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2015-erp-trendsLike all software, ERP evolves.  Recently, some folks at a firm called Compare Business Products compiled a few trends for 2015 culled from sources including Gartner Research and ComputerWorld, among others.  A few we thought worth highlighting follow.

  • Consolidation – Increasingly, enterprise applications seem to be covering more ground. What once were largely “accounting” systems have evolved to include CRM (Customer Relationship Management), SCM (Supply Chain Management) and BI (Business Intelligence), among others.  This trend only continues to grow as suites become more powerful and all-encompassing of the functionality required to run today’s more sophisticated enterprise.
  • Social Media – A trend we’re beginning to see, as ERP goes Social. Microsoft is among several companies exploring the potential.  While some may underplay the importance of social media, there is much to be gained from the type of customer engagement and retention that comes from social media integration.  CRM experts tell us that “social media data related to customers and to products is essential to understanding customer preferences and product improvement.”
  • Cloud vs. On-Premises – A recent Gartner survey found that only 2% of ERP buyers had moved to the cloud. Those whose answers ranged from Next 3 years… to 3 to 5 years… to 5 to 10 years… to “not likely” comprised a whopping 79%.  Another 17% said they “can’t say.”  Not a lot of traction for cloud at least for now and into the near-future according to those results.
  • Going Vertical – The trend to become more industry-specific continues to grow. If you’re in healthcare, you buy software made for that sector – whether it consists of a single suite of modules or (more likely) the addition of 3rd party enhancements to a base package.  The same is true of manufacturing.  There’s no need to write a bill of materials or a configurator when you can purchase such functionality off the shelf.
  • Buyer Education and Preparation – Buyers have come to understand that implementing ERP successfully is not easy. As a result, they’re more educated about their solutions.  Senior executives have learned that simply turning over responsibility to mid-level employees just doesn’t work.  There is a growing realization that clients must take ownership of their own systems, and not just rely on their consultants to make them run.  Likewise, areas including business process (and workflow) analysis and organizational change management are starting to be given the respect they deserve.  This will lead to better implementations overall.  (To which we and other implementers say: It can’t happen too soon.)

Other trends cited included increase mobility… the impact of the Internet of Things… and the larger tier vendors – who by now have sold all the systems they possibly can to large companies – continue their efforts to try to woo the small to midsize business customer.

You can register to download a copy of CBP’s “Top 8 Trends for ERP in 2015” here.

supply_demand_balanceThis month’s APICS Magazine (Mar/Apr ’15) presented what we thought was an ideal example of the utility of an ERP system combined with a little Excel expertise in defining the benefits such a powerful combination can bring.  In an article titled Steady Supply and Demand, APICS Managing Editor Elizabeth Rennie writes of a bearing manufacturer that was able to get a much better handle on matching order demands with supply capacity.

The company had extended lead times due in part to capacity constraints that could negatively affect sales opportunities and on-time deliveries, as well as causing increased expediting costs.  Basically, sales planners needed better visibility over inventory and production, and the shop floor wanted consolidated purchase orders for all sales units in order to identify potential capacity issues.

The solution was a report – drawn from the central repository of data found in the ERP system, matched with an Excel report to parse, filter and report the desired results, and all based on foundational APICS training and knowledge.  In other words, APICS taught them how to look, and the report they designed gave them the visibility they were looking for.

The company needed to know “what products were made on what production line, how many machines were on each line, and what capacity was available on each machine.”  Once they had that, their team could identify the items and SKUs associated with each product and inventory group code.  They then added a field to the ERP system’s item master card where the production line code was assigned to the SKU.

An Excel prototype served as the output format, and with some programming effort (at our firm, we’d think in terms of Jet Reports of course), orders and forecasts were extracted and mapped to a table of production line assignments.  After validation, the report was introduced to both sales and factory teams as a “source of reference to make capacity planning and investment decisions at the factory.”

Employees get real time visibility into production line use and can drill down to order details.  It enables a high level of responsiveness to issues like constraints, machine downtime, order changes and the like.  Their report evolved and grew to display available capacity and backlog development, so planners can recognize potentially damaging trends before the damage is caused.

And of course, because the report is built from the company’s single, trusted silo of uniformly available data – its ERP system – and then tested and validated, all users gain a ‘trusted’ view of orders and current plant capacity, in real time.  As the article points out, “this establishes trust among operational units that often have conflicting priorities.” (Sound familiar?)

Just one more fine example of how ERP and a little clever modification and reporting can yield improved business performance and customer responsiveness.

Digital Disruption Ahead

john chambersCisco’s John Chambers has been a leading IT thought provoker for a long time.  It’s always worth listening to voices of successful experience and reason when it comes to looking forward in business and technology.  So we note below a few of Mr. Chambers’ comments about what to expect in the not too distant future, culled from a recent interview by Scott Thrum, the Wall Street Journal’s senior deputy technology editor.

In the interview, Chambers notes two trends in particular to keep your eye on:

First, Chambers notes upon his return from the annual Davos Conference (World Economic Forum) “I guarantee you that the No. 1 thing on every CEO’s mind [there] is how to make your company a digital company.”  And number two, he notes, is the Internet of Everything, that interconnected world of gadgets and Net of which this blog has written several times before.

Said Chambers of his peers at Davos (admittedly, these are business luminaries from many of the very largest of firms) they all seemed to concur: “I’m not moving fast enough.  I have to become a digital company first, a physical company second.”  If true, that’s a paradigm shift of the highest order for most companies today.  It means fast innovation which means fast IT, and then it becomes about security.

For CIOs, Chambers notes, this means that “IT will be in vogue again.  It will be centered all around these new concepts, and the role of the CIO can change dramatically.”  Chambers believes that “a lot of companies won’t exist in a meaningful way in ten years unless they change dramatically.”  Speaking of digitization and the IOT (Internet of Things), Chambers believes getting the market transitions right is the first order of business.

Secondly, he says, it’s important not to stay doing the same thing too long.  Chambers claims it’s important to move into what he calls “market adjacencies” and then bring back what you’ve learned to your core capability.  He notes GE as an example of a company that’s done this well.

Thirdly, he says, and this is a tough one, you must reinvent yourself as a CIO or a CEO for your company.  That’s one where everyone struggles.  And then of course, all this is exacerbated simply by the rapid pace of change.  (Chambers claims that Cisco has changed more in the last 12 months that at any time in its history.)

Finally, he sees the role of the network changing dramatically.  “Contrary to a lot of people’s views on big data, I think the majority of the data will actually be analyzed and acted upon at the edge of the network.  And if you write your applications right, they can run in the cloud, they can run in your data center, they can run in the WAN (wide area network), they can run right all the way to the edge.  It will transform business at a tremendous pace,” he opines.

 

st pat hatStPat

jet BI2In our prior post we looked at what the folks at Jet Reports had to say in a white paper about building a Business Intelligence repository.  The authors contend that you want to build it first, and then work on the accuracy of your data, for some rather counter-intuitive reasons.  Read that post first, then see today what 4 steps they recommend to ensure that when it comes to implementing Data Governance, you are the “Data Governor.”

Step 1: Identify and Establish the Vision.  Make clear what you’re trying to accomplish with your reporting and data, then break down what you’ll do to accomplish that.  For example, the vision might be “Be the easiest company to buy from by offering one-step ordering and 100% on-time delivery with competitive prices.”  From that, goals can be established, like

  • “to increase customer satisfaction and encourage repeat business by streamlining the order process”
  • “to increase loyalty by instilling trust” and
  • “to increase quality of revenue through corporate retention”

Each of these goals can then have specific action items that pertain to how your BI system works and how you interact with the customer.

Step 2: Appoint Your ‘House of Representatives’.  The point here is to make sure that the way you collect, handle, store and process data is efficient and proper.  Major roles would include:

  • An Executive Sponsor – a senior person passionate about the task at hand
  • Data Stewards – Your IT and subject matter experts
  • Data Governance Driver – The coordinator for all tasks

Step 3: Build the Process.  When bad data finally surfaces in your data warehouse, it’s a good thing.  When numbers don’t make sense, you drill down, identify, locate and correct.  Jet’s people talk about three process stages:

  • Upstream Processes – What processes capture, create, import, transform or update and introduce data into your company’s system?  Too often the collectors of the data have little knowledge of (or sometimes, concern for) those who will use it.  That’s why an Executive Sponsor can evangelize and enforce proper methods.
  • Stewardship Processes – Managing the rules, policies and standards that govern your data in order to ensure it’s clean, well-managed and properly escalated when necessary.
  • Downstream Processes – The operations and analytics that consume, protect and store the data. This is the user interface: dashboards, reports, drilldowns, etc.  This is where the ROI happens.

Step 4: Policing the State.  Your forms and policies govern everything from the state of your CRM system to the integrity of your data.  It governs the data input process.  Be sure your data governance policies then include:

  • Data accountability and ownership
  • Organizational roles and responsibilities
  • Data capture & validation standards
  • Data access and usage

The Jet Reports white paper’s authors make some critical points about how you collect, manage and utilize your data.  Their suggestions on building the repository and then managing and improving the data as you go also fit perfectly into today’s ‘agile’ environment, and are worth a read.

For a copy of their white paper, leave a comment on this blog and we’ll send it out.

 

jet BIIn a recent white paper the folks at Jet Reports, a leading reporting engine for the ERP industry that’s extremely popular with users of systems including Microsoft Dynamics, authors Jonathan Oesch and Tara Grant make some very smart – and counter-intuitive — suggestions about how to go about building business intelligence, even when the data isn’t quite right.

They start from the premise that, when you think about it, you don’t know that data is bad in a business intelligence world (i.e., reporting and analysis) when you’re putting the data in – you only know when you’re getting the data out.

So if you have an urgent need to manage, say, three or four inventory-related KPIs (Key Performance Indicators), the time it may take to understand whether your inventory data is actually accurate can be, or seem, like a very long time.

Their prescription: build the business intelligence first.  If you build your reports and dashboards early, your key stakeholders are very likely to know when the system is spitting out bad data.  It will, most of the time, be obvious to your subject matter experts.  And that’s precisely when you can start drilling down into the data to determine just where the mistakes are occurring.

In other words, your BI (Business Intelligence) environment itself will make your numbers accessible, and the errors will usually reveal themselves.  That’s when you can start to get down to the root causes behind those errors, on the way to building a better data repository in the long run — and most importantly then, rendering better business decisions.

The Jet White paper (available free, just ask us in the Comments section for a PDF copy) then goes into some impressive depth explaining data governance, and teaching readers how to become their owner “data Governor.”

We’ll take a look at some of their key ideas in our next post.  Stay tuned…

bpr magnifying glassAccording to a 2014 Business Process Management Report produced by Panorama Consulting (available here)

“Organizations that effectively define and document business process improvements as part of their enterprise software initiatives are much more likely to complete their projects on-time and on-budget…. [and] are more likely to receive the business benefits that they expect from their ERP systems.”

Panorama lists three reasons why business process reengineering is sometimes overlooked (and then list 3 things you can do about it):

  1. Business process reengineering (or Business Process Analysis) appears to cost more time and money – at least on paper. After all, if we configure and implement ERP software without spending time to analyze (and change our processes), won’t the implementation go faster?
  2. Less experienced implementers defer to the ERP software to deliver business process improvements. This, Panorama points out, is like the “easy button.”  The software is so robust, surely it will fix all our problems, right?  In fact, the complexity can be overwhelming, and will cost you a lot more money if your processes aren’t well-defined before you design and build the phases of your implementation.
  3. Too many organizations think that they will simply start with a clean slate and throw out their old business processes. The truth is, you don’t want to throw the baby out with the bath water.  Sure, some of your old processes may be outdated or inefficient.  But don’t neglect those things that have made you successful.  Your people need to be trained in a way that connects your “future state” business processes to how things are being done currently.  Here, communication and training become key.

Panorama then provides 3 tips to help ensure that your team avoids these pitfalls:

  1. Don’t forget to address both your current and future business processes. Identify the gaps between current and future state and ensure employees understand what is changing, and how.
  2. Begin defining business process improvements prior to your ERP implementation. (At our firm, we always start here.  That Business Process Analysis is the critical first step – it builds the roadmap for the ERP implementation and all that follows.)
  3. Use your reengineered business processes as the foundation for your organizational change management and training strategy. Document and communicate to all persons what’s changed, how it’s changed, and how things work in the future.  It’s all about training and communication.  Whatever you do – don’t ignore these critical elements.

Just like Panorama, our long experience bears out their very good advice.  Take it to heart.

 

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