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How to get the most of your ERP investment

As an IT professional services firm, we are faced with clients who tell us “our system sucks” almost every day. It’s almost a mantra at some organizations as an excuse as to why things are not working well and profits are down.

The symptoms are the same: numerous Excel spreadsheets exist to analyze profits and to report key performance indicators monthly. “Workaround” is a word you hear from all personnel from Operations to Marketing. People are constantly finding creative ways to “work around” the perceived limits of the system and are working even harder to extract information from the system so that it can be presented to management in a colourful, meaningful way.

So why do people spend so much time, money and effort implementing an ERP system, only to feel as though it’s not living up to its promises? The answer may surprise you.

Most times the root cause of these issues is not system itself, but rather the people that championed the implementation…and I’m not talking about the “consultants”. I’m referring to the people that bought it! Most companies believe that implementing a new ERP system, with all of its “bells and whistles” will save the world, increase revenue, customer loyalty and profits. Isn’t this what the marketing brochure said? But what companies fail to realize is the biggest part of implementing an ERP system is CHANGE.

ERP systems are quite expensive because they are designed and programmed to follow “best practices.” But what does this really mean? It means that the “best” way to do something has been programmed into the system and all of the business processes follow these steps. ERP makers spend countless time and dollars working with customers (and even peers) to find the best way to do things and then share them with their customers. The problem, obviously, is that not all companies use “best practices” every day and operate as efficiently as humanly possible.

So what happens when “best practices” meets “ok practices”? Something has to give, and it’s usually the company putting the system in. What is needed is an effective Change Management strategy. A good IT professional will understand the system capabilities, the business capabilities and the gap between them. The real work is in closing the gap between what the company does well and what the system does extremely well!

Some ERP vendors will advertise that “we’ll change the system to the way you do business”, but that’s not necessarily true. If it were, then the world would be filled with custom solutions and no standardized packages at all. Clearly that’s not the case.

So what do you do to maximize the return on your investment? Here are some critical success factors:

• Before you even begin to look for a new ERP system, look objectively at your business and question “why” you do everything! Look at the “who” as well in the company and make sure your people have the right skills and are in the right jobs. If not, start educating them about how best practices work in their particular area!
• Dive into the root causes of why you have problems (Six Sigma is great for this). Have workarounds with the current system been created because the system truly has a limitation, or is it because “that’s the way we’ve always done it?” Objectively differentiate between true system limitations and “people issues.”
• Try to fix your problem processes without developing or using complex IT solutions. Get a baseline on your KPIs before you even begin to look for an ERP package. Understand your business thoroughly so that you can define success and know when things start to go off the tracks (before they really do!)
• Most importantly, have a clear understanding of your value proposition to your customers and what is core to the success of your business. With this knowledge in hand, you will be able to invest in a system that enhances these “core” characteristics (E.g.: fastest service tech response to a repair call). The rest of the “bells and whistles” are merely “context” and the system you choose merely needs to “accommodate” those needs, but not necessarily enhance them
• Create a comprehensive list of “nice to haves”, “must haves”, and “not important” features of a new ERP package, using your “core” and “context” knowledge
• Go through an RFP process to select your new software. Definitely kick the tires on a few packages!
• Don’t believe the sales hype of “we can do anything.” Ask for demos tailored to your business or at the very least your industry. Check references as well and use the same rule. If the supplier can’t give you the name of a customer in your industry, think twice about choosing them or even including them in the RFP
• Find (and use) the right implementation partner and pick a go-live strategy (small chunks or big bang…both have their pros and cons, but that’s for another article). There are many implementation partners (consulting firms) and they are not all the same

Use a consulting partner during the RFP and Implementation phase! Don’t take on a project that will have company wide impact without expertise.

• Define and measure success post go-live. Have contingency plans in place if things don’t go smoothly
• Always keep the system up to date! Your IT team should always have support packages (code updates) up to date (or at least one revision behind the current release) and above all else NEVER CUSTOMIZE YOUR ERP solution! If you use code customization within the application, future upgrades and bug fixes will be very difficult (e.g.: expensive)!
• Always question the status quo through continuous improvement initiatives and bit by bit take advantage of more bells and whistles within the application to make your business more efficient.

The above points won’t guarantee success and are not comprehensive, but they will improve the odds dramatically, whether you are implementing an ERP system for the first time, upgrading or switching systems.

Andrew King is a Partner with WebSan Solutions Inc., a professional services consulting firm specializing in helping companies get the most out of their ERP systems and Supply Chains. You can contact Andrew at Andrew.King@WebSan.com or at 905-713-1235 ext. 214.

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From Drab to Dazzling: How to make your Training more Effective

It was the first day of grade one.  The grass was wet with dew & the air was warm.  I had just received a new red bike & was eager to have my first ride.  And although I only lived a couple minutes from school, I jumped on my bike & started on my way.  Being that I lived at the top of a hill, I gained speed quicker than anticipated.

I rapidly approached an intersection with a school bus headed in my direction.  OH NO!  How do the brakes work? I wasn’t prepared for this.  Hastily, I aimed for a patch of grass, diving to safety.  Crash!  My new bike slid under the bus, ruined forever.

Turning on a new ERP system without the proper training for employees is like riding a new bike down a hill without knowing how to use the brakes.

Inadequate training inevitably leads to mistakes by users.  Companies lose valuable labour time while these mistakes are corrected & worse, can even incur penalties from the suppliers, customers or the government.  One doesn’t want to spend funds training employees only to see that investment go to waste either.

Installing a new system is a transition period for every member of the organization.  Some will fear & resent the new system without just cause.  Rumors will invariably start.  Proper training will ease this tension & increase employee acceptance.

So how do you get just the right mix?  With employees preoccupied with what’s for dinner or budget & time constraints limiting your possibilities, it can be confusing.  I have developed a simple set of principles that will ensure your next training session is a success.

• Gain & maintain support from management.
• Know your audience.  Remember everyone learns differently; try to address a variety of learning styles.
• Break training into manageable sessions.  You wouldn’t teach a 16 year old how to drive a race-car would you?
• Make expectations clear!  And hold employees accountable for learning.
• Provide context.  Make people care about what they are about to learn & provide a link between the topic & organizational success.
• Gather on-going feedback (& adjust the training as needed).
• Test employees.  This ensures knowledge retention & helps set the expectation level.
• Reward achievers!  A simple congratulations or thank you can go a long way.  Certificates or token gifts will also boost morale during this transition period.
• Find a champion.  Local experts can be leaned on after the consultants are gone.
• Provide a helping hand.  Every system allows the setup of checklists & reminders.  Create these for difficult procedures.  You can’t expect users to be experts by the first day.

There are many pitfalls that can hinder the effectiveness of ones training.  Understand that the installation of a new system or business process involves a large element of change management.  One must ease the fears of employees that feel threatened by the new system.  Provide that extra helping hand to employees that are not technologically inclined.

Resistance will always exist when responsibilities or processes change.  Many times users were not involved in the decision making process regarding the change, therefore, creating a positive first impression in the minds of users is crucial to gaining their commitment.  Utilizing these principles are not a guarantee for success; however, they will increase the chances of creating an unforgettable training session.  Try weaving these some of the points discussed into your next training session to witness increased knowledge transfer & improved on-the-job efficiency.

Adam MacIntosh is the Senior Implementation Lead with WebSan Solutions Inc., a professional services consulting firm specializing in helping companies get the most out of their ERP systems and Supply Chains. You can contact Adam at Adam.MacIntosh@WebSan.com or at 905-713-1235 ext. 213.

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SaaS is cheaper than on-premise software right? Maybe.

Is it less expensive to use Software as a Service SaaS than to purchase software for use on your premises? Research firm Gartner Group has issued a warning to CIOs not to assume that SaaS will in fact turn out cheaper in the long run.

"In recent years there has been a great deal of hype around SaaS," stated Robert DeSisto, VP and distinguished analyst at Gartner, the information technology research and advisory company. "As a result, a great number of assumptions have been made by users, some positive, some negative, and some more accurate than others. The concern is that some companies are actually deploying SaaS solutions, based on these false assumptions."

SaaS is cheaper during its first two years of use, Gartner finds, but the total cost of ownership over five years would be lower for on-premises software. It also warned that while most users will assume that they will be paying on a 'pay as you go' basis, there are still likely to be contractual considerations. In "the vast majority of cases," Gartner says that companies are pushed to sign predetermined contracts with fixed fees.

In its report, Fact-Checking: The Five Most-Common SaaS Assumptions, Gartner also warned that SaaS is not necessarily faster to implement. While vendors quote 30 days as the normal implementation time, "some software can still take up to seven months to set up."

Another assumption often made is that it is difficult or impossible to integrate SaaS with on-premises applications or data sources. Gartner advises that businesses need to remember that SaaS applications can be customized and are no longer only for basic functions and that data can be initially loaded to a SaaS application, then updated regularly or updated in real time using Web services.

Gartner took the top-five assumptions that users make and provided a fact check on their accuracy.

Assumption 1: SaaS is less expensive than on-premises software.
Fact Check: True during the first two years but may not be for a five-year TCO. SaaS applications will have lower total cost of ownership (TCO) for the first two years because SaaS applications do not require large capital investment for licenses or support infrastructure. However, in the third year and beyond, an on-premises deployment can become less expensive from an accounting perspective as the capital assets used for the on-premises deployment depreciate.

Assumption 2: SaaS is faster to implement than on-premises software.
Fact Check: True for simple-requirement SaaS, which will be faster, but growing complexity and other factors are coming into play. There is a danger in applying the general rule of SaaS being faster to implement for a specific deployment. Vendors often quote time frames of 30 days to implement but neglect to say that SaaS deployments can take seven months or longer. As the complexity of the business process and integration increases, the gap advantage between SaaS and on-premises deployment times will narrow because a larger percentage of the deployment time is associated with customization, configuration, and integration, which are equally difficult with both delivery models.

Assumption 3: SaaS is priced as a utility model.
Fact Check: False in the vast majority of cases. Many SaaS vendors state that they are utility-based providers, similar to electric companies, claiming that you're only charged for what you use. However, for most SaaS deployments, this is false. In the vast majority of cases, a company must commit to a predetermined contract independent of actual use. In some cases, the application lends itself to metered use - for example, an e-commerce application may have pricing based on order transaction processes - but for the most part, utility examples are in the minority

Assumption 4: SaaS does not integrate with on-premises application and/or data sources.
Fact Check: False. There are two primary methods of integrating SaaS offerings with on-premises applications and/or data sources. The first method is batch synchronization, which initially involves loading the SaaS application with data. Once this initial data load has been made, data can be incrementally synchronized on a scheduled basis. The second method is real-time integration using Web services. Another way to combine the two methods is by having a Web service trigger that is based on an event occurring in the SaaS service. Yet another method is emerging that involves integrating SaaS applications at the user-interface level through mashups.

Assumption 5: SaaS is only for simple, basic requirements.
Fact Check: False, but there are still limits. SaaS applications are highly configurable at the metadata level with many offering customization capabilities with platforms in the form of application platform as a service (APaas). There are industry examples in which complete custom applications have been built using SaaS APaas. However, some gaps remain for complex, end-to-end processes that require complex workflow or business process management capabilities.
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