Industry leaders don’t achieve or keep their positions merely through clever strategies or financial engineering; they do so through superior execution of exceptional processes.
Industry leaders use business process management (BPM) to deliver rapid and sustainable business value to their operations. BPM is the understanding, visibility and continuous performance improvement of an organization’s business processes, which define at an operational level, how work gets done.
BPM can help organizations efficiently and effectively improve business processes in four key areas.
Four Key Areas of Business Process Management (BPM)
Direction Setting - Stakeholders must identify strategic business goals that will set tactical direction. BPM can help build the burning platform for change by defining and giving visibility to a strategically linked, tactile direction that is compelling to all levels of the company.
Roadmaps - An end-to-end view of current state operational areas is critical to identifying process gaps and non-value added work. BPM can provide visual process maps that clearly define those areas that need to change. The process maps should be intuitive, comprehensive, and understandable at all levels within the company.
Analysis - The design goal is to achieve breakthrough performance improvement through process innovation – the invention and deployment of new ways of performing work, driving out non-value adding work and with it errors, cost, and time. BPM can help develop a future state that incorporates best business practices and fits into the overall business strategy.
Execution - Execution must be planned in terms of what the organization is willing and able to digest. All too often, the scope of implementation projects is based upon the problem to be solved with little regard for the organization’s readiness and ability to change. BPM can help you plan and pace your project around your organization’s ability to a absorb change.
Strong companies not only know business process management, they practice it and use it to drive success that is both achievable and sustainable. Panorama understands the true value of strong BPM and ensures BPM is a strong influence within organizational change management projects.
Blog entry written by Terry Delaney, Senior ERP Project Manager at Panorama Consulting Group.
Our 2010 ERP Report, of which the first installment was published last month, outlines several metrics that are of interest to most CIOs, COOs, and other executives about to embark on an ERP system implementation. Although the numbers improved relative to our 2008 study of hundreds of ERP initiatives across the globe, the data still shows that most ERP software implementations fail.
But first, how do we define implementation failure? People talk about failures all the time, whether it’s related to companies filing lawsuits against software vendors, pulling the plug on troubled implementations, or in some extreme cases, filing for bankruptcy due to their failed implementation (think Shane Co. in early 2009).
Aside from extreme cases such as these, there is a spectrum of implementation challenges that can result in varying degrees of failure. In short, we consider an ERP implementation to be a failure if one or more of the following occurs:
Takes longer to implement than expected
Costs more than expected
Fails to deliver at least half of the expected business benefits
In our most recent study, which is technology-agnostic and one of the most thorough studies conducted in the ERP space, we found that there is a 72% likelihood that one or more of these three things will happen. There is a 31% chance that two or more of these things will occur.
If we assume that these are three valid failure points, then there are a number of things companies can do to avoid one of these three outcomes, most of which are outlined in our report. Perhaps the quickest and most direct way to ensure these things don’t happen is to have realistic expectations to begin with. A realistic view of what an ERP implementation will cost and the business benefits that can be realized will go a long way toward avoiding these failure points. It is important to augment software vendor sales hype with a realistic view from independent and objective sources that fully understand ERP and your business.
Want to learn more about our 2010 ERP Report? View the brief video presentation below, which provides an overview of these and other findings from our study.
No single ERP solution is going to meet 100% of a company’s requirements. However, software customization can undermine the potential success of an ERP implementation. High customization levels are usually associated with high business costs and risks, which to some extent affect the realized benefits.
Take a moment to answer our weekly ERP poll and then check back to see how your response aligns with that of the average visitor.
I recently joined Panorama as an ERP consultant and as such, I was assigned to newly launched ERP implementation. As I become acquainted with the project, I’m reminded of my initial revelations on conducting enterprise planning and configuration meetings. Regardless of your experience level with ERP projects and consulting, I’d like to share the seven steps I learned for performing effective enterprise planning meetings.
Seven Tips for Conducting ERP Implementation Meetings
Ask why I am here? Be sure to keep in mind what your role is and why you’re here. Remember, you’re working for the client and you are there to help them. Your sole responsibility is to help them accomplish their goal(s) and nothing else. Always remember that the clients are most likely unfamiliar with you and any methodologies you bring to the project.
Maintain the proper presence. As I mentioned above, remember what your true role is for this particular project. You’re not here to physically configure the new ERP; your role is to help guide and facilitate the process. You role is to help guarantee the client realizes the benefits the project is intended to obtain.
Do your homework. Before arrival, learn as much as you can about the client, their industry, and any current issues that the client might be facing (i.e. current legislation, etc). Be as familiar with the ERP software package you’re helping implement. If it has been little a while since you’ve worked with this specific ERP system, refresh yourself on the package and make sure you review any upgrades that might have taken place since that last implementation you performed. Doing your homework will drive significant benefits for the client (and you) as you help the client configure the ERP application around their business operations.
Pay Attention. If you watch closely, you’ll notice a transition as the ERP implementation progresses. The stakeholders will begin to see the future and the positive impact the new ERP software will have on the business and its processes. They will immediately begin rethinking their normal workday and want you to be aware of it. As a consultant, it is key for you to be ready and able to document anything and everything that might be spoken or diagrammed.
Take lots and lots of notes. You never know what might be said, either directly or indirectly, by your project stakeholders. It might be an off-handed comment about a process they wish they could complete, or maybe a pain point that needs to be addressed. It is vitally important to make sure everything is captured for future use and documentation. As far as your note methodology, that is totally up to you. I usually type copious notes, but I have also used an audio recording application on my Smartphone. Okay in all honesty, I’ve even used a cassette tape recorder. Whatever process or device you are most comfortable with will work.
Ask lots and lots of questions. At times your role as a consultant almost needs be one of a Devil’s advocate. While you won’t know everything about your client’s business, you probably have a good idea how it works. To that point, your role is to thoroughly empathize with your stakeholder’s needs and attempt to expose any gaps or processes that need correcting.
Keep the project team focused. In many cases your stakeholders are so excited about their newly purchased ERP software, they just can’t wait to start using it. Given that fact, it is important to keep the project team involved and focused on the task at hand. Be sure everyone has juggled their schedules accordingly, and that you have a true captive audience to effectively complete the day’s tasks and topics.
While this may not be an exhaustive list, it is an important one. If everyone is working together and you’re on top of your game, effective planning and configuration meetings can pay long-term dividends for your ERP implementation.
Blog post written by John Hutchison, Senior Consultant, at Panorama Consulting Group.
As with all enterprise software initiatives, the Customer Relationship Management (CRM) software selection process can be tricky. There are plenty of solutions to choose from, multiple delivery options, and large amounts of software vendor hype. In addition, companies such as Salesforce.com, Microsoft Dynamics, NetSuite, and Oracle are aggressively pursuing the market with competing messages.
CRM evaluations should include elements inherent in effective ERP software selection processes. For example, a CRM software selection process should include the following steps:
Clearly define business requirements
Evaluate the technical fit of potential options
Assess vendor viability
Evaluate functional fit via a scripted demo process
Develop a business case
Negotiate with vendors
Create a realistic implementation plan
In addition to the above, there are five factors that are somewhat unique to CRM software evaluation processes:
Evaluate how you might extend CRM to ERP. It’s short-sighted to choose a CRM system without defining a plan for integrating with other key functions such as order entry, product configuration, inventory management, and financials. If your longer-term plan is to implement other enterprise software modules, it is important to have a sense of which will be the right fit beyond CRM so you don’t back yourself into a corner later on.
Clearly understand your business and technical integration needs. CRM can be powerful software with tangible benefits, but some of these benefits may be undermined if processes and data are not integrated with other enterprise modules. For example, sales reps need to see inventory levels and order status and to determine available-to-promise dates based on available capacity and production plans. Another example is the finance department, which may want to see how product costs compare with sales pricing models. Needs such as these may be met via integration with additional enterprise software modules or business intelligence and reporting solutions.
Don’t forget that it’s about the people, not the technology. The beauty (and the curse) of CRM is that there are plenty of viable options with sophisticated functionality in the marketplace. Whether it’s software as a service (SaaS) deployment models, cool bells and whistles, or other sexy functionality, it can be easy to get caught up in the technology. However, it’s important to remember that as with any enterprise solution, CRM is more about people and processes than the technology itself. It is key to find and implement a CRM solution that is a good fit for your business, processes, and organization.
Understand the tradeoffs of SaaS vs. on premise CRM delivery models. Before jumping straight on the SaaS bandwagon, it is important to carefully consider the pros, cons, and tradeoffs of different deployment models. As we outlined in our 2010 ERP Report, SaaS implementations are typically implemented in less time and at a lower initial cost, but average business benefits realized and likelihood of going over budget are also higher. It is important to determine which CRM delivery option is best for your business.
Set realistic expectations for implementation cost and duration. One of the most common reasons for CRM failure is not allocating sufficient time and resources to the implementation. Whether you are implementing CRM to 1 or 100 users, there are key project activities that need to be factored into your implementation plan. Business process design, training, and conference room pilots are just a few examples of key implementation activities that need to be included when budgeting the time and resources required.
These key steps will ensure you begin on the right path toward a successful CRM evaluation and selection. Read more about actual CRM and other enterprise software results from over 1,600 organizations in our 2010 ERP Report.
Valentine’s Day has always been a cliché filled holiday, with overpriced flowers and a two-hour wait at every restaurant in town. For many, it’s also filled with high expectations and occasional letdowns.
Yet this year, Valentine’s Day brought me a nice surprise. It wasn’t two-dozen red roses or an elaborate night on the town. It was the simple gesture of a heartfelt card and a homemade dinner. This Valentines, it was the small things that really made the day special.
Not only in love, but also in company communications, the small things can have the biggest impact. As a change management consultant for Panorama Consulting Group, our team has recently been spending a great deal of time facilitating inter-project and inter-company communications for a client. From milestone announcement emails to a dedicated project web-page, one pattern seems to keep emerging. It’s often the small things that create the biggest response and have the greatest impact on communication effectiveness.
Example 1: Last week we put together project update bulletin boards. Although I felt like I was in kindergarten creating these colorful collages of information, the small effort really paid off. In the short week they have been posted, we heard more comments and questions, and were able to respond to many on the spot.
Example 2: When inter-project communication needed a boost, we decided to start using an existing calendar within the companies’ SharePoint site. In days, the calendar starting filling up with useful project information. As a result, people were brought in the loop in a manner that streamlined quality communications and decreased the quantity of emails. It was really awesome to see an existing tool become a powerful communication solution.
The two examples above took less than a day to create and train users on, yet they have been some of the most effective communication mechanisms thus far in the project. In the end, it really goes to show, it’s the small things that can make the difference, in love and at work.
Blog entry written by Jacqueline Gardner, Senior ERP Consultant at Panorama Consulting Group.
Large ERP software vendors are taking a beating in the marketplace. Fortune 1000 companies are slashing their enterprise software budgets, Software as a Service (SaaS) is threatening traditional business models, and indulgent spending on ERP software solutions are a thing of the past. To add insult to injury, there has been a backlash against long-term and high-cost ERP maintenance contracts.
Companies typically spend 15-20% of their software license fees on maintenance and support each year. In fact, according to a recent survey on our web-site, 69% of companies spend at least 15% per year for ERP support and maintenance (view the current ERP poll results). On the other hand, 8% indicate that they are no longer paying support for their systems. Given the 10- to 15-year average lifespan of ERP investments, license costs are often eclipsed by maintenance costs in the long-term. So it’s understandable that companies would want to reduce these costs.
However, there are some risks to consider before canceling your ERP software maintenance contract. Here are three reasons to think carefully before canceling your ERP maintenance contract:
Inability to upgrade your software. Once you cancel your maintenance contract, your organization will generally be ineligible for automatic upgrades. ERP vendors spend significant sums of money on R&D to improve their software functionality incorporating best practices from their client bases, so there may be opportunity costs and lost business benefits associated with canceling your maintenance.
Business operations become frozen in time. Because upgrades and support stop when the maintenance contract is canceled, it becomes very unlikely that you will change the system to keep up with the evolution of your organization. As a result, your business needs are likely to become misaligned with the functionality of the software. This misalignment may accelerate the need to completely replace your ERP system, which can be more costly than the savings from reducing annual maintenance.
Proliferation of workarounds outside the system. Because of the first two reasons, users are more likely to become frustrated with the system and start adopting their own business processes and workarounds outside the ERP system. This will generally decrease user satisfaction with the system and undermine business benefits. Companies generally make significant investments in enterprise software implementations to take steps forward, so regressing backwards can damage your overall return on investment.
However, this is not to say that companies should blindly pay high costs for annual maintenance. These annual contracts are a high-profit area for ERP vendors, so these costs and terms should be negotiated accordingly. In addition, it is important to negotiate service level agreements (SLAs) to hold your ERP vendor accountable for the duration of the contract. Both negotiation tactics should be incorporated into your ERP selection process.
What do you think? Take one of our weekly polls on the topic or view the results regarding ERP software maintenance.
I had an interesting discussion with a prospective client the other day about the pros and cons of customization during an ERP implementation. As we outlined in a recent blog, most companies customize their enterprise software to a certain degree, which can elevate implementation cost, duration, and business risk.
However, this person had an interesting counter-point. Despite the potential risks and downsides of customization, there are upsides as well. Companies with true competitive advantages in their industry are likely to have one or more key business functions that are not addressed by leading ERP software vendors. The added costs may be immaterial compared to the potential upside, especially for a larger high-volume company. Therefore, customization can become somewhat of a necessary evil.
However, there are a few caveats to this perspective. First, as with any indulgence, customization can be acceptable only in moderation. ERP implementation failures often over-customize to accommodate an endless array of user requests, so it is important to have strong project governance and controls in place to ensure you are only customizing functionality that is absolutely necessary.
Second, don’t let customization be an excuse to choose the wrong software. An effective ERP selection process should weed out the software solutions that are not a good fit for your operational needs, which will minimize your need to customize the software.
Finally, customization should not be a surrogate for leveraging the best-practices embedded in your ERP solution. If the functionality in question is not a core competency or competitive differentiator (think G/L or procurement), then carefully consider the processes that are built into the software. It may be difficult to change your business to fit the software, but it may be the lesser of two evils in such instances.
Just how does customization affect ERP implementation results, such as cost, duration, and overall satisfaction? Read our 2010 ERP Report to learn more about the results of over 1,000 organizations across the globe.
Part of Panorama’s core service offering is organizational change management and ERP benefits realization. Our benefits realization process includes a rigorous financial analysis to support the planning, validation and realization of benefits associated with a strategic systems investment. It is a focal point of our ERP implementation and OCM projects.
While we aggressively monitor ERP benefits with our clients, we are now opening this same question up for websites visitors to weigh in on the subject. Take a moment to answer our weekly ERP poll and then check back to see how your response aligns with that of the average visitor.
We regularly work with a number of leading ERP software solutions including SAP, Microsoft Dynamics ERP, and Oracle’s ERP solutions. As we’ve outlined in other blogs and research, each software solution has its strengths, weaknesses, and tradeoffs.
Oracle’s product suite, which includes eBusiness, JD Edwards, and Peoplesoft, is number two in the ERP market in terms of market share and install base. In addition to our client experience with Oracle, we also recently compared the product to other leading enterprise software packages as part of our 2008 benchmark study of over 1,300 ERP implementations across the globe. More recent data from our 2010 ERP Report will be made available in the coming weeks.
In the meantime, some of the findings we discovered from our experience and research include:
Oracle is installed by 28% of organizations that use an ERP software solution.
Its product line is evaluated, selected, and implemented in an average of 18.6 months, below the overall average of 20 months for other solutions.
Oracle implementations have the highest level of predictability of all ERP software vendors in our study.
The average initial cost to implement Oracle is approximately 25% less than SAP, its primary competitor in the marketplace. Expressed as a percentage of annual revenue, Oracle’s total cost of ownership is nearly 50% less than SAP.
Oracle software solutions tied for first in executive satisfaction (76%).
However, in addition to the above strengths, there are two key tradeoffs to consider when evaluating Oracle as a potential option:
Oracle products are implemented with a total cost of ownership of $12.6 million or 10.6% of annual revenue, both of which are significantly higher than the overall averages of $8.5 million and 9%.
eBusiness Suite, JD Edwards, and Peoplesoft as an aggregate had the lowest level of employee satisfaction of solutions in our study.
The point is not to suggest that Oracle’s products are better or inferior to other enterprise software solutions, but rather to provide one data point as part of a robust ERP software selection process. While this provides useful information on the surface, it is also important to consider business requirements that are unique to your business, understand the key functional and technical differentiators, and assess the overall fit with your organizational and operational needs.
Learn more about how Oracle stacks up to other leading ERP software solutions by viewing the below video presentation.
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