It’s been six years since I posted my views on the Gartner ERP magic quadrant for Tier 2 vendors. It has been one of the most viewed posts on my blog, but I think it’s now time to have a relook at the ERP magic quadrant (MQ) and the ERP market as a whole. Continue reading
I thought that having left the ERP industry I would not have any reason or inspiration to write about it, but I was wrong. My experiences since I started working in the cloud application market have led me to believe that the era of the monolithic systems of record, as typified by ERP, might be coming to an end. Continue reading
Cross-posted from SYSPRO SmarterERP blog
There has been a post on the SYSPRO blog on how an ERP system can help a business, and also some suggestions on how to select an ERP solution. But if you have read some of the stories about ERP project problems you might wonder if it is worth the risk. The answer to this is twofold.
- The reports on ERP project failure mainly refer to large organizations implementing fairly large projects, and are not representative of projects undertaken by small- and mid-size businesses.
- It’s how you approach the implementation that is a significant determinant of success or failure.
So where and how do you start?
The lead up to an ERP project is a good time to consider Eli Goldratt’s Theory of Constraints Thinking Processes, which is a set of tools to help organizations identify what can be done to significantly improve any business system. By the time you start the project you should have dealt with the question “Why change?” Now you need to look at the other questions:
- What to change?
- What to change into?
- How to cause the change?
A number of organizations might think that all they need to change is their business system, when in reality they will probably also change and streamline processes, and realign roles and responsibilities. Therefore I recommend the following steps.
1. Do a business process blueprint.
To answer those “what” questions you need to understand the processes that operate in the business. A process blueprint provides a graphical view of the way processes work, who is responsible for the processes, and the interaction between different roles. It also helps by creating a view of the business that both IT and business can understand and discuss – a common, visually-based language. From the blueprint you can see more clearly what might need to change (e.g., in terms of streamlining processes), and with a decent blueprint tool you can try out different changes to see what might be most appropriate. The blueprint enables you to identify solution gaps and define integration points between IT solutions.
2. Check that the key project issues are covered
Evidence from many projects shows that there are four main factors that create project problems, and so mitigating them will improve the chances of project success.
|Main causes of project problems||How to mitigate them|
|Unclear objectives and poor focus||Focus on strategy, involve stakeholders and define project teams responsibilities and accountability|
|Changes in project scope||Ensure project team and all affected staff are aligned to work towards common project goals|
|Lack of appropriate skills||Ensure appropriate skills are available|
|Unrealistic schedules and poor planning||Have a good project manager|
3. Plan the project in phases
The implementation project plan describes how the transition from current state to envisaged future state will occur – it addresses “how to cause the change?” Plan the project in phases and implement over time, for several reasons.
- It’s easier to estimate and manage the budget for a smaller set of tasks than it would be for a ‘big bang’ type of approach
- It restricts the impact of the change to a smaller number of people, which means disruptions to everyday work can be minimized
- Showing rolled-out wins will keep people motivated
4. Make sure change management is included
The biggest cause of failure in IT projects is not software, it’s ‘wet-ware’ (people). Resistance to change can block even the most perfect plans, so building active consensus and buy-in is crucial. Forrester Research offers the following steps.
Lastly, although you may have undertaken a thorough business process analysis, and done the proper project planning, be prepared for unexpected complications that occur during roll-out. This is especially true for manufacturing businesses with complex processes, and where integration with other manufacturing applications is needed. If, however, you have done the upfront work, you will be in a position to handle these complexities without seriously impacting the project or the business.
What is your experience with starting an ERP project? Have you got any other tips to add?
The recent report that SAP was cutting back on development of Business By Design was widely reported. Here are some comments about it.
ByDesign is intended to serve “mid-market” companies …At launch, executives projected that the $4 billion software suite would generate $1 billion in annual revenue. Yet it is expected to generate no more than $35 million this year… Only a small team in India will take care of the maintenance of the software
SAP has been guilty of trying to own the entire ERP market by itself, rather than building a broad ecosystem which they are a part of – mid sized customers weren’t keen to be customers of SAP and by failing to embrace a more vibrant industry where small organizations could use third party products but would have a logical migration path as they grew or were acquired, SAP has done both its own business, and the market as a whole, a disservice.
Developed at reportedly great expense, the product was initially expected to have 10,000 customers by 2010 and be generating €1 billion (US$1.4 billion) in revenue for SAP. Instead, ByDesign has about 1,100 customers today
And from a SAP partner trying to do some repair work
SAP Business ByDesign, and its users, will in fact benefit from this leading technology [SAP HANA]… especially as SAP refactors parts of the SAP Business ByDesign platorm, so to take maximum advantage of SAP’s HANA breakthrough capabilities as well as dramatically improve speed and usability. As part of this, all of the know-how of SAP Business ByDesign is being preserved, and likewise is brought forward to benefit your business.
Of course, a cloud ERP vendor had to put the knife in.
There was a major brouhaha when word leaked out that SAP was finally burying its ill-fated cloud-based ERP system, Business ByDesign. I assume it must have been a slow news week because no one could really have been surprised.
In my opinion, it is a sign of something happening in the cloud ERP space – maybe that the demand isn’t as great as the big vendors originally anticipated. Or it’s another failed attempt by SAP to penetrate the mid-market. What’s your view?
I started blogging on a South Africa site in 2005, but moved here to WordPress after about a year. That South African site is going to be terminated soon so I decided to copy over a number of my blogs to a page on this blog – see the Archive page.
It was interesting for me to see some of the observations I made back then – some of them were quite presceient, others actually came true or show things haven’t changed at all.