Saturday, February 27, 2016
One of Deming’s 14 points for management was, “Drive out fear, so that everyone may work effectively for the company.” By this he meant that employees should not be afraid to point out problems, provide feedback, or make mistakes in an effort to improve. Business leaders should engage employees positively in continuous improvement.
But when it comes to business leaders themselves, fear can be a powerful motivator. And, nowhere is a healthy fear more needed than in ERP implementation.
It is difficult to think of a major project that is riskier for an organization than an ERP implementation. It ranks right up there with a major strategic merger or acquisition in terms of potential to disrupt the business. This is because an ERP implementation touches nearly every function of the business, nearly every business process, and nearly every employee. Although ERP systems involve computers, they are not IT projects: they are business change initiatives. Do it wrong, and you may find yourself as a case study on the front page of the Wall Street Journal.
Hopes and FearsI recently co-led a half-day workshop for a large client in the manufacturing industry that is about to embark on a wholesale replacement of their aging ERP system. The participants were 18 of the firm’s business leaders. We covered the history and role of ERP, reasons for failure, lessons learned from successful implementations, typical processes most in need of improvement, and the roles and responsibilities of business users in the implementation.
At the end of the workshop, we conducted a short exercise that I call, “Hopes and Fears.” We invited the participants to list the things that they hoped would result from the implementation. They responded with a variety of benefits, such as improved efficiency, lower inventory, better planning, and a more modern user experience.
We then asked them to list the one thing they were most worried about, the thing they most feared as they looked forward to the implementation. Here the mood turned more serious as they expressed their fears, such as that they might not get enough training, that inventory might actually increase during the transition, that employees might not speak up when things weren’t going well, and that customer delivery schedules might be disrupted.
But the one thing that worried this group the most was that they wouldn’t have the resources to get the implementation finished while still taking care of their regular duties. Would they have the bandwidth? We had told them that they had to put their best people on this project, but could they afford to do that? Where would they get additional personnel? The top executive in the room spoke up and assured the group that the company was ready to spend the money to make those resources available.
At this point, I told them that I had accomplished my unspoken objective. My goal in conducting this workshop was to put some fear into them, as business leaders. Nothing concerns me more than when I see a company begin an ERP implementation thinking that it is no big deal, that they can delegate the project to the IT department, or to the system integrator. Or, thinking that they can treat an ERP implementation as just another project, like installing a new production line, or implementing a new safety program.
Address Fears in Contingency PlanningHealthy fear can be a strong motivator in ERP implementation. At the same time, fear should not lead to paralysis, leading an organization to not move forward with new systems.The right response is to address each of those fears in the project plan, in the form of contingency planning.
You can never completely eliminate risk in an ERP implementation. But with careful planning, allocation of resources, and management commitment you can greatly mitigate those risks.
- Are you afraid you won’t have sufficient resources? Allocate budget to hire additional resources to back-fill the regular responsibilities of project team members.
- Are you concerned that business users won’t adopt the new system? Develop and implement a change management plan as part of the implementation.
- Are you worried that customer delivery might be disrupted? Allocate extra time in the acceptance testing phase to ensure that doesn’t happen.
Monday, November 16, 2015
This question comes up repeatedly in our vendor evaluation and software selection consulting services. Clients read about failed ERP or CRM projects, for example. They hear the warnings of executives from such companies, telling them to spend more time up front understanding their business processes. They hear about companies that go live but don’t achieve the desired benefits. They vow to do better. They don’t just want to implement a new system. They want to implement best business practices.
These are good reactions. When it comes to enterprise systems, anything that heightens the fear of failure is a good thing. The more business leaders are focused on business processes, the better.
But, how should business leaders deal with their business processes when implementing a new system?
- Should they improve their processes before implementing the new system, so that the new system is not automating broken processes?
- Or, should they choose the new system first, so that they can redesign their business processes using the best business practices that are embodied in the new system?
The answer is a little bit of both: the two should be done in parallel. In fact, doing all of one before the other—whether process first, or system first—will result in failure.
Read the full post on the Strativa website:
Which Comes First, New Business Processes and New Systems?
Wednesday, October 28, 2015
Although the jury awarded Oracle approximately $50 million in damages, the amount was far below what Oracle expected. Moreover, the jury found that Rimini Street’s copyright infringement was “innocent,” not “willful,” that Oracle suffered no lost profits as a result, and that neither Rimini Street nor its CEO, Seth Ravin, engaged in any tortious business conduct.
Assuming the jury’s verdict stands up against potential appeals, the case sets an important precedent for how 3PM providers should operate to ensure they are not violating the intellectual property rights of software owners. We expect customer use of third-party maintenance will increase as a result of this verdict.
Read this entire post on the Strativa blog: Oracle v. Rimini Street Verdict Clarifies Ground Rules for Third-Party Maintenance
Sunday, October 18, 2015
This post outlines key features of Sage Live, the challenges it will face, and recommendations for potential buyers.
Read this post on the Strativa blog: Sage Puts Stake in the Cloud with Sage Live
Sunday, October 11, 2015
This post provides an update to our previous coverage of AscentERP.
Read this post on the Strativa blog: AscentERP Rises in the Cloud ERP Market
Monday, October 05, 2015
In this post, we provide an update on FinancialForce, based on interviews we conducted with its executives at Dreamforce, the annual conference for users of Salesforce.com. We also provide recommendations for buyers considering FinancialForce.
Read this post on the Strativa blog: FinancialForce Expands Its Footprint in Cloud ERP
Wednesday, September 30, 2015
four ERP systems in the Salesforce ecosystem. This year, the annual Dreamforce conference gave me the opportunity to interview Rootstock executives and customers about the progress the firm has made over the past year.
In short, Rootstock is showing good momentum, nearly doubling its publicly announced customer count over the past 18 months. It is also building out its product offerings by developing its own native accounting applications and extending its business intelligence capabilities utilizing Salesforce Wave Analytics.
Read the full post on the Strativa website: Rootstock Rounding Out Its Cloud ERP Offerings.
Last year, I provided an update on the four ERP providers building on the Salesforce platform in a single post. This year, I want to provide an update on these, starting with Kenandy.
Unlike cloud-only ERP providers such as NetSuite and Plex, Kenandy is not interested in a "two-tier ERP strategy." The strategy of "two-tier" refers to the targeting of small divisions or operating units of larger companies that are running Tier 1 solutions, typically SAP or Oracle, at headquarters and in larger divisions. The cloud provider then targets its ERP solution for smaller divisions of the company with integrated to the corporate system, usually for shared services such as financials, central order processing, or cross-company supply chain management. NetSuite points to customers such as Jollibee Foods and NBTY (China) Trading Company as multinational companies implementing NetSuite in a two-tier strategy. Similarly, Plex boasts of Caterpillar and Inteva Products as success stories in two-tier ERP.
Going against this trend, Kenandy executives say that, although they will not turn away two-tier opportunities, they would rather work in what they consider a more strategic role with customers. This means targeting (1) large enterprises for a complete ERP solution, or (2) serving as a more agile "orchestration" solution for new lines of business within large enterprises.
Read the full post on the Strativa website: Kenandy: Against the Tide of Two-Tier ERP
Monday, July 06, 2015
But software as a service is more than just another deployment option, another way to consume software. SaaS is a business model. SaaS not only affects the product: it should drive the nature of how the provider does business, from how the product is developed and maintained to how it is sold, implemented, and supported. It should permeate the very culture of the provider’s organization.
How should the business model of a SaaS provider be different from that of a traditional software vendor? There are at least six aspects.
Read the rest of this post on the Strativa blog: Beyond Deployment Options: SaaS as a Business Model.
Wednesday, June 17, 2015
- Dynamics product development teams will now report up into the new Cloud and Enterprise unit (see above)
- Dynamics sales and partner relationship organizations will now report to Kevin Turner, Microsoft’s Chief Operating Officer
- Dynamics marketing functions will now be handled directly by Microsoft’s CMO, Chris Capossela, and his team.
Now, some observers and some competitors will be tempted to say that Microsoft is abandoning its Dynamics products. But, in our view, it would be more accurate to say that the Dynamics products are becoming a more integral part of Microsoft’s overall portfolio. There are three arguments in favor of this positive view of Dynamics.
Read the full post on the Strativa blog: Microsoft Unbundles Its Dynamics Business Unit
Labels: Microsoft Dynamics
Sunday, June 07, 2015
In this post, we identify the problems with the use of ERP requirements templates and outline a better way for specifying requirements for new ERP systems.
Read the rest of this post on the Strativa blog: The Problem with ERP Requirements Templates.
Labels: ERP selection
Saturday, May 30, 2015
Oracle was hit by a customer lawsuit earlier this month in conjunction with its MICROS Systems business, which Oracle acquired in 2014.
The dispute involves access to the source code for the MICROS Open Commerce Platform. Aero maintains that when it licensed OCP, MICROS (not yet acquired by Oracle) knew that Aero intended to build customizations and new features to integrate with OCP.
Aero alleges that MICROS personnel represented that Aero would have ongoing access to OCP source code in order to build its customizations and maintain them going forward.
Although we do not yet know all of the facts, there is a lesson in this case for companies seeking to become digital businesses.
Read the rest of this post on the Strativa blog:
Oracle Sued by Customer over Access to MICROS Source Code
Monday, May 18, 2015
Since the mid-1990s, it’s been easy to see how web commerce has disrupted many traditional business models. Early on, Amazon disrupted traditional bookstores, and Netflix disrupted video stores. More recently, Uber is disrupting the taxi industry, and AirBnB is threatening the traditional hospitality industry.
But what’s not so apparent is how web commerce has become the great equalizer for small businesses. This is true in at least three ways.
In other words, an entrepreneur with a business concept or a fresh product design can start a business and scale it in a way that was not easily done twenty years ago.
- Market presence. Traditional marketing channels, such as broadcast media, print advertising, and direct mail, required substantial budgets. Today, a small supplier with a well-designed and well-functioning e-commerce website and good natural search results can rank right up there with major brands.
- Global reach. Prior to the commercialization of the Internet, it took substantial investment for a supplier to grow its business internationally. But today, even the smallest manufacturer can be found by prospects in overseas markets. Using international distributors and third-party logistics, small suppliers today can more easily serve buyers around the globe.
- Cost efficiency. Economies of scale still count in making and distributing physical products. But a well-functioning e-commerce site that is integrated with back-end systems, such as ERP, can cut costs for small suppliers. Combined with cloud systems on the back-end, small businesses can enjoy productivity gains from information systems without having to support a large IT staff.
Small Companies Acting BiggerIn NetSuite's most recent user conference, CEO Zach Nelson touched briefly on this point. He said something to the effect that, with its integrated ERP and e-commerce capabilities, NetSuite was helping small companies act bigger. (He also said that it was equally important to help large companies act smaller, but that’s a thought for another post).
I made a note of Nelson’s remarks, and didn’t think much about them until I attended a reception for press and industry analysts later that evening. There, I found myself chatting with John Baker (CEO) and Alan Blackford (COO) of Thos. Baker, a supplier of outdoor furniture. They told me that NetSuite was working on a video about their business. After the reception, Baker sent me the pre-publication video link and I found it an inspiring story.
In the video, Baker tells how he had been commuting to his tech industry job in Seattle for many years, but he aspired to do something interesting that would allow him to work close to his family on Bainbridge Island. So, he started his outdoor furniture business to combine his interest in technology with his interest in design.
Baker points out that setting up web commerce for this sort of business is quite complex. His operational strategy makes extensive use of outsourced manufacturing, with furniture frames stocked in the warehouse on Bainbridge Island, the cushions from a supplier in Alabama, the umbrellas from California, the fire pits from Tennessee. Though the supply chain is complex, but the integrated system allows the firm to appear to its customers as if it were a much large company. When we are talking to our customers, they are comparing us to companies that are somewhere between 40 to 400 times our size,” he said.
Click the image below to watch the video. It’s a promotional video for NetSuite, of course. But it’s an inspiring story nonetheless.
Just how small is Thos. Bros? I believe the firm has just five employees, and all of them appear in the video.
Related PostsNetSuite Enhances Its Manufacturing Functionality
NetSuite Manufacturing: Right Direction, Long Road Ahead
Sunday, April 26, 2015
One of my goals was to see what kind of progress Infor has been making on its CloudSuite program, and especially its UpgradeX initiative, which is aimed at upgrading Infor’s existing customer base to current versions deployed in the cloud. In our ERP selection consulting services, we often see Infor as the incumbent provider, so knowing the details of these offerings is important in understanding options for these clients going forward.
But Infor faces two challenges. First, it must convince a greater share of its 70,000 customers to upgrade to its latest versions. Then, if it does convince them, Infor will need to have the implementation resources trained and available to support those customer migrations.
Read the rest of this post on the Strativa website: Infor ERP Customers and the UpgradeX Roadmap
Tuesday, March 24, 2015
All this is new and exciting. But there’s one industry where smart devices are very old news: manufacturing.
Yet, for the most part, today’s ERP systems do not leverage those smart devices on the factory floor. In the typical factory, the intelligence of the factory equipment is used almost exclusively by manufacturing engineers, process engineers, and quality assurance professionals to control production. But when it comes to recording transactions for production control, inventory, or accounting, they are often performed by human operators hand-entering the data.
Read the rest of this post on the Strativa blog: With Manufacturing ERP, the Best UI is No UI→