Mason Joseph posted an update 4 months, 1 week ago
Traditional ERP Implementations
Traditional ERP implementations are incredibly high-risk, for the partner deploying them as well as the customer. For this reason no one provides elusive fixed fee. The potential for loss are just too much.
The existing Dynamics NAV project costs were high because legacy methods can be very expensive. The normal implementation follows many phases originally determined by Microsoft in a waterfall project framework. Waterfall project management has been proven to be more costly compared to modern “agile” approach, that is based on LEAN techniques.
The approach that is utilized by virtually everyone since ERP ‘s been around is always to bill “Time and Material.” Because of this customers buy the time spent by consultants, nomatter just how or bad they are. This moves the danger from the implentor on the customer almost entirely.
In fact it is possible to massive risks to the partner with your waterfall projects. I’ve seen Most all cases where partners were sued or threatened when these projects go very badly.
I started thinking about the way you required to change this after reading a LinkedIn post that shared a piece of writing on why “Time and Material Billing is Unethical.” I had been really struck by the arguments. Mcdougal asked an issue that we think summed it up fantastically well:
If the restaurant charged you for the some time and material that it loved cook your steak, how does one 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 like a serious amounts of material business.
ERP Pricing is incredibly unpredictable
One of the primary videos that we uploaded to YouTube was my explanation of why traditional costing of ERP implementations was outrageously inaccurate. I’ve spent many years since finding out solutions to remove that inaccuracy.
Obviously the ultimate way to give accurate estimates ended up being to be fixed fee. The thing is that traditional approach can be so dangerous to the partner. It makes it really scary use a fixed fee. if you do not do it properly, you have a great deal of trouble. We have worked very difficult to develop a strategy that I think is unique.
Applying LEAN Thinking to ERP Implementations
You will find there’s movement to apply LEAN thinking to service activities. Generally speaking, LEAN is approximately removing waste from the physical product, however it does apply to projects too.
I invented my very own variations of waste in ERP projects.
First – there’s time spent with the wrong resource.
This really is typically when someone who costs too much does something that somebody that pays a smaller amount are capable of doing, or can do it faster.
Second – you will find unnecessary steps
I’ve found such things happen when individuals perform steps to “cover their butts.” Lots of project management software falls into this. What’s more, it occurs consultants (compensated on hours billed) push unnecessary work.
Third – you can find wasted tasks
Sometimes customers want to do stuff that we, as ERP consultants, know will not work. Within a traditional implementation we’ve no economic motivation to prevent it.
Lastly – there is a “bleed” of information
Rise about the customer. Typically it’s once the customer doesn’t remember their training because they do not spend time employed in the machine enough.
Why ERP Implementations Have to Change!
When we started doing cloud based ERP implementations with Microsoft Dynamics NAV it was common for customers to pay for $100,000 to the software and pay $200,000 for implementation.
Once you enter the whole world of the cloud, where Microsoft Business Central is $100 each month per user, things change. It’s hart to share with a client they’re going to spend $2000 per month for software but still pay $200,000 for implementation.
And we all did what our customers do. We set an expense we thought the market would support, and now we worked backwards to regulate our internal costs to make money doing that. Our company is manufacturing companies. They need to estimate an amount, then stay with it. They can not visit their customer and say “we have to bill you more because i was inefficient inside our production process.” They will close shop instantly.
The newest approach to ERP implentations.
I’m much more of a manufacturing expert than the usual technology expert. Few suppliers think in terms of projects with project managers (Engineer to Order is the exception). Many of them think with regards to operations managers and standard work instructions.
I applied this thinking to ERP projects. It helps that all we all do is implement ERP for suppliers.
Here’s will be the main steps that helped us dramatically decrease the risk (and costs) of ERP projects.
We merely do one sort of projectFocusing exclusively on manufacturing, along with small facilities, meant that we’re able to refine and obtain better with each and every project. We look in the process as being a repetitive, repetable process. This gets reduce the up front style of the project plan etc. The job management goes away completely, and that we reduce that waste enormously.
We offset easy but tedious attempt to the customerWhen a $200 each hour consultant does what depends upon a clerical task, that’s waste. We train the customers can use to accomplish a few of the tedious tasks. Evidently forms of much better done by the client. Business Central makes a great deal of this easier given it has great tools for customers to complete tasks that used to be hard. There are two of the specifically which might be key: Reports files Loading
We train people to edit formsCustomers determine what they need their invoice to check like. They know where they need the deadline on their own PO. It’s way easier when we make them learn to switch these items than do it for the kids.
We train visitors to load data in the systemData loading is really a task we assign to some co-op student soon after hours training. Truth be told, when customers “get” how this is accomplished – they certainly a far better job cleaning their data and things go much smoother!
We keep training sessions shorter and VideoPeople forget what they’re taught. Without question of life. There is a lot on the plate. Also, the longer someone spends in training – the greater they “zone out” and initiate to get rid of focus. We keep services short, and record every one of them as videos. People absorb more and can readily review what they’ve forgotten. What this means is we absolutely must train remotely. Travel time is often a killer (and totally waste)- so we can’t travel.
We keep the project tight, and discourage changeTraditional ERP partners encourage additional work. Additional work means extra profit. Not for people. Once we perform Business Central project, we discourage any changes from your original project. Our projects aren’t super restrictive – however they do limit the characteristics we’ll implement in “Phase 1.” By maintaining the plan tight, it is a lot less “creep” and the boss is usually much happier.
We still bill for customizations, but discourage them as well Customizations will be the a very important factor we simply cannot predict – and then we also discourage them. Given this new model, we find customers request a lot fewer also. They trust us more to understand what 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 employed to.
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