Kock Choi posted an update 9 months, 3 weeks ago
Traditional ERP Implementations
Traditional ERP implementations are really high risk, for the partner deploying them and for the customer. For this reason no one provides the elusive fixed fee. The hazards are merely a lot of.
The previous Dynamics NAV project costs were high because legacy methods are costly. The conventional implementation follows numerous phases originally lay out by Microsoft in a waterfall project framework. Waterfall project management software has been proven to become higher priced compared to the modern “agile” approach, which is depending on LEAN techniques.
The approach that has been utilised by virtually everyone since ERP has existed is always to bill “Time and Material.” Which means that customers pay for enough time spent by consultants, nomatter just how or bad they’re. This moves the risk from the implentor towards the customer almost entirely.
In fact there are still massive risks for the partner with one of these waterfall projects. I have come across MANY cases where partners were sued or threatened when these projects go very badly.
I began thinking about how we required to change this after reading a LinkedIn post that shared a piece of writing on why “Time and Material Billing is Unethical.” I used to be really struck through the arguments. The article author asked a matter that we think summed it up fantastically well:
If the 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 the way to stop like a some time and material business.
ERP Prices are 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 working out ways to remove that inaccuracy.
Obviously the best way to give accurate estimates ended up being be fixed fee. The thing is that traditional approach is so risky for that partner. Commemorate it scary use a fixed fee. unless you do it properly, you’re in a great deal of trouble. We have worked very hard to develop an approach that I think is different.
Applying LEAN Thinking to ERP Implementations
There’s a movement to make use of LEAN thinking to service activities. In general, LEAN is approximately removing waste from a physical product, nonetheless it is true to projects too.
I invented my very own variations of waste in ERP projects.
First – there is certainly time spent through the wrong resource.
This is typically when someone who is too expensive does something which somebody that is paid significantly less are capable of doing, or are able to do it faster.
Second – you can find unnecessary steps
I’ve found this occurs when folks perform steps to “cover their butts.” Plenty of project management falls into this. It also occurs when consultants (compensated on hours billed) push unnecessary work.
Third – you will find wasted tasks
Sometimes customers need to do things that we, as ERP consultants, know will not work. In a traditional implementation we now have no economic motivation to prevent it.
Lastly – you will find there’s “bleed” of information
It’s usually about the customer. Typically it’s if the customer doesn’t remember their training as they do not invest some time working in the device enough.
Why ERP Implementations Need to Change!
If we started doing cloud based ERP implementations with Microsoft Dynamics NAV it turned out common for purchasers to pay $100,000 to the software and pay $200,000 for implementation.
After you enter in 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 30 days for software whilst still being pay $200,000 for implementation.
Therefore we did what our customers do. We set an amount we thought the market industry would support, and we worked backwards to regulate our internal costs and make money doing that. Our customers are companies. They need to estimate an amount, and after that stay with it. They can not go to their customer and say “we should bill you more because we had been inefficient in our production process.” They might go out of business over night.
The modern approach to ERP implentations.
I’m more of a manufacturing expert when compared to a technology expert. Few suppliers think with regards to projects with project managers (Engineer to Order is the exception). They usually think with regards to operations managers and standard work instructions.
I applied this thinking to ERP projects. It will help that all we do is implement ERP for companies.
Here’s will be the main steps that helped us dramatically reduce the risk (and expenses) of ERP projects.
We just do one type of projectFocusing exclusively on manufacturing, along with small facilities, resulted in we could refine and get better with each project. We glance with the process being a repetitive, repetable process. This process gets eliminate the at the start style of the work plan etc. The job management goes away completely, and now we reduce that waste enormously.
We offset easy but tedious attempt to the customerWhen a $200 per hour consultant does what depends upon a clerical task, that is certainly waste. We train the shoppers to perform many of the tedious tasks. It turns out that kinds greater made by the client. Business Central makes a lots of this easier because it has great tools for customers to complete tasks that was once hard. There’s 2 of such specifically which can be key: Reports information Loading
We train people to edit formsCustomers know what they need their invoice to check like. They understand where they need the payment date on the PO. It can be way easier if we make them learn to improve these things compared to it for the children.
We train people to load data into the systemData loading is often a task we assign with a co-op student after a couple of hours training. The fact is, when customers “get” how this can be done – they are doing 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 have a lot on your own plate. Also, the more time a person spends in training – greater they “zone out” and initiate to reduce focus. We keep exercise sessions short, and record these as videos. People absorb many can easily review what they’ve forgotten. This implies we absolutely must train remotely. Travel time can be a killer (and totally waste)- therefore we can’t travel.
We maintain the project tight, and discourage changeTraditional ERP partners encourage work. Remodeling means extra profit. Not for individuals. Once we do a Business Central project, we discourage any changes in the original project. Our projects aren’t super restrictive – nevertheless they do limit the options we are going to implement in “Phase 1.” By keeping the program tight, there’s a lot less “creep” and the boss is normally much happier.
We still bill for customizations, but discourage them also Customizations include the a very important factor we can not predict – and then we also discourage them. Considering this new model, find customers demand a lot fewer also. They trust us more to know what we have been doing. Occasionally a customization is simply a no-brainer, and in those cases we support and even encourage them. Nevertheless – we’ve got fewer than half the customization we used to.
To read more about Process manufacturing cloud ERP you can check our webpage