Implementing ERP more effectively – Part 3

Part 3: Having the right approach and attitude to an ERP implementation

(cross-posted from SYSPRO Smarter ERP blog)

“Change is not made without inconvenience, even from worse to better.” Samuel Johnson

Do you know how complex Microsoft Word and Excel are?

Because Word and Excel look so easy, people under-estimate how complex other standard systems, like an ERP, can be. If business users knew how complex those two Microsoft applications really are, they would be more thoughtful and careful when embarking on a complex software project.

The statistics on ERP project failures are staggering. However you measure it, the figures don’t look good when it comes to software project success. There is a blog dedicated just to software project failures and a recent Harvard Business Review article highlighted the unexpected risks of major IT projects. Ironically ERP project failures keep occurring despite research that started more than 10 years ago on the critical success factors of ERP implementations, and which has been repeated several times since then.

While an ERP implementation is an IT project, it is also much more. Its main drivers and objectives are business-related, and it has a major impact is on people, processes and culture. Some important non-technical aspects of ERP projects were recognized early on:

“…large, complex projects, involving large groups of people and other resources, working together under considerable time pressure and facing many unforeseen developments.”

The way, therefore, to ensure that an ERP project is successful is not just to focus on IT issues but to have the right approach and attitudes. (Having the right people in the right place during the implementation is the topic of another blog series). The following are critical attitudes and approaches for a successful ERP project:

• Top management support
• Clear goals and objectives
• Management of expectations
• Change management, communication and user education
• Project/program management

Let’s look at each of these briefly.

Top management support

While top management initiate an ERP project, giving it their blessing to start, the tendency to delegate the project once it is underway should be challenged. Top management needs to remain not only accountable but also responsible for the project. The question of who in the executive team should be the ERP guardian is debated on numerous projects. One commentator has a strong argument that the CEO is the only proper person to be custodian of the ERP system.

Clear goals and objectives

Too many software projects use the metric of ‘on-time, on-budget’ to measure project success, but as a recent ERP project failure showed, if you only use those metrics other important objectives can get omitted, such as customer or user satisfaction. At the outset of the project, before software selection is done, success should be truly and clearly defined. How do we know the stakeholders will be happy? What specific measurable benefits should the system deliver? Put another way – what does DONE look like?

Management of expectations

One reason why a senior executive should be in charge of the project is so that it is ‘owned’ by the business, rather than by the implementation consultants who often develop the project plan. The project’s scope, planned deliverables and schedule have a significant influence on setting expectations.

Deciding on deliverables and schedules without sufficient executive and staff buy-in can produce an environment where legitimate concerns are ignored and distrust is created. When determining the scope, focus only on what is ‘in scope’ (which only implies what is excluded), but also make explicit what is ‘out of scope’ – this aims to avoid those difficult conversations of “but I thought XX was going to be included.”

Change management, communication and user education

There’s a saying in change management:

“Old organization + New technology = Expensive old organization”

An ERP project can succeed or fail through the commitment of the people who use it. Therefore it makes sense to communicate with employees – early, often and in-depth.
I mentioned in a previous blog that one of the aspects of managing an ERP project is how to handle business process changes. A Forrester Research comment on change management was:

source: Forrester Research

“Any business process change is strongly related to personal change — that means your people — and this is often the component that gets shortchanged.”

The change management and training programs should commence in the early stages of the ERP project, not, as is often the case, near Go Live date.

When it comes to training, there are some basic mistakes to avoid.

• Training should not be considered a secondary, optional aspect of the project
• Users need to be educated (taught the inner workings and reasons) as well as trained (how to complete a task)
• Training should be planned for the long term
• A variety of training methods need to be employed

Project and program management

ERP projects can be complex and long; organizations therefore need to invest in a project management capability. This means they need to understand the principles of project management relating to software projects, and be prepared for the challenges of managing a project.

Projects costs money. Don’t spend the money? Then, as Dr. Phil says, “how’s that work’in for ya?”

Finally, since an ERP project has long-term consequences, businesses need to develop a program mentality when it comes to their ERP application. This is to ensure that the system receives ongoing attention, oversight and support throughout its life cycle.

(Follow Glen Alleman and Michael Krigsman for ideas, evidence and pointers on how projects should be managed.)

Directions in cloud computing and software-as-a-service

I was fortunate to be invited recently by Microsoft to a seminar by well-known writer David Chappell. The seminar was given to provide Microsoft’s ISV (Independent Software Vendor) partners with insights and guidance on what to expect with, and how to prepare for, the growth of cloud-based software and software-as-a-service (SaaS).

Chappell is a skilled writer, and an informative and engaging speaker; but even more valuable, he was speaking as in independent with no restrictions on what he could say. His comments about Microsoft’s cloud offering – the Windows Azure platform – were balanced and he certainly didn’t pull some punches. In various areas, Azure is still a platform in development, but despite some shortcomings, Chappell believes it has potential.

He also believes that the most significant cloud development is in the area of Platform-as-a-Service (PaaS); this is where Google App Engine, Microsoft Windows Azure, Salesforce.com Force.com, and Amazon’s recently announced Elastic Beanstalk operate. However, Infrastructure-as-a-Service (IaaS) as delivered in Amazon EC2 is not going to be as well used in the future, according to Chappell.

Chappell covered technical and non-technical issues in the seminar. He pointed out the that type of application is significant in terms of applicability to a SaaS solution – a greater customisation requirement makes SaaS harder; which is why cloud solutions have been more in the basic accounting, CRM and SFA areas than in ERP. He also discussed how cloud computing requires changes to the business model of a traditional (i.e., on-premise) ISV, as in the table below.

Advantages of SaaS	Disadvantages of SaaS
Potential to reach new customers	Must demonstrate real value upfront
Sell direct to business, not via IT	Revenue builds up more slowly
More predictable revenue	Lessens ability to sell customisation and customisation services
Lower support costs	New sales challenges, e.g., resistance
Gain more knowledge about customers’ behaviour	Requires changes in how business is done
	Requires more capital to sustain in the start-up period
	Slower revenue growth

The move to SaaS requires change in a number of areas:

• target customers
• pricing model and subscription management
• sales process
• sales force and partner ecosystem
• sales compensation plan
• website becomes fundamentally important for sales success
• marketing
• support
• operations
• software development
• organisation structure

Because of the change needed, Chappell commented more than once that moving to the cloud is a major, disruptive change for traditional ISVs, but if ISVs wish to defend their existing market, and find new opportunities for growth, then they have to ‘bite the bullet’ and start the transition. In the short space of thirty years we have seen the predominant computing platform change from mainframe, to mini-computer, to client-server, so we should consider cloud computing as the next phase.

Three final points from the seminar.

   1. How SaaS changes the sales approach

Deal size	Customer acquisition cost	Type of sales force needed	Relationship with customer	Typical customer	Product complexity
High	High	External, field	Personal	Enterprise	High
Medium	Medium	Internal only	Phone	SMB	Moderate
Low	Low	None	Website only	SMB, department	Low

Chappell advises that an organisation should be aligned across the rows for the best sales approach – not be on different rows for different columns.

   2. He noted that it is easier to go up in the table; to go down is difficult. So ISVs should probably start with a solution that has less than the full set of functionality. In many cases, the SaaS entrants in the market have functionality that is ‘good enough’.

   3. What to consider when deciding where to host a SaaS application.

Platform location	In-country data centre	Support	Platform control	Admin required	Security	Disaster recovery	Cost
Local hoster	Good	Good	Extensive	High	Medium	Limited	High
Global IaaS platform (Amazon EC2)	Maybe	Remote	Partial	Medium	Strong	Excellent	Medium
Global PaaS platform (Azure)	Maybe	Remote/ local	Minimal	Low	Strong	Excellent	Low

In the decision between cloud platforms and hosting providers, the following issues also need to be considered. On the one hand, the cloud option is faster, cheaper, and has less risk; on the other hand, developers have to learn a new world, and they have less control and less choice.

Microsoft Partner Summit and the new economic landscape

I attended the Microsoft Partner Summit Africa, and heard some interesting points in the keynote address made by the two executives who run Microsoft’s business for most of Africa – Nteto Nyati, Managing Director of Microsoft South Africa, and Hennie Loubser, Regional General Manager for Microsoft WECA (West, East and Central Africa).

• The BRICS (Brazil, Russia, India, China, South Africa) are now areas where most growth is projected;
• 6 of the 10 fastest growing economies are in Africa;
• a number of Microsoft employees from Africa who have been working abroad are repatriating from Europe and the US back to Africa;
• there are 1300 large and mid-market companies in Africa from which Microsoft gets 75% of its revenue in this region;
• Africa has become a continent of hope and opportunity;
• on the African continent, the community expects companies to become an integrated part of the society – profitable returns to company owners must also accompany returns to society.

This led me to these thoughts:

1. the focus of economic growth in the world has moved from developed economies (the so-called North) to the emerging and developing economies (the South);
2. this change should have some impact on the issues and location of technology innovation;
3. a good deal of technology innovation focuses on mostly ‘northern’ business, consumer and societal issues;
4. there is an expectation, particularly in the North, that the source of technology innovation should still occur in certain ‘northern’ locations;
5. Points 1 and 2 do not agree with Points 3 and 4

It makes me proud therefore to say that SYSPRO is an African company that supports the real issues of small and medium businesses throughout the world. Comments of “how can innovation come from Africa?” should now be discarded for the irrelevant and arrogant rubbish that they are.

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Some other information from the keynote

Microsoft SA’s FY2011 growth areas:

Public sector	43%
Entertainment and devices	32%
Enterprise services	28%
Enterprise group	22%
Small & medium business group	20%

Microsoft SA’s FY2011 market share changes:

Web browser	+ 11 pts
Email, calendaring	+ 17 pts
Unified communications	+ 7 pts
Database server	- 2 pts
Smartphone	- 7 pts

Some Microsoft Africa stats (via IDC):

PC shipment growth	15%
Serve shipment growth	6%
Software piracy rate	> 80% (US $785 mill) in 2010

Microsoft partner logos changing

Have you ever noticed those logos on your Microsoft consultants’ letter head that said “Microsoft Certified Partner”?

From the end of October, Microsoft has mandated that its partners start changing their partner logos. Watch out for the change.

These are old logos.                                       This is the new logo. 

End of a gargantuan

This morning we heard of the death of Steve Jobs. The man could be described as a gargantuan – someone who is gigantic, wonderful, prodigious. The fact that he was personally instrumental in so many technological innovations is astounding:

• first consumer computer, Apple
• popularised the graphical user interface, Mac
• technical innovation in film animation, Pixar
• personal music player, iPod
• first smart phone, iPhone
• first touch-oriented consumer computer, iPad

He is probably the first ‘well-known’ figure in the modern computer industry to have died. Other significant personalities in the industry have already passed away – e.g., Thomas Watson, founder of IBM – but none had achieved Jobs’ level of worldwide recognition.

Jobs was a year older than me when he died. The other person with a similar claim to fame is Bill Gates, but as he is the same age as me, I hope it’s somewhat longer before we hear of his passing.

RIP Steve Jobs, 1955 – 2011

A more in-depth analysis and apprecation by Richard Poplak at http://dailymaverick.co.za/article/2011-10-06-jobs-vacancy-apples-genius-dies-at-56

Implementing ERP more effectively – Part 2

Part 2: Changing the system as business realities change

(cross-posted from SYSPRO Smarter ERP blog) 

Hands up all those who have started implementing an ERP system and not had to deal with changes as the project progresses. No one? I am not surprised. Has anyone gone live with an ERP project and never had any changes afterwards? The reality of any ERP project is that scope changes occur during the project, and after going live it is guaranteed that there will be more requirement changes.

In my previous blog, I discussed how integrated BPM (business process management) and ERP could provide a visual representation for designing and building an ERP, referring to my personal experience of having built a house. The second part of the story is about changing the plans when new ideas or new realities come up.
 
With my house we had extensive discussions with the architect during the design phase and we were confident that everything had been covered. But when we spoke to the builder he made additional suggestions and noticed some things that had not been considered. Using the blueprint drawings, we could decide on the changes needed, assess the effects on the building and the costs, and then make alterations to the drawing that everyone agreed with. It was a clear and understandable approach to taking on new ideas and changing plans even after everything had been agreed.
 
The same process happens in ERP implementations. Organizations often spend a good deal of time working on the design of the ERP application using skilled (and expensive) consultants to help them. This they believe will ensure they have got it right before the implementation starts. However, no matter how good the team, the fact is that issues can be over-looked, or valid change requests suddenly appear which had not been considered earlier.
 
In the past this was a problem because the ERP planning process assumed stability, and ERP systems were geared towards controlling data and automating processes. Flexibility and handling change were not priorities. Of course the world has changed and we now expect our software to be adaptable. For enterprise software, with its high level of inter-connected functionality and degree of complexity, this has been a challenge … until the advent of integrated BPM and ERP. With this integrated process toolset, new ideas and issues can be raised after planning is finished, and re-planning, review, approval and documentation can be managed more easily and clearly.

Integrated BPM-ERP

This concept of a model-driven ERP system is now possible using SYSPRO Process Modeling (SPM). Model-driven architecture has been around for 10 years, and is recognized as the most effective way to manage and optimize business processes, especially in a volatile environment. SPM helps in process management from high-level ‘Core Processes’, to actual ‘End-to-end’ processes, right down to activities and screens. For each level, this is integrated with the organizational structure, technology, data, and SYSPRO’s supported business processes.

This allows the organization to see how everything is inter-connected, and also to see how changing one element impacts on other areas of the model.

Hopefully the days of referring to ERP software as ‘monolithic’ are coming to an end. Changes to an ERP system should be expected and planned for because there are many aspects that can change. If you have been through more than one ERP implementation, particularly from the user perspective, what was your experience of making changes to the system? What would have made it easier?
 
In the next part of this blog series: Having the right approach and attitude to an ERP implementation.

Is the US rethinking some values?

As a foreigner visiting the US in previous years, one of the things that struck me was how important it was to make price as low as possible. It was obvious to me that the focus on lowest-price resulted in US jobs being outsourced to low-cost countries, and the local manufacturing sector being decimated. But the US population seemed prepared to accept the trade-off.

I am beginning now to detect a change in attitudes. Three recent articles have proposed the view that the US take manufacturing seriously again.

MIT president argues for return of U.S. manufacturing

Manufacturing’s wake-up call

How Manufacturing Can Attract Young Talent Again

The correlation of manufacturing with innovation and growth is strongly noted, as is the need to attract young people back into manufacturing.

For the sake of the US and world economy, I hope decision- and policy-makers take these views seriously. Low prices aren’t everything.

Evaluating analytic appliances

With the amount of data in the world increasing asymmetrically if not hyperbolically, the market for big, purpose-built machines for high-speed data analytics is now being contested by some major players.

The first company to bring out an analytical appliance (hardware and software, highly tuned and bundled together to provide something that will run out the box ) back in the 1990s was Teradata, and they had the market for such appliances for a number of years. Later came Netezza, now part of IBM. But neither of these seem to have generated the amount of press that two recent entries have done – SAP with HANA, and Oracle with Exadata.

It was during the mid-1990s when I worked in Silicon Valley with Redbrick, the data warehouse product and company started by Ralph Kimball, that I first experienced the database competition ‘war’ – then it was mainly against Oracle and Informix.

So I was interested to read a comparison of HANA and Exadata, and I see that the the same competitive arguments are still much the same as they were 15 years ago; the claims and counter-claims sound strangely familiar as well.

As I see it, the challenge of anyone trying to evaluate an appliance is to cut through the hot air and hype generated by SAP and Oracle and find the real information they need to make a selection. So the article about HANA and Exadata should help to clear up some points.

Not every company is going to go for an analytic appliance, certainly not the average mid-size company that I am mostly familiar with. The price tags of HANA and Exadata are in the millions, and require a level of IT sophistication and support that only very large organisations, and governments, can achieve.

I think it would be interesting to see a comparison of the appliances from the four vendors I mentioned, not just two. If anyone has seen it, please let me know

BI’s continuing problems

I recently attended a Microsoft seminar on BI (business intelligence) and who should I meet there but a former colleague, who worked with me in the field of what was then called decision support (in the days before the term BI was coined by Howard Dresner).

The first interesting point made was that, over 20 years since I started in BI, one of the continuing challenges is that the ability to access data is limited. That may be explained by the next point. An interesting diagram was shown during the session which highlighted some of the issues facing BI (I have adapted it here):

My era was very much that of Traditional IT, whose prime concern was control. Data was extracted from the source (usually operational systems), massaged and finally provided in a different form to the user. This ensured that the data came from the right sources, followed the approved definitions, and used the right formulas. If you follow this approach, access to data is going to be limited.

The problem with the traditional approach is that it creates other challenges, which again were issues we faced 20 years ago, namely:

• IT expends a lot of effort in providing information that is often used by one person, once;
• information requirements change too fast for the technology and approach to keep up.

The solution from the Microsoft perspective is to encourage self-service BI, with the emphasis on agility. It helps to understand that Microsoft advocate their PowerPivot product as the route to enable self-service BI. One unquestionable fact is that the goal of the universal BI front-end tool has been reached – and that tool is Microsoft Excel.

The problem with self-service BI is that the issue of proper understanding of the source data is not managed. It actually gets us back to the days of fourth-generation languages, such as SAS and FOCUS, when users with some technical understanding could pull data from mainframe databases without asking for the help of a programmer. This led to situations in which two people could produce information in a meeting, using the same source, but with differing results. That created the demand for a ‘single source of the truth’, something which the data warehouse was supposed to address, which brought the control of data back into the realm of IT.

So it seems that BI’s problems continue today in much the same way as they have done in the past. How can we solve these ongoing problems? If you have a suggestion, please let me know.

Notes from the UK version of the BI seminar can be found here.

Cross-context product marketing

One of my roles in product marketing is to generate product-based messaging to highlight the value proposition of our enterprise software, and to enable sales to position, articulate and sell the product. In doing so, something that has become clearer to me over the last few months, as I have absorbed experiences from a number of product announcements and launches, is how differently English-language speakers and readers use the language. (Note: this article is limited to English, I don’t have experience in translating).

In my previous roles in enterprise software marketing and sales, I was the person at the end of chain, delivering the message. Most of that time I was working for US-based companies, and there were many occasions when I was frustrated by the lack of understanding by corporate marketing of how things worked where I was. Now, I am at the other end, near the start of the chain, which means that I have to be aware of global implications of what we produce.

To understand how to approach cross-cultural communication, the concept of “high and low context” can be helpful (I am indebted to my brother-in-law for telling me about it; he has had to deal with the issuing working in mines around the world). “High context” societies don’t require verbally explicit communication, and have a more internalised understanding of the message. “Low context” societies require everything to be spelt out explicitly in the communication, there is very little implicit understanding. The other side of high and low context is that people tend to mistrust or look down on those in a different context society.

I have struggled to find sources about high and low context in a product marketing situation. There are a number of good sites – Hutch Carpenter’s , also here and here – but none seem to have discussed the issue any time recently.

What I have learnt is that messaging works best if we send draft material to various people in offices around the world for their comments before we finalise our collateral. By the way, I never saw this happen at either JD Edwards or Microsoft Dynamics – I they have a similar process I was not aware of it.

If you have had experience developing product collateral for high and low context societies, I would be interested in your comments.