ERP vendors have a flagship product where they invest most of their R&D. It behooves you to know which product this is and how it can be deployed. For example, Oracle ERP Cloud can only be deployed in the cloud. SAP S/4HANA, on the other hand, has multiple deployment options.
Most Tier I ERP vendors are heavily investing in cloud technology, but functionality is still limited compared to many on-premise solutions. This doesn’t mean every organization should select an on-premise solution. In the future, your ERP vendor may stop developing or even supporting their on-premise products. At that point, you’ll have to transition to the cloud, which is more complex and time-consuming than vendors claim.
While vendors are heavily investing in their cloud offerings and providing more robust functionality, the novelty of the cloud is still intimidating to many organizations. No one wants to be among the first to take the leap. They want a long list of references from companies of similar size and industry. Whether you’re evaluating SAP, Oracle or Microsoft Dynamics, their cloud implementation resume may be smaller than you expect.
Software scalability refers to a system’s ability to handle an increasing amount of work and increasing number of users. SAP, Oracle and Microsoft Dynamics are built for large organizations with complex operations, but do you know which products and deployment models can continuously scale to support your growing business?
For example, if your customer base increases, the software should be able to handle an increasing number of users and transactions. It should continue to provide real-time data despite an increase in data volume.
Scalability can be expensive for some on-premise solutions. You might need to purchase additional servers to support the increased workload. It’s important to ask vendors what their products can support out-of-the-box, and if they can be scaled.
3. Technical Fit
SAP, Oracle and Microsoft Dynamics each have different functional strengths that make them well-suited for certain industries. While industry focus is a strong indicator of technical fit, your business requirements should have the final say. If you take the time to map your processes and define your business requirements, you can ask vendors to demonstrate specific functionality. You’re not expecting too much by asking a vendor to demo their ERP system based on your business requirements rather than presenting a canned sales demo.
While no ERP system can address every possible business requirement, you should look for a system that addresses your highest priority requirements. In addition, you should determine which of your processes should be standardized based on ERP functionality, and which processes are competitive differentiators that could require software customization.
Sharing your business requirements with vendors and allowing access to subject matter experts ensures vendors fully understand your business.
Vendors will make many claims about their system’s capabilities and ease of use. If you want to validate these claims, you should request references, so you can ask previous customers about their experience. What functionality did they implement, and did they achieve the desired results? Did the vendor offer ongoing support?
References should be from organizations similar to your own that have implemented similar functionality. If you’re considering cloud ERP, ask for references that have deployed their software in the cloud.
5. Return on Investment
While total cost of ownership is a common consideration during organizations’ ERP evaluations, return on investment is even more important. While Microsoft Dynamics may be less expensive then SAP or Oracle, that doesn’t necessarily mean it will save you money in the long run and deliver a high ROI. If you select an ERP system based on your organizational vision rather than total cost of ownership, you’ll realize more business benefits.
Developing a business case will help you quantify the benefits you expect. This will guide you in improving your processes and defining your business requirements. Your ERP system will be more likely to deliver a high ROI if it’s configured based on optimized processes.
If you’re comparing the ROI of several different ERP systems, you may find Panorama’s ROI Calculatoruseful.
6. Product Viability
Do you know the long-term outlook of the ERP solutions you’re evaluating? While SAP, Oracle and Microsoft Dynamics aren’t likely to go out of business any time soon, they may stop supporting certain products. It’s also worth knowing where a vendor plans to invest their R&D in the future, as it’s your responsibility to select a product that will support your organization in the long-term.
You should conduct industry research to determine if a software product is on par with its competition. If not, the vendor may be planning to discontinue the product. In the short-term, product stagnation hurts your business as you’ll spend a fortune on customization just to remain innovative.
Before evaluating ERP software, you should define a digital strategy. What are the pain points of your current IT infrastructure, and what needs to change to support your organizational objectives?
While new technology can bring much needed change, the only way to enable long-term, large-scale change is through business process reengineering and organizational change management. Even if you select the best solution from among SAP, Oracle and Microsoft Dynamics, you won’t transform your organization unless you enable change by focusing on your people and processes.
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Measuring customer experience isn’t easy, but it is essential if you hope to improve your customer experience. Understanding the drivers of customer satisfaction can help you determine where to invest your time and money.
So, what metrics should you measure? What technology should you use? And, what obstacles should you expect?
Challenges of Measuring Customer Experience
New Variables – Customer expectations have drastically changed during the last decade, so drivers of satisfaction you measured in the past may not be the same variables that matter today. Today’s customers expect self-service, convenience and personalization. Customer touchpoints span more channels than ever before, so you’ll need to track more metrics and consider the unique metrics of each channel.
Lack of Integration – Many organizations haven’t integrated their ERP system, or main system of record, with their ecommerce system or content management platform. Without one version of truth, customer metrics are difficult to decipher.
Lack of Ownership – Even organizations that have actionable customer metrics struggle to decipher them simply because they didn’t assign data ownership. Should the sales department be responsible for some metrics, while the marketing department is responsible for others? Which decision makers need access to dashboards? These ownership decisions baffle many organizations.
Using Digital Optimization to Increase Customer Loyalty
Before you measure customer experience, you need processes and tools for collecting quantitative and qualitative data. Most organizations collect this data within their CRM systems, which integrate with their ERP systems. The ERP system provides additional insights from the business as a whole and offers advanced analytics capabilities.
Common sources of data include billing, help desk, web analytics and social media. Some organizations gather additional data from focus groups and customer surveys. Ideally, all of these data sources should flow into an ERP system to ensure a single version of truth.
Some technology falls short when it comes to measuring customer experience. Based on your business strategy and IT strategy, you can evaluate your current systems to determine where you should invest in new technology.
The best technology for measuring customer experience integrates data from multiple channels and supports customizable dashboards. The technology should also include business intelligence functionality, as this will help you diagnose root causes and predict potential outcomes.
What other functionality should you consider? Requirements gathering workshops can help you determine this. Some organizations involve their customers in the requirements gathering process by asking them how they’d like to interact with the company and what would make their lives easier.
Most importantly, don’t look for the lowest cost solution, but the solution with the highest ROI potential.
Best Practices for Measuring Customer Experience
Common customer experience metrics include customer satisfaction and net promoter score. These metrics can be cross-referenced with other metrics or insight to determine the drivers of satisfaction. For example, if a customer has a high customer satisfaction score, you can investigate contributing factors, such as website user experience. This helps you prioritize improvement efforts based on their level of impact.
Customer satisfaction and net promoter score can each be measured through a single, straightforward question on a customer survey. Net promoter score measures customer loyalty and likelihood to recommend. You can divide responses into three categories: Promoters, Passives and Detractors.
In addition to top-level metrics, you should determine metrics for each stage of the customer journey as well as each transactional touchpoint. You can correlate these with top-level metrics as well as operational data, such as sales figures and HR data.
A customer journey map is useful in this process as it helps you make sense of both quantitative and qualitative data. As you identify pain points throughout the customer journey, you may generate ideas for new product or service offerings. This may also give you ideas for process improvements, in terms of customer interaction processes as well as product or service rollout processes. You may also want to track customer buying histories and preferences as this will help you improve targeting and personalization.
Almost as important as what to track is who should track it. Your sales and marketing departments should each be accountable for tracking and communicating certain KPIs. These departments should agree on how metrics should be interpreted and acted upon. One way to interpret customer experience metrics is by benchmarking against your direct competitors as well as industry leaders. This insight may help you think of innovative ways to serve customers.
Customer satisfaction is not just the responsibility of sales and marketing. Your entire organization should have a customer-focused mindset, but this doesn’t happen overnight. If you appoint change agents in every department, they can ensure that actionable insights make their way to decision makers.
Creating customized dashboards for decision makers and holding regular meetings will enable you to act on data in real-time and make continuous improvements. If you have a call center, your reps should have easy access to customer feedback, so they can make informed and timely decisions.
Measuring Customer Experience to Transform Your Organization
For many organizations, providing an excellent customer experience is part of their competitive advantage. A positive customer experience can lead to repeat business, which is the lifeblood of most organizations.
If your organization is customer-centric and dedicates time and resources to measuring customer experience, you may want to consider a digital transformation initiative – you can use customer metrics to design new service offerings and new ways of interacting with customers.
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Have you ever considered which of your employees (non-decision makers) will have the greatest influence your ERP software selection? It may not be who you expect.
The largest generation in the American workforce is the Millennial generation. Depending on your industry, they likely comprise about 35% of your workforce. Naturally, this generation’s preferences and propensities will significantly influence your ERP software selection – if you put any weight on user experience when making IT decisions.
User experience should be a consideration during any IT project, but it is especially important during ERP software selection. End-users across departments and across generations will use the new software. You have a lot of people to please as the software will touch every part of your organization.
While people pleasing isn’t generally a fruitful pastime, the rules change when it comes to ERP software. Your evaluation criteria should consider user experience as a factor equally as important as functional requirements and total cost of ownership. The risks of not considering user experience include low employee morale, low system usage and process inefficiencies.
The influence of the Millennial generation isn’t relegated to its size – its unique characteristics also contribute to its power. Millennials are “digital natives,” meaning they’ve never known life without digital technology. This unique characteristic makes them critical of technology that doesn’t meet their expectations.
Millennials expect software to be intuitive, much like their favorite social media platforms. Their familiarity with social media also primes them to expect software features that promote collaboration. Additionally, they expect accessibility – your ERP software better be mobile-friendly! They also crave efficiency. If it takes more than two clicks to navigate somewhere, they may throw their laptop across the room.
Millennial-friendly ERP Software
Many ERP vendors have responded to feedback from Millennials by building user interfaces that resemble social media platforms, adding social collaboration features, improving their mobile-compatibility and reducing users’ click-fatigue.
If you want to gauge the more specific needs of your workforce, you can conduct anonymous surveys, encouraging employees to provide honest answers. Monitoring your employee attrition rate also will help you measure dissatisfaction.
Some Organizations Cling to Their Old Software
Deciding to begin an ERP software selection is the first step to meeting the needs of your Millennial employees. Many organizations avoid ERP implementations because their legacy applications are “fit-for-purpose,” and seem too expensive to migrate. Some of these organizations resort to time-consuming workarounds to please Millennials. They’ve built new front-end applications to improve the usability of their software, while overlooking inefficiencies throughout the entire ERP system.
If you’ve chosen to implement new ERP software, you have an advantage over these stubborn organizations. Most ERP vendors have modern products at reasonable costs. You surely will find a solution that meets your business needs – and the needs of the largest generation in your workforce.
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ERP Boot Camp was the best value for the money seminar I have ever attended. Every manager hoping to build or validate their project strategy should attend.
~ Boot Camp Attendee
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:
Because the fundamentals of ERP project management should not be a secret or surprise. 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?
We will give you expert guidance and advice you will not hear elsewhere. 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.
You will learn in a relaxed, collaborative environment. 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.
We will cut through all the jargon and hype to give you the truth. 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.
We teach you about ERP failures to prepare you for success! 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?
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.
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 Human Element
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.
As the top software company in the world, it only makes sense that Microsoft would offer its own version of ERP software . Microsoft Dynamics was first released in 1993 . Since then, it has undergone significant changes and upgrades, primarily to stay ahead of the many other ERP software vendors that have entered the market. So, how does Microsoft Dynamics stack up against the competition? Here’s a look at how Microsoft Dynamics compares to other ERP software.
1. Options for a variety of business sizes and operations
Microsoft Dynamics offers four ERP solutions: AX, NAV, GP, and SL plus CRM software (Microsoft Dynamics CRM) and software for retail businesses (Microsoft Dynamics RMS). Although any of the four ERP solutions can work for any size business, GP, NAV, and SL are better suited for small to medium-sized businesses. AX is the preferred option for large companies that operate in multiple sites and/or countries.
Each ERP has unique features to suit different business sectors. NAV offers the functional support that is often needed in manufacturing and distribution industries. GP has significant HR and financial management abilities. SL is a great fit for project-based businesses, such as construction companies. This array of choices makes it easier for businesses to select the specific ERP solution that will work best for their needs.
2. Implementation and integration
Dynamics can be challenging to implement. One reason is because it is an expensive and complex ERP program. If the initial parameters are not correct, the long term results could be costly. Those mistakes won’t be apparent until it’s much too late. It is unwise to attempt implementation without the guidance of an expert. While Microsoft has several Value Added Resellers (VARS), finding who is competent with Dynamics and your industry can be difficult.
Dynamics easily integrates with other Microsoft products that you are likely already using, including QuickBooks, Outlook, Excel and Word. This streamlines processes and increases business efficiency. Also, this allows your employees to access and use Microsoft programs without going outside the ERP software. Integrating other ERP systems with Microsoft products is often a difficult and time-consuming process.
3. Customer support
It is important to identify the level of service your vendor is going to provide. As stated above, Dynamics is a complex, intricate program. Your employees are going to need guidance and support well beyond the initial implementation.
Larger companies using AX will find there are several competent, customer-focused VARs in the marketplace. They will provide on-site training and support. However, smaller businesses often have to rely on Microsoft’s rapid deployment program. Training usually doesn’t extend beyond self-service training videos. This can leave your employees with more questions than answers.
4. Microsoft Dynamics intuition
Dynamics makes good use of artificial intelligence, including Azure Machine Learning and Power BI. This greatly enhances the system’s intuitiveness. Your team will gain insight into customer communications, transactions, and other pertinent data. The result is accurate predictions and inferences allowing you to anticipate client needs. Businesses benefit from streamlined operations and reduced costs.
5. Dynamics is compatible with legacy systems.
Compatibility with your legacy system is critical when transitioning to an ERP system. Unfortunately, not all ERP systems are compatible with legacy systems. Dynamics has shown the ability to be compatible with some legacy systems. This can help the transition by reducing time, money and effort. Again, it’s imperative to have an expert guide you through this process.
6. Microsoft Dynamics useful features
Dynamics gives businesses a wide selection of tools for productivity that can enhance every facet of a company. The functions available through Dynamics are numerous. Businesses can accomplish useful tasks, such as control general ledger, sales and finances. Manufacturing has the ability to manage their supply chain, schedule and plan production. It can even assist HR by tracking employee training, development and performance.
Overall Microsoft Dynamics is a powerful ERP. But due to its complexity, it requires expert guidance. Is Dynamics right for your business? Panorama Consulting can help you decide.
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.
Saves Admin Costs
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.
Saves Material Cost
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.
If you’re new to the world of ERP software, welcome!At Panorama Consulting, we’ve been guiding novice users through the education process and implementation for years.Our team of independent ERP consultants have backgrounds in both business and technology and have what it takes to guide any novice user, in any industry, with education and implementation every step of the way.During your time with an ERP consultant, be sure to let him/her know what kinds of benefits you are seeking if you have any in mind. ERP System benefits and features are bountiful and can be made to fit any need your organization has.
1. What is ERP?
As a novice user, the best definition of ERP (or Enterprise Resource Planning) software
handles management, accounting, human resources, customer relationship management system and more.An all in one solution, ERP software has evolved a lot over the years just like any technology.Even if you’re not a complete novice, if you haven’t used it in a while then there’s probably a lot of new information to take in.
2. So, where to start?
We have great resources on our website which we encourage you to check out including blog posts, videos, white papers and in-depth research and comparisons about options you may consider.For example, should you go with a completely customized option or one that is off the shelf or is cloud technology right for your project?
We also encourage you to consider attending ERP boot camp, held January 24-26 2018 in San Diego, California.This will give you great insight about options you have, choices available to you, project implementation and more.We also offer one on one sessions between you and our consultants if you desire a more private setting.
3. The benefits of ERP
Overall, as you go through the process of learning more about ERP solutions and then eventually implementing it in your organization you will find that this system will save you both time and money.Every organization in every industry must appreciate the idea of saving time and money.After a successful implementation, an ERP solution can save administrative time, with better organize records and invoices.ERP solutions can also manage inventory and costs for large and small scale manufacturing organizations.ERP solutions can also help out a busy sales and marketing staff with CRM capabilities.All of these benefits are in one totally convenient package too, which eliminates the need for multiple programs that don’t communicate.Check out our 2017 Clash of the Titans report for a comparison of top choices.
4. The main benefit of ERP
Truthfully, the main benefit of ERP systems is completely personal.Possibly, the thing which attracted you to ERP software at the start of your project is not your favorite thing about it towards the end of the project.Because ERP software offers such a wide array of benefits and features, there’s no one answer of the greatest benefit.However, if you’re looking for a key functionality within ERP, make sure to let your consultant know that during your initial discovery process.
I’m not sure why, but business cases have gotten a bad rap in recent years. It seems that more client executives that I speak with are becoming less inclined to develop a business case for their digital transformation initiatives.
In years past, it seemed that leadership and project teams understood the need for business cases – even if they were often superficial or unrealistic. They at least understood the value as a tool to justify the investment or to estimate the return on investment.
Now, I seem to hear more excuses for not creating a business case or cost-benefit analysis. One hypothesis is that companies have under-invested in their enterprise software for so long that they have reached a breaking point of needing to upgrade their systems out of necessity, so organizations don’t see the need to develop a business case. In other words, more companies are implementing new ERP software and other technology because they have to, not because of a strategic expectation surrounding ROI.
Whatever the reason, this isn’t a good trend. A business case is key to a successful digital transformation, and here are a few reasons why:
1. Because you have to
I understand that more companies are embarking on their digital initiatives because they have to. They’ve either underinvested for too long, let their systems get out of sync with their business needs, and/or their industries are being disrupted to the point that they need new technologies so survive (think: retail), but this alone isn’t a good enough reason to take the leap.
It is important that you define and quantify the exact business benefits that you expect to realize from your digital investments. From there, you can assess whether or not the investment is a wise one and make adjustments to your plan as needed. This is also the first step to holding your team accountable to actually realizing the expected business benefits and achieving the ROI that you would like to see.
2. You won’t achieve what you don’t measure
The popular adage is true: if you don’t measure it, you won’t achieve it. This is one of the key reasons why, according to our 2017 ERP Report, that so many organizations don’t realize the business benefits that they expect from their ERP systems. Defining performance measures and targets for each area is a first step toward achieving the ROI potential of your digital transformation initiative.
3. You can’t improve business benefits without measuring and understanding where you might be falling short
Most organizations don’t realize business benefits right away. It can take months or years to realize the full potential of your new enterprise software. But, you won’t ever achieve many of those potential benefits if you don’t understand where you’re falling short and continuously improve to optimize those benefits.
Once you understand where you’re falling short of expectations, then you can identify the root causes of suboptimal benefits and take corrective action to remediate them. Most of the time, I’ve found that these are very simple fixes, such as refresher end-user training, tweaks to business processes, or modifications to the way that the software is implemented. After spending so much time and money on your implementation, why not take this small (and relatively easy) step to ensure you improve your business benefits? This is an area where independent ERP consultants can help.
4. A business case is a key project governance implementation risk management tool
If the long-term, post-implementation advantages of a business case still isn’t enough, then perhaps the value during implementation will change your mind. It’s no secret that so many ERP implementations fail, and poor project management and governance is one of the leading reasons for this phenomenon.
A business case will help rationalize key decisions that haunt so many project teams. For example, is that customization request really worth it? There’s no way to answer this question without a solid business case. Without it, you’re making tough decisions in the dark, but with it, you will have clear direction on how to keep your project on track.
5. You need to accept that you will be disappointed with your benefits realized – at least initially
It’s common to fear business cases because they expose the areas where you will inevitably fall short of your expected business benefits. It’s okay to admit it: you’re going to fall short at first, no matter what – we all do. A business case will help ensure that you eventually get to where you want to be. So, it’s important to view this as a positive rather than a threat.
Recently, I was working with a potential client whose ERP evaluation process was rigged. The potential client didn’t realize it at the time, which made the situation especially risky.
I started Panorama 12 years ago, because of this very concern. Most ERP consultants, system integrators, and value-added resellers represent the software vendors rather than clients’ best interests. It concerns me that so many firms operate with economic incentives. These “incentives” can be misaligned with what’s best for companies. Keep in mind that these are often multi-million-dollar ERP initiatives with a lot at stake.
Part of the conundrum is that it’s not always obvious when a third-party is biased. There are a host of things that can lead to a rigged evaluation process, but here are some common ones to watch out for:
1. Your consultant is a value-added reseller of one or more software vendors
This is probably the easiest one to sniff out, but one that is often overlooked. If your software vendor is a reseller of software or has any sort of economic incentive to sell a certain software, then you’re probably not getting a truly agnostic and unbiased recommendation. Be especially aware of companies that claim to be agnostic because they represent more than one solution (see point #2 below).
2. Internal politics or economic incentives of your consulting firm can lead to a biased recommendation
Even if a consulting firm or system integrator isn’t a formal partner, there still may be other economic or political incentives that cause bias. For example, many large consulting firms are resellers of both SAP and Oracle. In theory, they could help you decide between the two systems, but you will always be nudged toward the group with the most internal political clout or the one that provides the biggest economic incentive.
Before launching Panorama, I worked for one of the big consulting firms. We helped clients evaluate multiple systems that we represented, but we had our preferred solution. The prevalent choice was often pointed to the one with the biggest bench of resources that we had to keep busy. The only way to receive a truly independent ERP recommendation, is to ensure that there are literally no financial ties with vendors or any solution-specific resources on the consulting team.
3. Software vendor demos can create false internal perceptions of the software
Whether you work with a consulting firm or not, you will want to make sure that your vendor demo process doesn’t create a biased view of your software options. Your internal employees will form opinions based on emotion or sales spin if you let this happen. It’s important to have a structured and disciplined demo process based on your specific needs and requirements, rather than what a software vendor might want to show you. It is not unheard of for demos to contain “future-state” features. These future-state applications may not even exist in the current software, but are a glimpse of what might exist in the next release.
4. Your consultants or internal resources don’t understand ERP implementations
This is all about having the right people in the room. If you or your team haven’t been through an ERP implementation (or better yet, several implementations), you may have very different expectations within your group. Unfortunately, an uninformed view can become misaligned with reality and create a high-risk backdrop for your project.
This sort of bias leads to a number of challenges, including an incomplete or misguided plan of how to implement the solution. For example, you may not know enough to realize how important business process management, organizational change management, program management or data migration are to a project. You may also not understand what level of effort these work streams will entail. The symptoms of unrealistic expectations often don’t emerge until the project is underway. The amount of time, money and resources required to make your implementation successful, are also common risk factors for teams that struggle with this bias (see #5 below).
5. Unrealistic expectations of your implementation timeline and budget
Someone in your company has probably designated a timeframe and budget for your ERP initiative. While not arbitrary, it is also unlikely the work of an experienced ERP implementer. A software vendor is not going to tell you if it’s realistic or contradict your wishes. Unrealistic expectations are often a root cause of many ERP implementation challenges. Wouldn’t it be great if the project took less time, money, and resources than planned? Rarely is this the case. Forcing a timeline could lead to some bad decisions later.
For example, if you find that you can’t complete your project within that unrealistic timeframe or budget, you’ll be more inclined to cut organizational change management activities, which are arguably the most important critical success factor for an implementation. These pressured decisions are often forced upon you. An initial bias in planning your implementation is where the downward trajectory begins. Relying on a biased software vendor or ERP consultant’s opinion to validate your planning process only adds fuel to the fire.
There are ways to combat and mitigate biases. The straightforward answer: hire experienced independent ERP consultants (like Panorama Consulting) to help you with your evaluation, implementation planning and implementation process. This is the best way to smoke out biases while adding valuable resources to your bench.
When a start-up entrepreneur, or any business owner for that matter, dives into the nitty-gritty of his or her operations, then he or she becomes well-aware of the intricacies involved in the processes. Managing processes and transactions can be helped greatly with today’s technology.
Focus on the Foundations of Success: Efficiency is Key
Optimizing operations towards efficiency can positively impact any type of business. Is it not true that for any business, the combination of experience and wisdom is a formidable asset to have? The presence of these two things is a critical aspect that roots itself in the growth of many business ventures. This often means investing in your business in ways that make sense for future stability and growth.
With technology and the internet as necessary components for business success due to their sheer significance – both as a platform and resource – competition has become fiercer than ever. While many an organization may have access to these two, the businesses built for success are backed by the foresight. One of the ways towards progress and development is to be transformative.
In practice, many businesses begin with basic tools like QuickBooks and Excel but eventually outgrow them or they start to become less efficient. Selecting and investing in a more robust ERP system can be a long-term strategy. The intelligent CIO knows that there is no “one software” fit for all types of businesses. For example; a financial organization will have requisites that differ from a building contractor. It is advisable that a business first seek consultation with tried and tested ERP consultants, most familiar with the current types of ERP software available. Like any technology, ERP software changes and updates frequently.
Some ERP Preparation Basics
An organization that aims to be more than statistic is interested in continuous improvement. This almost always points to the use of technology. To ensure that a business is on the right path, below are some of areas to consider in the ERP selection process:
Revisit the business’ processes (are they still relevant)
Study the workplace environment (are your workers productive and happy)
Identify business requirements (not just today’s requirements, but your future state as well)
Consider financial limitations (budget and ROI)
Evaluate your existing ERP system or lack thereof (what are your pain points and workarounds)
Prepare for changes and developments (organizational change management)
Determine quantifiable benefits (how will technology help grow your business)
If this seems like a lot to consider, it is. Independent consultants such as Panorama Consulting Solutions have the expertise, and are well-versed, in ERP software selection and all the nuances that must looked at for a successful transition to a new ERP system.[vc_custom_heading text=”Welcome to the Future: A Case Study on Modernizing a Business” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes”]Take, for instance, how a consumer services company in Denver grew exponentially. However, they were still relying on paper-based and manual operations. The company’s primary problem was that it coursed all its processes through a single employee who served as the primary architect of the operations. Should something happen to this person, the possibility of the organization being crippled was very real.
Through a meticulous evaluation of available ERP software options, redefinition of business processes, as well as management of its ERP implementation, the Denver-based company streamlined and automated its operations. This success, as forecasted, was measurable through business results – the company yielded a 60 percent ROI and 2-year payback period, among other gains.
Business owners, information officers, and project managers should consider the ongoing and ever-changing need for technology. An organization’s ERP system affects budget, timeframe, and operations. If an ERP project is not executed flawlessly it can very well result in the failure. However, an organization with well-matched current ERP software and a solid implementation plan sets itself for an upward trajectory. This is what industry leaders do, utilizing accessible knowledge and tools to support and propel an organization’s goals.
Scalability is a term that often pops up during talks about enterprise resource planning (ERP). Despite its frequency in such conversations, some organizations thread the subject lightly. Protecting software investments, however, call for a deeper understanding of this concept.
With over a hundred software options available, finding the right solution proves to be a challenge. Instead of going through them all, some businesses settle with the first ones offered—and that shouldn’t be the case.
From a practical perspective, the search should not stop with just finding the right solution. The ideal scalable software should not just meet your requirements. Rather, it should protect your investment in the long run.
But where do you start?
Defining Scalability First
Software scalability refers to a system’s capability of handling an increasing amount of work and accommodating growth. Operating system giant Microsoft offers another and more relatable definition: “the ability of a system to meet your business needs.”
Scaling a system means upgrading existing hardware or adding another one without implementing many changes to the application. It is also a crucial factor in ERPs; this quality shapes the growth of businesses through streamlined operations and maximized productivity.
Scalability and ERP: The Great Question
Should you set the bar high in terms of scalability success?
While investing in the right scalable software will not immediately catapult your organization to greater heights, it spares you from the following:
Rejecting opportunities for growth due to limited software capabilities
Spending beyond the budget to cover for unprecedented ERP system shortcomings
When it comes to evaluating scalability for ERP, answer this question first: “Can my ERP handle the changes that come with growth?”
To answer that question, keep in mind that scalable ERPs should have the following capabilities:
Effective account management. When businesses grow, so will the customer base. Good ERP systems can handle the drastic increase in accounts. If your software has a limit on data entries, inaccessible to users, or incapable of real-time updates, keeping up with business growth will be a challenge.
Updated information. Outdated business solution compromises growth. CIOs and business owners will have a difficult time forecasting sales and communicating closed deals if the ERP fails to keep up. Scalable software should produce real-time reports and keep businesses updated often.
Accessible on all platforms. Can you access the software on smartphones and other gadgets? If not, you limit opportunities in a mobile workforce. ERPs should work on any device for it to be scalable, providing mobility and flexibility for you and your employees.
The Scalable Option?
When selecting a new ERP system, you have plenty of options. Two of the top go-to solutions are cloud-based and on-premise software.
Some firms choose to be traditional by working with on-premise software. Providers locally install this software on your company’s computers and servers. All you need is a licensed or a purchased copy to operate seamlessly and with more control for security.
The cloud, however, may offer better scalability as well as flexibility.
Recently, cloud-based ERP options gained popularity, especially with small- to medium-sized businesses. This option, hosted on the vendor’s servers and accessed through browsers, reduces internal IT needs and accommodates growth. Unlike on-premise operations, you need not buy and deploy new servers.
Evaluating ERP scalability can make or break your business’s potential for growth in the future. Selecting the right software can be overwhelming; fortunately, you do not have to make the decision alone.
Panorama is an independent consultant you can trust with ERP concerns. Your business is our business—we help your company blueprint current processes and foresee your future state. In the case of scalability, our team can assist in determining how much you will need and how to measure it.
Take the scalable ERP talk seriously. Let our consultants offer an unbiased outside perspective in your software selection. Talk to us today and see your business grow with the right ERP solution.
An Enterprise Resource Planning (ERP) system is the backbone of business innovation. As a matter of fact, an antiquated ERP might just be the only thing standing between your business and growth. In today’s competitive business environment, a robust, well-integrated, and up-to-date IT infrastructure is a key ingredient to long-term success.
But a sweeping upgrade or replacement can be intimidating and costly. Some organizations tend to operate with aging systems on the premise that the current system, “still works.” An upgrade sometimes only becomes an option—the only option—when a malfunction occurs causing the system to stop. This creates big issues.
With market changes driving competition on a global scale, can your business afford to sit and wait to update, upgrade or replace your ERP system?
How an Antiquated ERP Hurts Your Business
ERP systems older than five years old may not have the capabilities necessary to bolster today’s retail, manufacturing, and supply chain activities. They often can’t support future expansion. As software ages, eventually software vendors stop supporting certain versions. You don’t want this to happen because it will clearly put your company in a reactive mode, which is never a good place to be.
Today’s businesses are also more diverse, where a new generation of employees are rapidly joining the workforce. Today’s workers, especially those working remotely, expect an ERP system that’s intuitive and compatible with IoT (think handheld devices, smart phones, etc.). Aging ERP systems often have many manual workarounds, lower employee acceptance, and reduced quality of output.
What Makes a Robust ERP System?
A fast-paced, rapidly changing business landscape requires an agile and integrated ERP system. From enhancing your business performance to allowing better decision-making via advanced reporting capabilities, your ERP system can transform the way your business runs.
It can unify your core and non-core operations, including finance and accounting, inventory, warehouse management, fulfillment, analytics and reporting, sales, customer service, marketing, human resources, and other relevant processes and departments.
ERP software should also be user-friendly to enhance the productivity of your workforce and reduce errors. Newer ERP software can offer exceptional flexibility and multiple configuration options. It automatically updates on a regular basis, and can be remotely operated and accessed in real time.
Moreover, cloud options offer a whole new and expanding dimension to ERP.
Advantages of Hiring an Independent ERP Consultant
But how do you make the move from stone-age ERP to new ERP? Seeking an independent ERP consultant is a sound choice. This greatly enhances your chance for success.
An ERP overhaul is a long and complex process, and can be a major business disruption. It has many steps. To make sure it doesn’t divert your focus from critical business operations, choose an ERP consultant that understands your line of business, and can align their solutions with your objectives.
Letting an independent ERP consultant work with you is comparable to hiring an experienced attorney to represent you in court. While you have the option to represent yourself, there is a danger of overlooking critical details and facts that a lawyer would have otherwise spotted.
ERP consultants also offer a fresh set of eyes to uncover what’s causing inefficiencies in your business processes. Independent ERP consultants like Panorama, are not tied to software companies, so you’re getting unbiased and practiced advice.
ERP systems are indispensable in achieving significant business growth and product differentiation. The right time to invest in an updated ERP system is probably now, because there will never be a good time.
So you want to make your competitors jealous, eh? Nothing wrong with that. When it comes to digital transformation, it’s smarter to be an early adopter than a laggard. But you can’t stay ahead of the curve by rushing through the selection process – you can only win if you conduct a slow and steady assessment of all your strategic options.
Here are six high-level steps to conducting an ERP selection that will help your organization find very enviable enterprise software:
1. Develop a long list. SaaS, cloud, on premise, best of breed, single ERP and a host of other options make the selection process overwhelming. You can keep it simple by eliminating most ERP vendors based on your business requirements and budgetary needs. In general, your organization should aim for a long list of no more than six to eight ERP software vendors.
2. Develop a short list. Your organization’s business requirements can be divided into several categories, the most essential being “deal-breaker” requirements. These requirements should guide you in selecting three to four software vendors for your short list.
3. Conduct a detailed analysis of your short-list vendors. Your organization should ensure that each of your short-list vendors specifically addresses your “deal-breaker” requirements while demonstrating their product. Creating a demo script is essential if you want to compare apples-to-apples. In addition to arranging software demos, your organization should issue a request for proposal to each short-list vendor so they can outline their costs, software capabilities and proposed implementation strategy.
4. Involve key stakeholders in the evaluation process. Throughout the demonstration process, key employees should share their input through quantitative assessments. In particular, employees should evaluate how well each product’s functionality addresses your organization’s key business requirements.
5. Assess each vendor’s technical capabilities. The project team and key stakeholders also should evaluate items such as vendor scalability and ease of integration. These technical factors may or may not weigh as heavily as your functional business requirements.
6. Make a decision. Your organization should use the input from the various assessments to prioritize each vendor’s strengths and weaknesses in relation to your business needs.
Easier said than done, right? Well, it’s never easy leading the pack. That’s why many organizations rely on an independent third party to facilitate communication and contract negotiations with ERP vendors. If you’re really lucky, you’ll find an independent consultant who’ll be there for you through your entire project – from implementation to go-live and beyond.
Now, you just need to make your competitors jealous of your innovative, energized company culture. Their change-resistant, sleep-deprived employees will wish their employer had invested in as much organizational change management as your organization.
Selecting new enterprise software can be a daunting task. Organizations often make decisions based on perception rather than objective and unbiased information. However, if your new ERP system is ever going to enable true digital transformation, your organization needs to prepare for a successful selection process.
Preparing for ERP Selection
Before evaluating potential ERP vendors, your organization should ask the following questions:
1. Why do you want to implement ERP? In many cases, ERP software will not solve your business problems. If your business processes are flawed, even the most advanced enterprise system isn’t going to help. It’s more important to identify your organization’s specific pain points so you can define the appropriate enterprise or IT strategy. If you find that ERP is not the best path forward, there may be more cost-effective and lower-risk options such as improving your processes, redesigning your organizational structure or consolidating your global supply chain. Alternatively, you may find that technology is the best way for your organization to enable business improvements.
2. What is your business case and expected ROI? Your business case should outline the expected benefits and total cost of ownership for each ERP system under consideration. If the expected ROI for several of these systems meets your minimum investment criteria, then it’s time to share your findings with executives. Armed with this powerful tool, you can convince executives that new technology is a wise investment.
3. What are your business requirements? Once executives are on-board, the next step is to define and document your business requirements. This includes “nice-to-have” requirements as well as “deal-breaker” requirements. Requirements gathering is not only an opportunity to improve your operations and increase efficiency, but it will help you select the ERP system that best supports your optimized processes. The last thing you want to do is use software to automate inefficient processes. Of course, this is only a snapshot of the entire planning process. Your organization may not be prepared to enter the ERP selection process without additional planning and guidance. An independent third-party can provide what your organization may be lacking in terms of resources and expertise. Most organizations do not have an objective view of the entire ERP market, nor do they have experience and lessons learned from hundreds of ERP implementations.
Selecting an ERP system is one of the most important decisions your organization will ever make. This decision will have a long-lasting impact on your organization’s employees, customers and profitability. Given the magnitude of such a project, your organization should do everything it can to mitigate risk.
The ERP software selection process isn’t without its share of pitfalls and ambiguities. Few of these challenges are intentionally caused by ERP vendors and their sales reps, but a lack of oversight early in the selection process can come back to haunt your organization during the ERP implementation process.
Five Red Flags
If your vendor is exhibiting any of the following behaviors, consider it a red flag:
Insists on conducting the demo and evaluation process their way, rather than your organization’s preferred way
Controls the tempo and pace of the evaluation process by requesting that they demo last or at a later date
Bypasses working with your project team, and tries to work directly with executives
Creates doubt by criticizing your project team’s approach
Cries foul by expressing concern that they don’t have enough time to prep or don’t agree with the selection process
These patterns are generally more common when the ERP vendor feels they are at a competitive disadvantage to their competitors. Many organizations overlook the warning signs, but this is to the detriment of their entire digital transformation.
How to Manage ERP Vendors
The following methods can be very effective in diffusing vendors’ attempts to control the selection process:
1. Ensure time to prep with the vendors so they have no reason not to understand your business. This includes sharing demo scripts, outlining key business requirements and allowing access to subject matter experts within your organization.
2. Allow vendors access to your organization’s key employees. While many sales reps prefer to build strong relationships with your executive team rather than sell the merits of their system, they should have at least some interaction with your employees. Without this relationship building, key employees may refuse to participate in the selection process.[vc_video link=”https://www.youtube.com/watch?v=aj2psg5LSWA” el_width=”60″ align=”center”]3. Remember that you are the customer, not them. Although it sounds simple, you would be amazed at how demanding sales reps can be. Whatever heartache a sales rep expresses, it is important to remain firm, have confidence in your evaluation process, and demand that they earn your business on merit. You are not expecting too much by asking a vendor to demo their ERP system against your business needs and requirements rather than simply presenting their canned sales demos.
4. Coach executives to deal with vendors. It is very likely that at least one vendor will bypass you at some point in the process and go straight to someone higher in the organization. Your executive team should be coached on how to handle reps when they call or request a meeting so that those inquiries are redirected to the project team.
5. Let a vendor walk if necessary. If a vendor thinks their chances of success are slim, they may walk from the deal. Your organization shouldn’t be afraid to let a vendor self-disqualify. After all, it’s not a good sign if a vendor doesn’t have confidence in his or her own product’s ability to compete.
6. Remember that you can work with another value-add reseller (VAR). Many software vendors sell directly to customers as well as through a network of VARs. If one option doesn’t want to participate, don’t be afraid to look at another VAR that may be willing to participate in your selection process.
7. Engage with an independent third-party to facilitate the evaluation. Information is power, and having complete and unbiased information about software vendors and their functional capabilities can only be achieved by relying on an independent third-party.
8. Expect some turbulence and drama. There is no such thing as a software selection that goes exactly as planned. It is not realistic to expect that every vendor will cooperate.
ERP vendors that are difficult to work with during the selection process aren’t going to be any easier to work with during ERP implementation. By managing ERP vendors “like a boss,” your organization will save time, money and heartache.
There are a number of questions you might ask during the ERP selection process: Is the ERP system cloud-based? How reliable is technical support? Will the software vendor be around in five years, because, jeez, I don’t want to have to learn how to use a new ERP system again?!
These are the questions on everyone’s mind. But these are all the wrong questions.
It’s About Your Business, Not the Software
Think about it. Your organization’s competitive advantages were born, nurtured and developed by people, not software. If ERP software was all we needed, we would just flip a switch and drink cocktails with little umbrellas at the beach.
Right now, your business is known for an overnight turnaround on delivery, and you have the best quality rating for your class of product on Amazon. Is this a result of some out-of-the-box ERP system, or is it a result of your organization’s well-designed business processes?
ERP software is a tool, and it is incredibly important to use it correctly. When talking to an ERP vendor, you should ask the right questions, and this requires a thorough understanding of your current state and future state business processes.
Hold Your Horses
Before selecting an ERP system, you should begin by mapping out your current business processes. If any business processes need optimization, you may want to engage an ERP consultant to assist you with business process reengineering. With clearly defined business processes, your organization will have a better idea of the business requirements that your ERP system must address, and you’ll be ready to begin digital transformation.
While ERP vendors know their product inside-and-out and can validate your required functionality, they don’t know your organization as well as you do. It is up to you to paint a clear picture of your business and the differentiators that fuel your competitive advantage.
Life as an ERP expert witness has its pros and cons. While it’s discouraging to see the magnitude of failure that many organizations face when trying to implement new enterprise software, there are plenty of lessons learned from ERP failure that help project team members avoid the same mistakes in the future.
Our ERP expert witness and project recovery practice is often tasked with the need to identify who is at fault in a failed ERP implementation. This is never an easy question to answer, as a host of stakeholders contribute to the success or failure of a project. Depending on the unique situation, the implementing organization’s team, executives and front-line employees may all be at least partially to blame. Even the company’s ERP consultants or system integrator could be at fault. In some cases, it’s a combination of both.
Regardless of who is at fault in an ERP implementation, there are a number of key lessons that we have learned from helping with ERP lawsuits and project recoveries:
Technical projects typically don’t succeed, but business transformations do. Unfortunately, most CIOs are more comfortable with technology than they are business. The most successful ones, however, treat their ERP implementations as business transformations rather than technical installations. After all, implementing new ERP software is much more complex and has more impact on the business than say, a Windows upgrade or antivirus software rollout. When compared to a more basic technical installation, ERP implementations have a bigger impact on employees, business processes and the overall strategy of your company. Be sure to plan and execute your project accordingly.
Taking time to reengineer your business processes prior to implementing the software will reduce time, minimize costs and maximize business benefits. ERP vendors love to sell the proposition that you do not need to worry about your business processes because implementing their software “will solve all of your problems.” Industry best practices, pre-configured solutions and out-of-the-box silver bullets should be taken with a grain of salt, because they typically don’t have material relevance to how you will run your business. ERP systems are too flexible and robust to define your business processes out of the box. Because of this, it is critical to define your future state business process reengineering prior to implementing your new system.
The “people” side of the project will make or break your project. If I had to pick one thing most likely to determine ERP success or failure, my hands-down choice would be change management. It’s the most important aspect of an implementation, yet too many organizations fail miserably in this area. In fact, of the 30+ lawsuits that I have either testified and/or written expert reports for, organizational change management and ERP training was a key failure point in each and every one. Investments in training, employee communications and other organizational change activities will yield exponential returns relative to the investment.
Unrealistic expectations from ERP vendors and sales reps can kill your chances of success before the project begins. Starting a project with unrealistic expectations is often the first domino to fall in an ERP failure. When an ERP vendor or sales rep lowballs the implementation cost or duration, it leads to a host of bad decisions later. Corners will need to be cut, additional money and time will be requested and key employees will most likely be fired. It is critical to start the project with a realistic implementation plan and budget (read: not overly aggressive). Remember that it is not the job of ERP vendors to manage your expectations – it is your job to understand what it will really take to get the job done right.
When you are investigating an ERP failure, it’s not about pointing fingers. It’s about getting it right.