Erlandsen Ulrich posted an update 4 months ago
Traditional ERP Implementations
Traditional ERP implementations are incredibly risky, for the partner deploying them as well as the customer. This is the reason no one supplies the elusive fixed fee. The potential for loss are only too much.
That old Dynamics NAV project costs were high because legacy methods can be very expensive. The typical implementation follows a number of phases originally lay out by Microsoft in the waterfall project framework. Waterfall project management software has been shown to become more expensive compared to modern “agile” approach, which can be based on LEAN techniques.
The approach that is utilised by virtually everyone since ERP has existed is usually to bill “Time and Material.” This means that customers spend on some time spent by consultants, nomatter just how or bad they are. This moves the danger from the implentor for the customer almost entirely.
In fact you may still find massive risks to the partner using these waterfall projects. I’ve come across MANY cases where partners were sued or threatened when these projects go very badly.
I started contemplating how we required to change this seeing a LinkedIn post that shared a write-up on why “Time and Material Billing is Unethical.” I used to be really struck by the arguments. Mcdougal asked something that I think summed up fantastically well:
If the restaurant charged you for that some time to material that it loved cook your steak, how do you feel?
This probably sparked my first real opinion of easy methods to stop being a time and material business.
ERP Prices are incredibly unpredictable
The primary videos that I uploaded to YouTube was my explanation of why traditional costing of ERP implementations was outrageously inaccurate. I’ve spent many years since working out approaches to remove that inaccuracy.
Obviously the easiest method to give accurate estimates ended up being be fixed fee. The thing is that traditional approach can be so high-risk to the partner. Celebrate it truly scary use a fixed fee. if you do not still do it, you’re in a large amount of trouble. We have worked tough to develop a method that we think is exclusive.
Applying LEAN Thinking to ERP Implementations
There is a movement to use LEAN thinking to service activities. In general, LEAN is around removing waste from a physical product, but it is true to projects too.
I invented my very own variations of waste in ERP projects.
First – there is time spent by the wrong resource.
This can be typically if someone else who costs too much does a thing that somebody who is paid much less are capable of doing, or can do it faster.
Second – you’ll find unnecessary steps
I have discovered such things happen when folks perform steps to “cover their butts.” A lot of project management software falls into this. What’s more, it occurs consultants (compensated on hours billed) push unnecessary work.
Third – you’ll find wasted tasks
Sometimes customers want to do stuff that we, as ERP consultants, know won’t work. In the traditional implementation we have no economic motivation to prevent it.
Lastly – there exists a “bleed” of data
It’s usually around the customer. Typically it’s once the customer doesn’t remember their training as they do not invest some time employed in the system enough.
Why ERP Implementations Have to Change!
When we started doing cloud based ERP implementations with Microsoft Dynamics NAV it had been common for patrons to spend $100,000 to the software and pay $200,000 for his or her implementation.
When you go into the world of the cloud, where Microsoft Business Central is $100 per month per user, things change. It’s hart to see a person they’re going to spend $2000 monthly for software but still pay $200,000 for implementation.
And we all did what our customers do. We set a cost we thought the market would support, and that we worked backwards to regulate our internal costs and make money doing that. Our clients are companies. They need to estimate a price, and then adhere to it. They can’t go to their customer and say “we have to bill you more because we were inefficient in your production process.” They might close shop instantly.
The modern procedure for ERP implentations.
I’m much more of a manufacturing expert than the usual technology expert. Few manufacturing companies think regarding projects with project managers (Engineer to buy may be the exception). Many of them think regarding operations managers and standard work instructions.
I applied this thinking to ERP projects. It will help that carry out is implement ERP for suppliers.
Here’s include the main steps that helped us dramatically reduce the risk (and charges) of ERP projects.
We simply do one type of projectFocusing exclusively on manufacturing, along with small facilities, meant we’re able to refine and acquire better with each project. We look in the process being a repetitive, repetable process. This does get reduce the beforehand kind of the job plan etc. The job management goes away completely, so we reduce that waste enormously.
We offset easy but tedious make an effort to the customerWhen a $200 hourly consultant does what depends upon a clerical task, that is waste. We train the shoppers to accomplish some of the tedious tasks. Apparently kinds greater done by the client. Business Central constitutes a great deal of this easier given it has great tools for customers to do tasks that had been hard. There’s two of these in particular which might be key: Reports information Loading
We train visitors to edit formsCustomers know what they want their invoice to appear like. They understand where they need the payment date on their own PO. It’s way easier as we teach them to switch these items than do it for them.
We train customers to load data in to the systemData loading is often a task we assign into a co-op student after a couple of hours training. The truth is, when customers “get” how this is achieved – they are doing a much better job cleaning their data and things go much smoother!
We keep exercise sessions shorter and VideoPeople forget what they are taught. It’s a fact of life. You do have a lot on the plate. Also, the more time a person spends in training – greater they “zone out” and begin to get rid of focus. We keep exercise sessions short, and record them all as videos. People absorb countless can certainly review what they’ve forgotten. This means we absolutely must train remotely. Travel time is often a killer (and totally waste)- so we can’t travel.
We keep your project tight, and discourage changeTraditional ERP partners encourage extra work. Additional work means extra profit. Not for all of us. Once we perform Business Central project, we discourage any changes from the original project. Our projects aren’t super restrictive – nevertheless they do limit the features we’re going to implement in “Phase 1.” By keeping the plan tight, there is lots less “creep” along with the boss is often much happier.
We still bill for customizations, but discourage them also Customizations are the one thing we’re not able to predict – and we all also discourage them. Considering this new model, we discover customers demand a lot fewer also. They trust us more to be aware what were doing. Occasionally a customization is simply no-brainer, plus those cases we support and even encourage them. However – we have fewer than half the customization we employed to.
For more details about Best cloud ERP see our web portal