Traditional ERP Implementations
Traditional ERP implementations are extremely risky, for the partner deploying them and also for the customer. This is the reason almost nobody provides the elusive fixed fee. The potential for loss are just a lot of.
That old Dynamics NAV project costs were high because legacy methods can be very expensive. The conventional implementation follows numerous phases originally set out by Microsoft within a waterfall project framework. Waterfall project management software has been shown to be more expensive than the modern “agile” approach, that is depending on LEAN techniques.
The approach that’s been utilised by virtually everyone since ERP ‘s been around is usually to bill “Time and Material.” Which means that customers purchase time spent by consultants, nomatter just how or bad these are. This moves the danger from your implentor for the customer almost entirely.
The reality is that you can still find massive risks for the partner with one of these waterfall projects. I’ve seen Most all cases where partners were sued or threatened when these projects go very badly.
I started contemplating how you needed to change this looking at a LinkedIn post that shared a write-up on why “Time and Material Billing is Unethical.” I was really struck through the arguments. The article author asked an issue that I think summed up fantastically well:
In case a restaurant charged you for the some time and material which it popularized cook your steak, how do you feel?
This probably sparked my first real thoughts about how you can~the way to~tips on how to~the best way to~ways to stop as a serious amounts of material business.
ERP Prices are incredibly unpredictable
One of the primary videos that we uploaded to YouTube was my explanation of why traditional costing of ERP implementations was outrageously inaccurate. I’ve spent time since determining 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 is indeed high-risk to the partner. It makes it really scary to supply a fixed fee. if you do not do it properly, you have a great deal of trouble. I’ve worked very difficult to develop a technique which i think is unique.
Applying LEAN Thinking to ERP Implementations
You will find there’s movement to use LEAN thinking to service activities. Normally, LEAN is about removing waste coming from a physical product, nonetheless it is true to projects too.
I came up with my own variations of waste in ERP projects.
First – there exists time spent with the wrong resource.
This can be typically if someone else who is too expensive does something somebody who pays a smaller amount can do, or are able to do it faster.
Second – you can find unnecessary steps
I find this occurs when individuals perform steps to “cover their butts.” A great deal of project management software falls into this. It also comes about when consultants (compensated on hours billed) push unnecessary work.
Third – you’ll find wasted tasks
Sometimes customers need to do things that we, as ERP consultants, know won’t work. In the traditional implementation we have no economic motivation to stop it.
Lastly – there’s a “bleed” of knowledge
Normally, this is on the customer. Typically it’s when the customer doesn’t remember their training as they do not spend time doing work in the device enough.
Why ERP Implementations Have to Change!
If we started doing cloud based ERP implementations with Microsoft Dynamics NAV it turned out common for patrons to pay for $100,000 for your software and pay $200,000 for implementation.
Once you type in the arena of the cloud, where Microsoft Business Central is $100 monthly per user, things change. It’s hart to inform a customer they will spend $2000 per month for software yet still pay $200,000 for implementation.
And then we did what our customers do. We set a cost we thought the marketplace would support, so we worked backwards to manipulate our internal costs to make money doing that. Our industry is manufacturers. They need to estimate an expense, after which follow it. They can’t visit their customer and say “we need to bill you more because we had arrived inefficient in your production process.” They will go out of business overnight.
The newest procedure for ERP implentations.
I’m much more of a producing expert compared to a technology expert. Few manufacturing companies think regarding projects with project managers (Engineer to get will be the exception). They often think with regards to 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 would be the main steps that helped us dramatically slow up the risk (and charges) of ERP projects.
We simply do one kind of projectFocusing exclusively on manufacturing, as well as in small facilities, meant that we’re able to refine and have better with each and every project. We glance in the process as a repetitive, repetable process. This kind of gets eliminate the beforehand design of the work plan etc. The project management disappears, and we reduce that waste enormously.
We offset easy but tedious try to the customerWhen a $200 per hour consultant does what comes down to a clerical task, that is waste. We train the customers to complete a few of the tedious tasks. Apparently these are also greater made by the buyer. Business Central makes a large amount of this easier because it has great tools for users to accomplish tasks that used to be hard. There are two of these specifically which can be key: Reports and knowledge Loading
We train visitors to edit formsCustomers understand what they desire their invoice to look like. They are fully aware where they want the deadline on the PO. It’s way easier when we teach them to improve these things compared to it on their behalf.
We train customers to load data to the systemData loading is really a task we assign with a co-op student soon after hours training. The fact is, when customers “get” how this is done – they are doing a far better job cleaning their data and things go much smoother!
We keep workout sessions shorter and VideoPeople forget what they’re taught. It goes without saying of life. There is a lot on your own plate. Also, the longer someone spends in training – the more they “zone out” and begin to lose focus. We keep workout sessions short, and record all of them as videos. People absorb more and can simply review what they’ve forgotten. Therefore we absolutely must train remotely. Travel time is often a killer (and totally waste)- and then we can’t travel.
We keep your project tight, and discourage changeTraditional ERP partners encourage work. Work means extra profit. Not for us. If we execute a Business Central project, we discourage any changes from your original project. Our projects aren’t super restrictive – nevertheless they do limit the options we’ll implement in “Phase 1.” By maintaining the master plan tight, there’s a lot less “creep” along with the boss is usually much happier.
We still bill for customizations, but discourage them as well Customizations include the another thing we can not predict – and we all also discourage them. With all this new model, find customers require a lot fewer also. They trust us more to understand we are doing. Occasionally a customization is simply a no-brainer, along with those cases we support and also encourage them. However – we’ve got fewer than half the customization we used to.
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