News & Views | ERP

News & Views is published monthly by 180 Systems. Our objective is to provide recent articles to our readers on business technology topics. In some cases, our blog contains a title with a hyperlink to a source article, a quote from the article and our comments. In other cases, we have provided a blog without a hyperlink for original content by 180 Systems. We encourage you to post your own comments. You can also access our blog by topic.

National Forum on Technology Solutions

Business Intelligence, CPM, ERP, Software Selection

180 Systems and CPA Canada have developed a new conference that is targeted to senior leaders responsible for technology investment decisions. The conference will focus on enterprise software (ERP, BI and CPM) and includes customers speaking about their journey through selection and implementation by industry (manufacturing and distribution, not-for-profit and financial services). It will also include solutions for today’s industry challenges and emerging technologies such as AI, Blockchain, and IOT. The conference will take place on May 28-29, 2018 at the Metro Toronto Convention Centre.

0 Comments

Is your implementation on track?

ERP, Project Management

February 2018 from CPA Magazine and written by Michael Burns – “Senior executives of any organization that is going through a major system implementation worry whether the implementation project will cause huge problems when it goes live or whether the costs and time estimates are accurate. The project manager might be telling them all is well but project managers have been wrong on occasion. How do you look under the covers of a project to see what is really happening?”…

0 Comments

What come first – an ERP system (the chicken) or lean management (the egg)?

Business Process Analysis, ERP, Software Selection

Lean management is all about eliminating any waste by identifying each step in a business process and then revising or cutting out non-value added steps. The question is whether this should be done prior to selecting an ERP system. Proponents of doing it first assume that the implementation of an ERP system would be merely improving the automation of the existing process and better to eliminate the waste first. However, this approach (sometimes called repaving the cow paths and extending the chicken and egg analogy) is not best practice. The implementation of an ERP system is the best opportunity to implement lean processes. As well, eliminating waste can often be done efficiently with technology so why design and implement a business process that could potentially be part of an existing ERP system? ERP systems have also evolved and do incorporate lean techniques. But ERP implementers don’t always know enough about Lean to optimize business process. You need to either make sure the implementer can implement Lean methods or find yourself a Lean consultant to help with the implementation. One of our clients recently turned to Focused Improvement Consulting to make sure that lean management is applied to the implementation process.

0 Comments

2017 ERP Survey

ERP, Software Selection

September 2017 from CPA Magazine and written by Michael Burnse – “Welcome once again to our annual vendor survey on enterprise resource planning (ERP) software. Every year we have a different theme for the article that accompanies our ERP survey results. This year we decided to look at the fine print in ERP contracts and the good, the bad and the ugly about requests for proposals (RFP) used in software selection….”

0 Comments

How do you compare a SaaS annual fee to a one-time license fee?

ERP, Software Selection

We have found that on average the one-time (on premise) license fee is 3 times the annual fee based on our experience in evaluating RFP responses from vendors. One might think that the ratio between license and annual fee should be greater but that does not take into account the additional hosted services provided by the SaaS vendors including maintenance fees which are billed annually by on premise vendors at approximately 20% of the license fee. It’s still early days for SaaS and as competition heats up the license ratio:annual fee will increase as SaaS fees are reduced. We recommend that even if the SaaS costs are high that you don’t rule out SaaS vendors just on cost. They are willing to negotiate and there are other factors that should be considered in making a decision.

2 Comments

ERP Customer Survey

ERP

From CPA Magazine and written by Michael Burns – “We have all heard horror stories about failed ERP implementations but we rarely hear about the ones that went well. Does ERP deserve the bad rap it gets?…”

0 Comments

ERP Survey 2016

ERP

From CPA Magazine and written by Michael Burns – “Welcome to our annual vendor survey on enterprise resource planning (ERP) software. Our survey now includes 100 systems…”

0 Comments

Reduce Risk of ERP Implementation Failure: Pre-Contract Business Needs Analysis

Contract Negotiations, ERP, Software Selection

You naturally want to minimize risks and avoid cost overruns before signing a long-term contract for a new ERP system. Your prospective vendor also wants to minimize risk, but is usually not in a position to do anything other than give an implementation estimate based on lots of assumptions about scope, roles and responsibilities. These assumptions could be fairly accurate, but could also be way off, which could lead to surprises and costly change orders during the implementation.  Neither you nor the vendor want this to happen.  Wrong assumptions that lead to change orders will create frustration, friction and could lead to you being an unhappy, non-referenceable client, or even worse, one who wants to abandon the project.

Everyone would prefer to avoid this.  So we encourage you to consider a pre-contract Business Needs Analysis (“BNA”).   A BNA provides the vendor with more detailed information about your environment that it can use to firm up its understanding and provide a fixed fee for the implementation. In the absence of a BNA, this work would normally be done by the vendor during the implementation, after the contract is signed.

The more analysis done in the BNA, the lower the risk. 180 Systems’ approach to the BNA is to identify the requirements that are the most challenging and/or unique and make sure they are clearly understood by the vendors so they can figure out how to handle them in detail before the contract is finalized. Although the vendors charge for their time to complete the BNA process, it is time they would be charging during the implementation anyway, and by doing the work upfront, the risky parts of the implementation can be built into the implementation contract and therefore reduce the likelihood of surprises.

A BNA should include

  • Implementation scope linked to requirements in the RFP
  • Conceptual design with agreed upon design decisions
  • Functional specifications for any requirement requiring customization
  • Statement of Work

The vendors may resist as they would rather just close the deal or are reluctant to assign resources to a client that may not sign a long-term contract. But if the risks are high, both the vendor and the client are protected using the BNA approach.

0 Comments

Statement of Work (SOW) Stoppers

Contract Negotiations, ERP, Software Selection

The SOW is a key document from your vendor that can make or break the implementation. The vendors will do their best to reduce their risk by limiting scope to a high level list, assuming that you will follow best practices, and making a lot of other assumptions about you doing work that you don’t know or understand the effort to complete. 

As the vendor risks go down, the customer risks go up.  We recommend the following:

  • Scope is tied to the requirements in the RFP which need to be specific
  • Best practices should only be applied to processes that are considered basic.  It should not be tied to ones that allow a company to differentiate themselves from the competition or address critical success factors (what an organization must do well in order to be successful strategically). You should limit the best practices to a few basic processes such as accounts receivable and accounts payable.
  • Ensure you understand what is involved in your roles and responsibilities. Many organizations don’t have the experience or qualifications to do some of the tasks that may be assigned to them without a lot of help from the vendors. An example of this is developing to-be business process documentation.  If you don’t have a resource on your team with the skill set to do this, you may be setting yourself up for a vendor change order.

A good way to limit scope for both the vendor and the customer is by arranging a “paid-for” business needs analysis (BNA) or discovery process prior to signing any long-term contracts. This should not delay the implementation process as it is work that would need to be done anyway. It should also not be a full-blown design phase by the vendors. It should be enough work for the vendors to define scope clearly and provide a fixed or not-to-exceed fee to do the implementation. It will also involve deciding what to do with all the requirements that are not met out-of-the-box by the vendors which include customization or custom reports, 3rd party modules, changing the process and workarounds.

The vendors would rather close the deal without doing the discovery if possible but we think this is short-sighted. In the end, the vendors don’t want unhappy customers and taking this extra step will help reduce the risks of unexpected and costly surprises during the implementation.

0 Comments

So the project has gone belly-up, what now?

ERP, Project Management

December 3, 2015 from LinkedIn – “…Most SMEs and many larger companies are not experienced in running projects. It is just not something they need to do on a regular basis and certainly not with this much at stake.  An investment in the services of a skilled internal Project Manager is rarely a waste of money. It will often cost you more to skimp in this area and then have to recover afterwards…”

180 View – The author, a business development manager for Pronto Software, makes a number of really good comments on why implementation projects fail and what to do about it. I have acted as an ERP expert witness and have seen just how bad things can get. It is far better to find a solution to the problems than to fight it out in court.

0 Comments