Kock Choi posted an update 9 months, 1 week ago
Traditional ERP Implementations
Traditional ERP implementations are really dangerous, for both the partner deploying them but for the customer. This is the reason almost nobody offers the elusive fixed fee. The potential risks are simply excessive.
The existing Dynamics NAV project costs were high because legacy methods are expensive. The standard implementation follows many phases originally determined by Microsoft in the waterfall project framework. Waterfall project management software is proven to get more costly than the modern “agile” approach, that’s depending on LEAN techniques.
The approach that is employed by virtually everyone since ERP has been in existence would be to bill “Time and Material.” Which means that customers spend on the time spent by consultants, nomatter just how or bad they may be. This moves the danger from the implentor to the customer almost entirely.
In fact you can still find massive risks for your partner with one of these waterfall projects. I have come across Most all cases where partners were sued or threatened when these projects go very badly.
I started considering how you had to change this looking at a LinkedIn post that shared an article on why “Time and Material Billing is Unethical.” I used to be really struck with the arguments. The writer asked a question i think summed it fantastically well:
If the restaurant charged you for your some time and material who’s took to cook your steak, how would you feel?
This probably sparked my first real opinion of how to stop being a some time and material business.
ERP Pricing is incredibly unpredictable
Among the first videos i uploaded to YouTube was my explanation of why traditional costing of ERP implementations was outrageously inaccurate. I’ve spent time since working out solutions to remove that inaccuracy.
Obviously the easiest method to give accurate estimates ended up being to be fixed fee. Unfortunately that traditional approach is really risky for that partner. It makes it scary to provide a fixed fee. unless you still do it, you have a great deal of trouble. We have worked tough to develop a technique which i think is exclusive.
Applying LEAN Thinking to ERP Implementations
There exists a movement to use LEAN thinking to service activities. In general, LEAN is around removing waste from the physical product, but it is true to projects too.
I developed my very own variations of waste in ERP projects.
First – there is certainly time spent from the wrong resource.
This really is typically if someone else who is too expensive does something which somebody who will be paid a lot less can do, or are capable of doing it faster.
Second – you’ll find unnecessary steps
I’ve found this happens when people perform steps to “cover their butts.” A lot of project management falls into this. In addition, it occurs consultants (compensated on hours billed) push unnecessary work.
Third – you will find wasted tasks
Sometimes customers might like to do stuff that we, as ERP consultants, know will not work. Inside a traditional implementation we’ve no economic motivation to stop it.
Lastly – you will find there’s “bleed” of data
Rise around the customer. Typically it’s in the event the customer doesn’t remember their training they do not invest some time doing work in it enough.
Why ERP Implementations Have to Change!
Whenever we started doing cloud based ERP implementations with Microsoft Dynamics NAV it was common for clients to pay $100,000 for your software and pay $200,000 for their implementation.
After you go into the realm of the cloud, where Microsoft Business Central is $100 each month per user, things change. It’s hart to see a customer they’ll spend $2000 a month for software and still pay $200,000 for implementation.
Therefore we did what our customers do. We set a cost we thought the marketplace would support, and that we worked backwards to control our internal costs to make money doing that. Our customers are companies. They should estimate a cost, and then adhere to it. They cannot check out their customer and say “we have to~require to bill you more because i was inefficient inside our production process.” They will go out of business overnight.
The newest way of ERP implentations.
I’m a greater portion of a producing expert than the usual technology expert. Few suppliers think in terms of projects with project managers (Engineer to get will be the exception). They generally think when it comes to operations managers and standard work instructions.
I applied this thinking to ERP projects. It will help that most we all do is implement ERP for manufacturing companies.
Here’s are the main steps that helped us dramatically lessen the risk (and charges) of ERP projects.
We just do one type of projectFocusing exclusively on manufacturing, plus small facilities, meant we will refine and obtain better with each project. We glance at the process as being a repetitive, repetable process. This does get rid of the beforehand design of the project plan etc. The project management goes away completely, and now we reduce that waste enormously.
We offset easy but tedious make an effort to the customerWhen a $200 each hour consultant does what comes from a clerical task, that is waste. We train absolutely free themes to complete a number of the tedious tasks. It turns out that sorts much better produced by the buyer. Business Central makes a large amount of this easier since it has great tools for customers to accomplish tasks that used to be hard. There’s 2 of the specifically which can be key: Reports information Loading
We train people to edit formsCustomers know very well what they really want their invoice to check like. They understand where they need the due date on their own PO. It is way easier whenever we guide them to improve these products than do it on their behalf.
We train customers to load data to the systemData loading is often a task we assign with a co-op student soon after hours training. The truth is, when customers “get” how this is accomplished – they actually do a much better job cleaning their data and things go much smoother!
We keep exercise sessions shorter and VideoPeople forget what they are taught. Without question of life. There is a lot in your plate. Also, the longer someone spends in training – greater they “zone out” and initiate to lose focus. We keep services short, and record every one of them as videos. People absorb increasingly can simply review what they’ve got forgotten. What this means is we absolutely must train remotely. Travel time is really a killer (and totally waste)- and then we can’t travel.
We keep the project tight, and discourage changeTraditional ERP partners encourage extra work. Additional work means extra profit. Not for all of us. When we do a Business Central project, we discourage any changes in the original project. Our projects aren’t super restrictive – nonetheless they do limit the functions we’ll implement in “Phase 1.” By maintaining the plan tight, there’s a lot less “creep” as well as the boss is often much happier.
We still bill for customizations, but discourage them also Customizations would be the another thing we simply cannot predict – and we all also discourage them. Given this new model, look for customers ask for a lot fewer also. They trust us more to be aware what we are doing. Occasionally a customization is simply no-brainer, and in those cases we support and even encourage them. Even so – we’ve fewer than half the customization we utilized to.
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