First things first, the obvious, smaller companies have
smaller budgets and less resources to implement technology changes. Even changes that increase efficiencies and
throughput. The challenges are similar
for large and small organizations, it is just larger organizations generally
have more resources available. The
relative impact is generally equal though.
For smaller organizations the stakes are relatively
greater and the margin for error much smaller.
For example, a budget overrun or deadline exception will have a negative
impact on a budget for a larger organization, but it can be devastating for a
smaller organization and effectively put them out of business.
Ironically
technology itself can help.
When it comes to Enterprise Resource Planning (ERP)
solutions, there are many different variations that are tailor made for many
industries. Often the variations came
from home-grown solutions from companies that could not find the right solution
and built their own and over time starting selling that to other companies in
their industry.
With so many solutions and so much history now, you have
to wonder why budget and time overruns occur.
The reality is it happens all the time.
Much too often. Somewhere there
was a breakdown in communication.
There are three basic categories to ERP solutions. Each category has many components, but they
all funnel into these three.
The software or programs are module oriented where
modules are based on departmental or functional roles in the organization. It is
responsible for the collection and presentation of the information the solution
stores. ERP software typically has an
initial license fee and annual maintenance.
I have had conversations where a prospect just could not justify why the
software cost so much, after all it was already written. I did my best to explain that the annual fee,
perhaps more so than the initial fee was for future support and not so much for
what was already written. Business needs
change and ERP software solutions need to change to match the business
landscape.
Remember that ERP solutions are designed to integrate the
organization, the entire organization.
The more of your company that is included in the solution, the greater
the efficiencies can be and therefore cost savings and increased profits.
The second component is the hardware or physical
equipment the software is designed to run on.
This includes a central database of information that is shared by a
server and distributed to clients. The
clients are everyone that accesses the information at one level or another
including web delivery.
In some cases companies will choose a Software-as-a-Service
(SaaS) solution which is a subscription based solution where someone else
manages the infrastructure. This type of
solution is talked about a lot lately and is referred to as Cloud
solutions. For many, if they are not
already using a hosted solution, they are one or two generations of software or
hardware away from this type of solution either in part or in whole.
On premise or hosted in the Cloud is a personal choice
that really is dependent on more details than can be discussed in an online
column. It is not the point of this
writing and there is no one right answer.
Each challenge needs to be matched with an appropriate solution.
Cloud is irrelevant. The solution as a whole is the important
part.
Here is the point.
With some careful planning and analysis the software and hardware costs
can be estimated fairly well. The
solution usually falls into a range that is predictable and can be clearly
documented as to why it is smaller or larger than estimated. For example, the solution is now expanded to
cover another division and there are more users, clients and the need for more
robust database server solution. This,
by the way, is a particularly great benefit of Cloud solutions in that the
vendor should be able to scale the solution resources easily (either up or
down).
So where is the problem?
What is the third component?
Where do so many organizations lose control of their budget, their time,
their patience?
Implementation.
Implementation which includes training, conversion and
support. In a rush to close deals or
fear of limited budgets and losing a deal this component of the solution is
often given too little analysis. Granted
some of the components are harder than others.
How much training do your users need?
Do you learn to swim by jumping in the water? That is sink or swim. Sinking is not a good option for most
companies.
Conversion, if it has been done before between the
From-Solution to the To-Solution can be estimated fairly well. If it is a new conversion, there is still
historical averages that can be used.
Some solutions are programed, some are re-keyed, and some are a
combination of both methods. A big
category is the decision on how much and which type of history should be
converted. Do you phase out one system
and build history in the new solution or do you convert everything so everyone
uses the new system.
Support is relative to everything else. Too little training and planning means more
support later. More support up front
usually means less hiccups later. You
cannot bypass support. New ERP solutions
are a series of complex interrelated components. They are not off the shelf box or quick
download solutions.
Your organization
is not simple and neither will your ERP solution be simple.
Technology can help collect and organize information. Information you need to make decisions in deciding
what solution to select and implement as well as manage the implementation
project. Information you collect and
analyze to manage your business with the solution you select.
Information is key and technology is a vehicle for collection
and delivery. The solution is the
important part and the technology is the delivery mechanism. There are no shortcuts in implementation and
it is the most variable component in a solution and therefore needs the most
attention to prevent unpredictable budget overruns.
Dolvin
Consulting works with your team and brings together industry experts to
help you manage the chaos associated with ERP solutions. Contact us today to learn how
we can help.
