Stifling corporates

A few weeks ago, the managing director and I had a meeting with the South African innovation manager of a major international food manufacturer based in north America.

My managing director has a gift of being able to identify quickly the essential issues that a prospective customer has, and this often enables us to have meaningful conversations early on in a discussion. In this instance we were getting along very well and discussing some really interesting challenges and possible solutions, when the IT manager was invited into the meeting. Within minutes his attitude towards any kind of solution killed the atmosphere.

He pointed out how every subsidiary had to comply with the rules laid down for IT projects by head office. Listening to the bureaucratic process that they had to follow, I was struck by how a good intention - preventing project and software proliferation – had served to obstruct a manager from making his department more productive, and effectively stifled any type of creativity or process innovation.

It also made me appreciate how fortunate we are as a company to deal with owner/manager companies in the medium-size business market. We had meetings this week with MDs and FDs (managing and financial directors) of building and construction organisations. In the space of a single meeting with some of them, we went from an initial discovery session to the directors making decisions about preliminary work we could deliver. They were able to identify the problems, debate and evaluate options, and decide on a course of action to introduce new or improved processes without having to go through a laborious approval process.

Vinnie has coined the term “business process angioplasty”, which is his way of showing how processes should be improved. The food company needs to do some business process angioplasty on its IT adoption process.

How are the mighty fallen

About 10 years ago I joined an ERP company called JD Edwards. 5 years ago the company was acquired by Peoplesoft. 4 years ago Oracle acquired Peoplesoft. Now I see a message thread on IT Toolbox about JDE with a comment on how the company has shrunk – “…  went from occupying four office buildings to half of one in Denver.”

PMO means too many things

What does the term PMO mean to you?

In the work that our company does – ERP implementation – it’s the acronym for “project management office”.

However, if you use or market Oracle’s Hyperion product, I have learnt that PMO refers to “performance management organisation”.

The IT industry is renowned for its TLAs (three letter acronyms), but I have not come across a situation where the same TLA is used to mean to totally different things.

There is an additional problem for our company, we have started to promote a solution to projecting industries and the director responsible refers to PMO, but it means neither of the two above. So does that mean we have to invent yet another TLA?

What project management methodologies leave out

In my time as an IT consultant and implementer, I have been exposed to, or had to use, several project management methodologies. Often these methodologies claim to provide a unique solution to defining, planning, implementing and closing IT projects, however in my view they tend to be fairly similar.

In all cases, these methodologies emphasise the importance of processes to follow, and documentation to be produced and maintained. In the last few months though I have come to wonder whether they omit something critical.

Two project I have been involved in have had a situation where the project has been proceeding satisfactorily but the customer wants the project manager changed because of personality issues. In other words, while the project manager may have been following process and documenting faithfully, he/she has failed to understand the social psychology of the project.

This is the area that I have not yet found any project management methodologies cover – the psychology of project management. It is a common saying that projects usually don’t falter because of hardware or software issues, but due to human factors. In the IT industry we tend to assume that the human factor is something in the customer organisation. What recent experience has shown me is that we need to recognise the human factor in the implementation provider.

I think it is important that project management courses and methodologies cover the handling of personality types that courses on selling and general management have been doing in recent years. One potential difficulty – is the personality of project managers amenable to understanding this?

Time for thinking

About a month ago I blogged about how I discovered the need for contemplative time. Where I am this weekend is very close to where I was a month ago, now at a different camp, but re-discovering the value of time to think.

After a busy week, I used to believe that the weekend was when I had time to relax. However, being at this camp made me realise that on many weekends I am still busy, although in a different way.

It has given me an understanding of those people who like to get away to the bush, for example, on a frequent basis because it helps them refresh and re-energise.

It has occcurred to me here that I find blogging to be stimulating and creative, and I hope informative, whereas using Twitter – which I do during the week - could almost be called shouting and noisy. During the week, Twitter is about all the time I can afford, and provides me with social network connections. The problem is that on many weekends I don’t have the quality time to blog, which gives me a deeper sense of making a contribution.

I am coming around to the idea that every so often I should try to get away and disconnect from the rush of life. How, when and where I haven’t yet figured out.

Whither the SA Internet economy?

If you want to know the status and direction of the South African Internet economy, a good place to start is Johannesburg’s ClassicFM radio station every Friday. In the last few weeks they have had discussions of local trends and conditions by the country managers of Google and Blackberry, and a Gartner analyst. In the best traditions of new ‘Net journalism, all the programs are available as podcasts.

More on ERP maintenance costs

SAP’s decision to increase its maintenance fees (which I blogged) seems to have started a discussion among bloggers about the validity of ERP maintenance costs:

• how and why software licensing is what it is
• Vinnie discussing “empty calories”
• the software maintenance revolution

Dennis Howlett offers a new model for ERP vendors. In the tradition of academic debate, his proposal could become the first step to developing a new paradigm around maintenance costing. But Dennis’ thesis has some flaws, in particular the points he makes about (1) vendors taking back control of the channel and implementation, and (2) customers having centres of excellence.

1. Perhaps some ERP vendors – SAP, Oracle – could take over their partner channels, but many others, including  Microsoft, don’t have the depth or breadth of resources. There are probably several countries like South Africa where there is more skill in the channel than with the vendors. In this country, when an implementation goes wrong, the vendor typically puts in another partner not their own staff.

2. The concept of a customer centres of excellence can only occur in larger organisation and with a developed IT support group. In developing countries, and in the small and medium size business, those two criteria don’t exist. Many of the companies I come across seem to consider IT as a cost centre and try to keep it as small as feasibly possible. When it comes to the user community, the skills shortage means that people barely have enough time to do the work they should be doing, let alone spend time on software training and certification.

I don’t have any alternative proposals as yet, but I strongly believe that the debate on software maintenance fees needs to be given serious consideration.

ERP maintenance costs

In July AMR Research reported that SAP had raised the maintenance fees of its enterprise suite to 22% of net licence value – in other words, SAP customers now pay the full cost of their software every five years. In a way that is great for competitors like SYSPRO who are charging 10-12 percent points less.

A recent blog on the IT Project Failures site says that the big ERP vendors are doing this because the complexity of their systems and their implementation puts the vendors in a position to abuse their customers.

If that attitude is correct then it disturbs me, as it reminds me of the phenomenon of the tragedy of the commons – by abusing their resources (customers) now those vendors risk destroying their own eco-system later.

The spikey ERP world

For some time there has been a debate about whether the world is flat or spikey. This refers to whether globalisation has made everything uniform (flat) around the world, or whether there is still significant regional diversity (spikey).

A survey of the ERP market in South Africa seems to indicate to me that the world is definitely spikey. If the world was flat, I would have expected that the relative market shares of the major ERP players in the developed ‘north’ would be reflected in the SA market. But as the research found, that is not the case.

Looking at the SA mid-market (companies with 50 to 250 PCs, or 251 to 500 PCs), 35% of the survey were manufacturing companies; about 30% were in professional services, wholesale trade, and logistics; and rest in areas like construction, finance, mining, and parastatals. Over 50% of the survey were in the Gauteng province where Johannesburg is located. 70% of the respondents had between 50 and 250 PCs.

When it came to products, Microsoft Dynamics GP (ex Great Plains) and CRM had over 50% recognition; the other Dynamics products were not well known (NAV had some awareness but AX was very low).

What were the best known ERP brands? SAP (not surprisingly) and SYSPRO (SA’s own ERP) … by far. So much for the other big ERP players efforts in SA!

So when you read another press release from a large ERP vendor which describes them as “leading”, check which geographies they are referring to.

The survey also asked what factors made companies change their ERP, in order:

1. greater functionality
2. new business requirements
3. company growth
4. lower cost (note this)
5. merger/acquisition with company with different ERP

What were the reasons for choosing an ERP, in order:

1. good fit to business
2. quality/reliability
3. technical superiority/innovation
4. ease of implementation
5. low cost of ownership (note again)

The vendor selection criteria were:

1. quality/reliability
2. understand our business/industry
3. customer service
4. ease of implementation/doing business

For the ERP marketers, the major sources of ERP information were:

1. search engines
2. vendor/product websites

What had the biggest impact in creating awareness:

1. customer reference
2. technology/business events
3. sales person visit

The Microsoft-IBM analogy again

Last year, having come out of a period as a Microsoft ERP partner, I blogged how it reminded me of IBM in that company’s ‘old days’. My impression was that:

It doesn’t matter if there is better software, if Microsoft promote it the organisation might just take it.

IBM had a monopoly cash-cow in mainframe hardware and operating systems, Microsoft has their one - Windows and Office …

IBM was good in some areas and terrible in others, but still continued in the terrible areas, so too is Microsoft …

We thought that IBM should maybe not do AS and AD/Cycle, and now some of us think Microsoft should maybe not do ERP and Search.

No I see Larry Dignan has blogged about Microsoft’s “IBM moment of clarity“. He comments how Microsoft is being diverted by:

chasing Yahoo, plotting to be an advertising empire and pining for consumers with things like the Xbox and Zune

IBM had its crash in the late 1980s, and as a result has now focused on “enterprise and helping business get stuff done.”

Where I disagree with Larry is when he supports Microsoft as an enterprise player with all these opportunities (as quoted by Microsoft CEO Ballmer):

“We see the most fantastic growth opportunities of all time in the enterprise. Desktop value, mail and collaboration, business intelligence, business applications, the server market despite virtualization is still exploding, enterprise search, the move of enterprises to host their infrastructure in the cloud that we call Microsoft Online, conferencing and IP telephony, management, virtualization software, the database and database application platform. I think palpably we are about this close, Microsoft, able to claim that we’re the number one enterprise software company in the world, which nobody would have been able to say 20 years ago, and yet we see nothing but opportunity.”

In my opinion this is Microsoft trying to be like IBM of old. Where is the synergy in, for example, business intelligence vs conference and IP telephony; or desktop value vs virtualisation.

I also disagree that Microsoft is the number one enterprise company in business intelligence and business apps (unless they justify that with Excel), enterprise search and conferencing.

I agree with Larry that Microsoft needs to learn to focus, as IBM did, but I believe that the areas of focus need to be trimmed even more.