Flynn Ulrich posted an update 4 months, 1 week ago
Traditional ERP Implementations
Traditional ERP implementations can be extremely high risk, for the partner deploying them and for the customer. This is the reason no one offers the elusive fixed fee. The potential for loss are merely an excessive amount of.
That old Dynamics NAV project costs were high because legacy methods are expensive. The conventional implementation follows a number of phases originally lay out by Microsoft inside a waterfall project framework. Waterfall project management software is proven to become more expensive as opposed to modern “agile” approach, that’s based on LEAN techniques.
The approach that is utilised by virtually everyone since ERP has been online is always to bill “Time and Material.” This means that customers spend on enough time spent by consultants, nomatter how good or bad they are. This moves the danger in the implentor for the customer almost entirely.
The reality is that it is possible to massive risks for that 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 considering how you needed 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 something that I think summed up fantastically well:
If your restaurant charged you for the some time to material it loved cook your steak, would you feel?
This probably sparked my first real thoughts about how to stop as a some time to material business.
ERP Prices are 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 many years since finding out methods to remove that inaccuracy.
Obviously the ultimate way to give accurate estimates ended up being to be fixed fee. Unfortunately that traditional approach can be so dangerous for the partner. It makes it genuinely scary to offer a fixed fee. unless you still do it, you’re in a lot of trouble. We have worked tough to develop a method which i think is unique.
Applying LEAN Thinking to ERP Implementations
There is a movement to use LEAN thinking to service activities. Normally, LEAN is all about removing waste from your physical product, nevertheless it can be applied to projects too.
I invented my very own variations of waste in ERP projects.
First – there is certainly time spent by the wrong resource.
This can be typically when someone who costs too much does something that somebody that is paid a smaller amount are able to do, or can do it faster.
Second – you can find unnecessary steps
I’ve found this happens when individuals perform steps to “cover their butts.” Plenty 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 wish to accomplish issues that we, as ERP consultants, know won’t work. Inside a traditional implementation we now have no economic motivation to avoid it.
Lastly – there’s a “bleed” of info
Normally, this is about the customer. Typically it’s once the customer doesn’t remember their training as they do not spend some time doing work in it enough.
Why ERP Implementations Need to Change!
Once we started doing cloud based ERP implementations with Microsoft Dynamics NAV it had been common for patrons to pay $100,000 to the software and pay $200,000 because of their implementation.
When you enter the arena of the cloud, where Microsoft Business Central is $100 per month per user, things change. It’s hart to inform an individual they are going to spend $2000 a month for software yet still pay $200,000 for implementation.
So we did what our customers do. We set a cost we thought the market would support, and we worked backwards to manipulate our internal costs and earn money doing that. Our industry is companies. They have to estimate a price, then follow it. They can not check out their customer and say “we have to bill you more because we were inefficient in your production process.” They might close shop magically.
The brand new procedure for ERP implentations.
I’m much more of a manufacturing expert than the usual technology expert. Few suppliers think when it comes to projects with project managers (Engineer to Order may be the exception). They usually think in terms of operations managers and standard work instructions.
I applied this thinking to ERP projects. It may help that every we all do is implement ERP for suppliers.
Here’s include the main steps that helped us dramatically slow up the risk (and charges) of ERP projects.
We simply do one type of projectFocusing exclusively on manufacturing, as well as in small facilities, meant we’re able to refine and have better with each project. We look at the process as a repetitive, repetable process. This kind of gets rid of the at the start kind of the work plan etc. The project management disappears, and now we reduce that waste enormously.
We offset easy but tedious try to the customerWhen a $200 per hour consultant does what comes down to a clerical task, that is waste. We train the shoppers to perform many of the tedious tasks. Apparently , forms of much better produced by the buyer. Business Central is really a large amount of this easier as it has great tools for end users to accomplish tasks that was once hard. There’s two of such particularly which can be key: Reports information Loading
We train people to edit formsCustomers know what they need their invoice to appear like. They know where they want the payment date on their PO. It can be way easier whenever we teach them to alter these items than do it for them.
We train visitors to load data to the systemData loading is a task we assign into a co-op student right after hours training. The truth is, when customers “get” how this is done – they are doing a far better job cleaning their data and things go much smoother!
We keep workout sessions shorter and VideoPeople forget what they’re taught. It’s a fact of life. You have a lot on your plate. Also, the more a person spends in training – the greater they “zone out” and begin to lose focus. We keep services short, and record all 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 can be a killer (and totally waste)- and we all can’t travel.
We keep the project tight, and discourage changeTraditional ERP partners encourage work. Additional work means extra profit. Not for individuals. Once we perform 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.” Keeping the program tight, it is a lot less “creep” along with the boss is generally much happier.
We still bill for customizations, but discourage them as well Customizations are the a very important factor we can not predict – and we all also discourage them. With all this new model, we find customers require a lot fewer also. They trust us more to know what we have been doing. Occasionally a customization is only a no-brainer, as well as in those cases we support and even encourage them. However – we have not even half the customization we used to.
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