Traditional ERP Implementations
Traditional ERP implementations are really high risk, for the partner deploying them and also for the customer. For this reason almost nobody provides elusive fixed fee. The risks are merely too much.
The previous Dynamics NAV project costs were high because legacy methods are costly. The conventional implementation follows a number of phases originally lay out by Microsoft inside a waterfall project framework. Waterfall project management has been proven to get higher priced as opposed to modern “agile” approach, which is based on LEAN techniques.
The approach which has been utilized by virtually everyone since ERP has been in existence would be to bill “Time and Material.” Which means customers pay for time spent by consultants, nomatter how good or bad they are. This moves the chance in the implentor for the customer almost entirely.
In fact you may still find massive risks for that partner with one of these waterfall projects. I have seen Most cases where partners were sued or threatened when these projects go very badly.
I started thinking about how you had to change this reading a LinkedIn post that shared a piece of writing on why “Time and Material Billing is Unethical.” I was really struck from the arguments. The article author asked a matter that we think summed it up fantastically well:
If your restaurant charged you for your time and material which it took to 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 some time and material business.
ERP Prices are 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 figuring out methods to remove that inaccuracy.
Obviously the simplest way to give accurate estimates was to be fixed fee. Unfortunately that traditional approach is indeed high-risk for your partner. Celebrate it truly scary use a fixed fee. if you don’t do it properly, you are in a large amount of trouble. I’ve worked very difficult to develop a method that we think is exclusive.
Applying LEAN Thinking to ERP Implementations
There exists a movement to apply LEAN thinking to service activities. Generally speaking, LEAN is around removing waste from a physical product, but it can be applied to projects too.
I came up with my own, personal variations of waste in ERP projects.
First – there is time spent by the wrong resource.
This can be typically if someone else who is too expensive does something somebody that will be paid a smaller amount are capable of doing, or are capable of doing it faster.
Second – you can find unnecessary steps
I find such a thing happens when individuals perform steps to “cover their butts.” Plenty of project management falls into this. In addition, it occurs consultants (compensated on hours billed) push unnecessary work.
Third – you’ll find wasted tasks
Sometimes customers want to do stuff that we, as ERP consultants, know will not work. Inside a traditional implementation we now have no economic motivation to stop it.
Lastly – you will find there’s “bleed” of knowledge
Rise on the customer. Typically it’s when the customer doesn’t remember their training as they do not spending some time working in the system enough.
Why ERP Implementations Must Change!
If we started doing cloud based ERP implementations with Microsoft Dynamics NAV it absolutely was common for clients to spend $100,000 to the software and pay $200,000 because of their implementation.
As soon as you go into the whole world of the cloud, where Microsoft Business Central is $100 per month per user, things change. It’s hart to inform a client they will spend $2000 per month for software and still pay $200,000 for implementation.
And then we did what our customers do. We set a cost we thought industry would support, and we worked backwards to manage our internal costs making money doing that. Our industry is suppliers. They need to estimate a price, and then stick to it. They can not 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 magically.
The brand new way of ERP implentations.
I’m really a manufacturing expert compared to a technology expert. Few suppliers think with regards to projects with project managers (Engineer to acquire could be the exception). They usually think when it comes to operations managers and standard work instructions.
I applied this thinking to ERP projects. It can help that we do is implement ERP for suppliers.
Here’s include the main steps that helped us dramatically decrease the risk (and expenses) of ERP projects.
We only do one sort of projectFocusing exclusively on manufacturing, as well as in small facilities, meant we will refine and have better with every project. We look at the process as a repetitive, repetable process. This does get reduce the beforehand form of the work plan etc. The job management disappears, so we reduce that waste enormously.
We offset easy but tedious work to the customerWhen a $200 per hour consultant does what depends upon a clerical task, which is waste. We train the customers to accomplish many of the tedious tasks. Apparently kinds superior made by the client. Business Central produces a great deal of this easier given it has great tools for end users to accomplish tasks that used to be hard. There are two of these particularly which can be key: Reports and Data Loading
We train people to edit formsCustomers know what they desire their invoice to check like. They understand where they desire the payment date on the PO. It can be way easier as we help them learn to change these items than do it for the children.
We train customers to load data into the systemData loading can be a task we assign into a co-op student after a couple of hours training. The reality is, when customers “get” how this can be done – they do a far better job cleaning their data and things go much smoother!
We keep workout sessions shorter and VideoPeople forget what they are taught. It goes without saying of life. There is a lot on your own plate. Also, the more an individual spends in training – the greater they “zone out” and initiate to shed focus. We keep training sessions short, and record every one of them as videos. People absorb increasingly can readily review what they’ve forgotten. This means we absolutely must train remotely. Travel time is really a killer (and totally waste)- and then we can’t travel.
We keep your project tight, and discourage changeTraditional ERP partners encourage remodeling. Extra work means extra profit. Not for people. 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 functions we’re going to implement in “Phase 1.” By maintaining the master plan tight, there is lots less “creep” and the boss is often much happier.
We still bill for customizations, but discourage them as well Customizations are the another thing we simply cannot predict – and we all also discourage them. Considering this new model, look for customers require a lot fewer also. They trust us more to understand were doing. Occasionally a customization is simply a no-brainer, as well as in those cases we support and even encourage them. However – we have less than half the customization we accustomed to.
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