Notes

7 Approaches To Reduce Erp Implementation Rates And Minimize Risks




Traditional ERP Implementations





Traditional ERP implementations can be extremely high risk, for the partner deploying them and for the customer. That is why almost nobody supplies the elusive fixed fee. The potential risks are only too much.

That old Dynamics NAV project costs were high because legacy methods are costly. The conventional implementation follows many phases originally set out by Microsoft inside a waterfall project framework. Waterfall project management has been confirmed to be higher priced compared to the modern "agile" approach, that is determined by LEAN techniques.

The approach that's been employed by virtually everyone since ERP has existed is to bill "Time and Material." Which means that customers spend on time spent by consultants, nomatter how good or bad these are. This moves the danger from the implentor towards the customer almost entirely.

The reality is that it is possible to massive risks for the partner with these waterfall projects. I have come across Most all cases where partners were sued or threatened when these projects go very badly.

I started thinking of the way we required to change this seeing a LinkedIn post that shared a write-up on why "Time and Material Billing is Unethical." I was really struck by the arguments. The article author asked a question that we think summed it down fantastically well:

In case a restaurant charged you to the some time and material that it took to cook your steak, how would you feel?

This probably sparked my first real thoughts about how to stop as a some time to 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 time since finding out solutions to remove that inaccuracy.

Obviously the simplest way to give accurate estimates ended up being to be fixed fee. The thing is that traditional approach is indeed high-risk for that partner. It can make it genuinely scary use a fixed fee. if you do not still do it, you are in a lot of trouble. We've worked very difficult to develop a technique that we think is unique.

Applying LEAN Thinking to ERP Implementations

You will find there's movement to use LEAN thinking to service activities. Generally speaking, LEAN is about removing waste coming from a physical product, nonetheless it can be applied to projects too.

I invented my own, personal variations of waste in ERP projects.

First - there exists time spent by the wrong resource.

This is typically when someone who is too expensive does something which somebody that is paid a lot less are capable of doing, or are capable of doing it faster.

Second - you can find unnecessary steps

I have found this happens when folks perform steps to "cover their butts." A great deal of project management software falls into this. In addition, it happens when consultants (compensated on hours billed) push unnecessary work.

Third - there are wasted tasks

Sometimes customers need to do stuff that we, as ERP consultants, know won't work. Inside a traditional implementation we have no economic motivation to halt it.

Lastly - there exists a "bleed" of info

Rise around the customer. Typically it's when the customer doesn't remember their training they do not spending some time doing work in the machine enough.

Why ERP Implementations Need to Change!

Whenever we started doing cloud based ERP implementations with Microsoft Dynamics NAV it was common for purchasers to pay for $100,000 to the software and pay $200,000 because of their implementation.

As soon as you enter the realm of the cloud, where Microsoft Business Central is $100 a month per user, things change. It's hart to share with a customer they're going to spend $2000 per month for software but still pay $200,000 for implementation.

Therefore we did what our customers do. We set an expense we thought the market would support, and now we worked backwards to manipulate our internal costs making money doing that. Our industry is suppliers. They have to estimate an expense, and then stick to it. They can't check out their customer and say "we need to bill you more because we had been inefficient inside our production process." They will close shop overnight.

The new procedure for ERP implentations.

I'm really a manufacturing expert compared to a technology expert. Few suppliers think in terms of projects with project managers (Engineer to buy is the exception). Many of them think regarding operations managers and standard work instructions.

I applied this thinking to ERP projects. It can help that all perform is implement ERP for companies.

Here's would be the main steps that helped us dramatically decrease the risk (and expenses) of ERP projects.

We merely do one kind of projectFocusing exclusively on manufacturing, plus small facilities, resulted in we could refine and get better with each project. We look with the process being a repetitive, repetable process. This gets rid of the in advance design of the project 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 amounts to a clerical task, that is waste. We train the shoppers to accomplish many of the tedious tasks. Evidently kinds far better created by the consumer. Business Central constitutes a lots of this easier given it has great tools for clients to perform tasks that was previously hard. There are 2 of the specifically which might be key: Reports information Loading
We train people to edit formsCustomers determine what they really want their invoice to check like. They know where they want the payment date on their PO. It can be way easier as we guide them to alter these things compared to it on their behalf.
We train visitors to load data into the systemData loading is really a task we assign into a co-op student after a couple of hours training. The reality is, when customers "get" how this is done - they actually do a far better job cleaning their data and things go much smoother!
We keep exercise sessions shorter and VideoPeople forget what they're taught. It's without a doubt of life. You've got a lot on your own plate. Also, the more time an individual spends in training - the more they "zone out" and initiate to reduce focus. We keep workout sessions short, and record every one of them as videos. People absorb increasingly can easily review what they've forgotten. Therefore we absolutely must train remotely. Travel time is a killer (and totally waste)- so we can't travel.
We keep your project tight, and discourage changeTraditional ERP partners encourage additional work. Work means extra profit. Not for all of us. When we do a Business Central project, we discourage any changes from your original project. Our projects aren't super restrictive - however they do limit the options we are going to implement in "Phase 1." Keeping the plan tight, there is lots less "creep" as well as the boss is generally much happier.
We still bill for customizations, but discourage them too Customizations are the something we simply cannot predict - therefore we also discourage them. Given this new model, look for customers demand a lot fewer also. They trust us more to be aware what we are doing. Occasionally a customization is simply a no-brainer, as well as in those cases we support and in many cases encourage them. Even so - we now have less than 50 % the customization we used to.


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