Notes

Several Approaches To Erp Implementation Costs And Minimize Potential Risks




Traditional ERP Implementations





Traditional ERP implementations are incredibly high-risk, for both the partner deploying them as well as the customer. For this reason no one offers the elusive fixed fee. The risks are simply an excessive amount of.

That old Dynamics NAV project costs were high because legacy methods are 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 proven to be higher priced compared to modern "agile" approach, which is determined by LEAN techniques.

The approach that has been employed by virtually everyone since ERP 's been around is to bill "Time and Material." Which means that customers purchase the time spent by consultants, nomatter just how or bad they're. This moves danger in the implentor for the customer almost entirely.

The reality is that there are still massive risks for your partner using these waterfall projects. I've come across Most cases where partners were sued or threatened when these projects go very badly.

I started considering the way you needed to change this looking at a LinkedIn post that shared articles on why "Time and Material Billing is Unethical." I used to be really struck from the arguments. The article author asked a question i think summed it down fantastically well:

In case a restaurant charged you to the time and material that it latched onto cook your steak, how do you feel?

This probably sparked my first real thoughts about easy methods to stop being a some time to material business.
ERP Pricing is incredibly unpredictable

Among the first videos which i uploaded to YouTube was my explanation of why traditional costing of ERP implementations was outrageously inaccurate. I've spent many years since determining solutions to remove that inaccuracy.

Obviously the simplest way to give accurate estimates would have been to be fixed fee. Unfortunately that traditional approach is really high risk to the partner. It can make it really scary to supply a fixed fee. unless you still do it, you are in a great deal of trouble. I've worked hard to develop a strategy that we think is exclusive.

Applying LEAN Thinking to ERP Implementations

There's a movement to make use of LEAN thinking to service activities. In general, LEAN is around removing waste from a physical product, however it is true to projects too.

I created my very own variations of waste in ERP projects.

First - there is time spent through the wrong resource.

That is typically if somebody who is too expensive does something which someone that will be paid significantly less can perform, or are able to do it faster.

Second - you will find unnecessary steps

I have discovered this occurs when people perform steps to "cover their butts." A lot of project management falls into this. Additionally, it occurs when consultants (compensated on hours billed) push unnecessary work.

Third - there are 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 prevent it.

Lastly - you will find there's "bleed" of info

Normally, this is for the customer. Typically it's in the event the customer doesn't remember their training because they don't invest some time employed in the device enough.

Why ERP Implementations Need to Change!

Whenever we started doing cloud based ERP implementations with Microsoft Dynamics NAV it turned out common for clients to spend $100,000 for your software and pay $200,000 for their implementation.

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

Therefore we did what our customers do. We set an expense we thought industry would support, and now we worked backwards to manage our internal costs making money doing that. Our clients are suppliers. They have to estimate an expense, then follow it. They can not check out their customer and say "we need to bill you more because i was inefficient in our production process." They will go out of business instantly.

The newest way of ERP implentations.

I'm much more of a producing expert than a technology expert. Few manufacturing companies think regarding projects with project managers (Engineer to Order may be the exception). They generally think when it comes to operations managers and standard work instructions.

I applied this thinking to ERP projects. It helps that most we all do is implement ERP for companies.

Here's are the main steps that helped us dramatically lessen the risk (and costs) of ERP projects.

We simply do one type of projectFocusing exclusively on manufacturing, along with small facilities, meant we could refine and get better with every project. We glance at the process like a repetitive, repetable process. This kind of gets gone the at the start design of the project plan etc. The project management goes away, and now we reduce that waste enormously.
We offset easy but tedious make an effort to the customerWhen a $200 by the hour consultant does what comes from a clerical task, that's waste. We train the customers can use to complete some of the tedious tasks. Apparently , forms of much better done by the consumer. Business Central produces a great deal of this easier given it has great tools for customers to complete tasks that had been hard. There are 2 of such specifically that are key: Reports information Loading
We train customers to edit formsCustomers know very well what they want their invoice to look like. They know where they need the payment date on their own PO. It can be way easier when we make them learn to alter these things compared to it on their behalf.
We train people to load data in the systemData loading is really a task we assign to a co-op student right after hours training. The fact is, when customers "get" how this is done - they do a much better job cleaning their data and things go much smoother!
We keep workout sessions shorter and VideoPeople forget what they are taught. It's without a doubt of life. You've got a lot in your plate. Also, the longer someone spends in training - the harder they "zone out" and initiate to reduce focus. We keep training sessions short, and record all of them as videos. People absorb increasingly can easily review what they've got forgotten. Therefore 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 work. Remodeling means extra profit. Not for individuals. If we perform a Business Central project, we discourage any changes through the original project. Our projects aren't super restrictive - nevertheless they do limit the functions we will implement in "Phase 1." By maintaining the blueprint tight, it is a lot less "creep" along with the boss is generally much happier.
We still bill for customizations, but discourage them also Customizations will be the one thing we're not able to predict - and then we also discourage them. Considering this new model, we find customers ask for a lot fewer also. They trust us more to understand what we're doing. Occasionally a customization is simply no-brainer, and in those cases we support and also encourage them. However - we've got less than half the customization we utilized to.


Check out about User friendly Manufacturing software explore our web page

Website: http://www.linkagogo.com/go/To?url=112251982