This article is most likely as much for my competitors as it is for any end-user business that is interested in implementing ERP. This is the technique that we've developed. I assist individuals who wish to do this (so long as you choose a various target audience) since I think the market is big enough for method, method more than simply me.
It has actually been a significant challenge for me to determine a new way to do this sort of execution. In particular I have actually wished to use LEAN believing and principles to ERP for several years. It has taken a lot of time but I think we have actually created a new and better method to deploy an ERP.
My competence now is with Characteristics 365 Organization Central from Microsoft. I'm going to utilize that for most of my examples, but these approaches must work with nearly any modern-day ERP. It may be that a cloud ERP system would be needed, as there are some elements of this that work best because Service Central is cloud based, but ideally you can apply these methods to any system.
I have actually had the ability to fine-tune and eliminate the waste of typical ERP executions in such a way that now utilize solely a fixed fee for our Organization Central projects. This is quite radical. The techniques I talk about below are the "secret sauce" that we've determined make this work.
First a little bit of background.
Standard ERP Applications
Traditional ERP implementations are very high risk, for both the partner releasing them and for the customer. This is why almost no one uses the evasive fixed cost. The risks are simply excessive.
The old Characteristics NAV task costs were high since tradition approaches are costly. The common implementation follows a variety of phases originally set out by Microsoft in a waterfall task structure. Waterfall task management has actually been proven to be more pricey than the contemporary "nimble" approach, which is based on LEAN strategies.
The technique that has actually been used by essentially everyone because ERP has existed is to costs "Time and Product." This means that consumers pay for the time spent by consultants, nomatter how excellent or bad they are. This moves the risk from the implentor to the customer almost completely.
The reality is that there are still massive threats for the partner with these waterfall jobs. I've seen MANY cases where partners were sued or threatened when these jobs go very badly.
I started thinking about how we needed to change this after checking out a LinkedIn post that shared an article on why "Time and Material Billing is Unethical." I was actually struck by the arguments. The author asked a question that I think summed it up remarkably well:
If a dining establishment charged you for the time and material that it required to prepare your steak, how would you feel?
This most likely sparked my first real ideas about how to stop being a time and product company.
ERP Costs are exceptionally unpredictable
One of the very first videos that I uploaded to YouTube was my description of why standard costing of ERP executions was outrageously incorrect. I've invested the years because determining methods to eliminate that error.
Clearly the best method to give accurate quotes was to be fixed charge. The trouble is that traditional method is so high risk for the partner. It makes it actually scary to provide a fixed cost. if you don't do it right, you're in a lot of trouble. I have actually worked really hard to develop a method that I believe is special.
Applying LEAN Thinking to ERP Executions
There is a movement to use LEAN thinking to service activities. In general, LEAN has to do with eliminating waste from a physical product, but it can be applied to tasks too.
I developed my own variations of waste in ERP projects.
First - there is time invested by the wrong resource.
This is normally when somebody who costs too much does something that someone who is paid much less can do, or can do it much faster.
Second - there are unneeded steps
I find this happens when individuals carry out actions to "cover their butts." A great deal of task management falls into this. It likewise occurs when consultants (compensated on hours billed) push unnecessary work.
Third - there are wasted jobs
In some cases customers want to do things that we, as ERP specialists, understand won't work. In a traditional application we have no economic motivation to stop it.
Lastly - there is a "bleed" of understanding
This is usually on the customer. Typically it's when the customer does not remember their training because they do not hang around working in the system enough.
Why ERP Implementations Have to Change!
When we started doing cloud based ERP executions with Microsoft Dynamics NAV it was common for consumers to pay $100,000 for the software and pay $200,000 for their execution.
Once you go into the world of the cloud, where Microsoft Business Central is $100 monthly per user, things change. It's hart to tell a customer they are going to spend $2000 a month for software and still pay $200,000 for execution.
So we did what our customers do. We set a rate we thought the market would support, and we worked in reverse to manage our internal costs and make money doing that. Our consumers are manufacturing companies. They need to approximate a cost, and after that adhere to it. They can't go to their customer and state "we need to costs you more because we were inefficient in our production process." They would fail over night.
The new approach to ERP implentations.
I'm more of a manufacturing professional than a technology specialist. Couple of manufacturing companies believe in terms of jobs with job managers (Engineer to Order is the exception). They typically think in terms of operations managers and basic work instructions.
I applied this thinking to ERP projects. It helps that all we do is execute ERP for manufacturing companies.
Here's are the main actions that assisted us significantly lower the risk (and expenses) of ERP jobs.
We simply do one sort of projectFocusing solely on manufacturing, and in small centers, indicated that we could improve and get better with each task. We take a look at the process as a recurring, repetable procedure. This eliminates the up front design of the project strategy etc. The job management goes away, and we lower that waste immensely.
We offset simple however laborious work to the customerWhen a $200 per hour consultant does what totals up to a clerical job, that is waste. We train the consumers to do some of the tedious tasks. It turns out that these are also better done by the customer. Service Central makes a lot of this much easier because it has excellent tools for end users to do jobs that used to be tough. There are 2 of these in particular that are crucial: Reports and Data Filling
We train consumers to edit formsCustomers know what they want their billing to look like. They understand where they desire the due date on their PO. It is way simpler if we teach them to change these things than do it for them.
We train customers to load information into the systemData loading is a job we assign to a co-op trainee after a few hours training. The fact is, when consumers "get" how this is done - they do a far much better job cleaning their information and things go much smoother!
We keep training sessions shorter and VideoPeople forget what they are taught. It's a fact of life. You have a lot on your plate. Likewise, the longer an individual spends in training - the more they "zone out" and begin to lose focus. We keep training sessions short, and record all of them as videos. Individuals absorb more and can easily review what they've forgotten. This implies we absolutely must train from another location. Travel time is a killer (and absolutely waste)- so we can't take a trip.
We keep the task tight, and discourage changeTraditional ERP partners motivate extra work. Extra work indicates extra revenue. When we do a Company Central job, we dissuade any changes from the original task.
We still costs for modifications, however discourage them too Customizations are the something we can't predict - so we likewise dissuade them. Provided this new design, we find clients ask for a lot less also. They trust us more to know what we are doing. Occasionally a customization is just a no-brainer, and in those cases we support and even encourage them. Nevertheless - we have less than half the modification we used to.
Conclusion
We do a lot of Business Central applications, all in manufacturing. Now we have actually refined the process to the point where practically every customer is offering us a testimonal (frequently as a video).
Ideally this article can assist you work with your ERP partner to figure out how to save costs and enhance the task. Get the ERP specialists to teach you to edit reports and load data.
If you are a partner, feel totally free to steal these ideas. If you desire to reach out and ask for suggestions, feel free to.
Synnove Systems provides quality SAP Consulting Services in the region with our regional offices in Singapore, Vietnam, Malaysia and Indonesia. Our award winning team bring innovation and differentiated capabilities that help Clients create value and deliver business outcomes. Synnove Systems is set to become a market leader in Enterprise Business Solutions. Synnove Systems – One of the competent ERP solutions company Malaysia, SAP accounting software Malaysia, payroll ERP software Malaysia.
We've been doing this approach for a variety of industries.
With out of package Organization Central
Task Store Manufacturing
Production Manufacturing (make to stock, make to order).
Engineer to Order.
Job Manufacturing (a more integrated Engineer to Order).
With the PrintVIS MIS Addon.
Industrial Print.
Flexible Packaging.
Folding Carton.
Label Manufacturing.
And it's been working great. There are still areas we require to figure out, but overall it has been astonishingly effective.
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