Ulriksen Svensson posted an update 9 months, 3 weeks ago
Traditional ERP Implementations
Traditional ERP implementations are really high-risk, for both the partner deploying them but for the customer. This is why almost nobody provides elusive fixed fee. The potential risks are just an excessive amount of.
The old Dynamics NAV project costs were high because legacy methods can be very expensive. The normal implementation follows several phases originally determined by Microsoft in a waterfall project framework. Waterfall project management is proven to get more costly compared to the modern “agile” approach, which can be based on LEAN techniques.
The approach that’s been utilised 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 how good or bad they may be. This moves the danger in the implentor towards the customer almost entirely.
In fact it is possible to massive risks for your partner with one of these waterfall projects. I’ve seen Most cases where partners were sued or threatened when these projects go very badly.
I began thinking about the way we required to change this looking at a LinkedIn post that shared articles on why “Time and Material Billing is Unethical.” I was really struck through the arguments. Mcdougal asked an issue that I think summed it down fantastically well:
If your restaurant charged you for the time and material it loved cook your steak, would you feel?
This probably sparked my first real opinion of how you can~the way to~tips on how to~the best way to~ways to stop being a serious amounts of material business.
ERP Cost is incredibly unpredictable
One of the first videos which i uploaded to YouTube was my explanation of why traditional costing of ERP implementations was outrageously inaccurate. I’ve spent the years since working out methods to remove that inaccuracy.
Obviously the simplest way to give accurate estimates ended up being be fixed fee. The thing is that traditional approach is indeed high-risk to the partner. Commemorate it scary use a fixed fee. if you do not do it properly, you have a large amount of trouble. I have worked very difficult to develop an approach that I think is different.
Applying LEAN Thinking to ERP Implementations
There exists a movement to use LEAN thinking to service activities. In general, LEAN is all about removing waste coming from a physical product, however it does apply to projects too.
I invented my own, personal variations of waste in ERP projects.
First – there is time spent with the wrong resource.
This really is typically if somebody who is too expensive does something which someone that is paid significantly less can perform, or are able to do it faster.
Second – you can find unnecessary steps
I’ve found such a thing happens when individuals perform steps to “cover their butts.” Lots of project management falls into this. Additionally, 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 stop it.
Lastly – there exists a “bleed” of knowledge
Rise for the customer. Typically it’s once the customer doesn’t remember their training they do not invest some time working in it enough.
Why ERP Implementations Have to Change!
When we started doing cloud based ERP implementations with Microsoft Dynamics NAV it turned out common for clients to spend $100,000 to the software and pay $200,000 because of their implementation.
After you type in the arena of the cloud, where Microsoft Business Central is $100 monthly per user, things change. It’s hart to share with a client they’re going to spend $2000 per month for software whilst still being pay $200,000 for implementation.
And then we did what our customers do. We set an amount we thought the market would support, and that we worked backwards to manipulate our internal costs making money doing that. Our industry is manufacturers. They need to estimate a price, after which stick to it. They are unable to visit their customer and say “we have to~require to bill you more because i was inefficient within our production process.” They would close shop over night.
The new way of ERP implentations.
I’m really a producing expert when compared to a technology expert. Few manufacturing companies think regarding projects with project managers (Engineer to buy will be the exception). They usually think when it comes to operations managers and standard work instructions.
I applied this thinking to ERP projects. It helps that every perform is implement ERP for suppliers.
Here’s will be the main steps that helped us dramatically lessen the risk (and expenses) of ERP projects.
We only do one form of projectFocusing exclusively on manufacturing, as well as in small facilities, meant we could refine and obtain better with each and every project. We look in the process as being a repetitive, repetable process. This kind of gets gone the in advance design of the work plan etc. The job management disappears altogether, 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 down to a clerical task, that’s waste. We train absolutely free themes to do a number of the tedious tasks. Evidently these are also far better made by the buyer. Business Central produces a large amount of this easier given it has great tools for clients to perform tasks that had been hard. There’s 2 of the especially which are key: Reports information Loading
We train customers to edit formsCustomers determine what they really want their invoice to appear like. They do know where they really want the deadline on their own PO. It’s way easier whenever we help them learn to change these things than do it for the children.
We train customers to load data in to the systemData loading is really a task we assign with a co-op student right after 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 training 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 longer someone spends in training – the more they “zone out” and start to reduce focus. We keep training sessions short, and record all of them as videos. People absorb countless can easily review what they’ve forgotten. This means we absolutely must train remotely. Travel time can be a killer (and totally waste)- and we all can’t travel.
We maintain the project tight, and discourage changeTraditional ERP partners encourage extra work. Work means extra profit. Not for us. Once we perform a Business Central project, we discourage any changes through the original project. Our projects aren’t super restrictive – but they do limit the features we are going to implement in “Phase 1.” By maintaining the plan tight, it is a lot less “creep” as well as the boss is often much happier.
We still bill for customizations, but discourage them too Customizations will be the another thing we can’t predict – and we all also discourage them. With all this new model, look for customers demand a lot fewer also. They trust us more to understand were doing. Occasionally a customization is simply a no-brainer, along with those cases we support and even encourage them. Nevertheless – we’ve got fewer than half the customization we used to.
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