Fixing ERP System Erosion to Unlock Business Value

Implementing an Enterprise Resource Planning  (ERP) system, such as SAP, JD Edwards or Oracle Netsuite, is a significant financial investment, particularly if the implementation is global in scale and involves multiple business units. While the benefits of an effective ERP system can outweigh the high cost of implementation, challenges invariably arise when companies grow via mergers or acquisitions or into new markets. In such situations, achieving short-term commercial goals is often prioritized over ERP considerations.. This can lead to system customizations and process workarounds that meet short-term objectives but that erode the original benefits of the ERP implementation by adding additional costs and complexity. These workarounds eventually become codified in standard operating procedures, additional technology is built upon the existing foundation, and the technical debt compounds rapidly, eventually outstripping any efficiency gained by the ERP system in the first place. 

Companies end up with complicated, disparate product, customer and vendor master data that result in complex or ineffective offline operational and financial reporting.  This may also result in “data silos" by business unit, further undermining the benefits of an integrated ERP. So, how do companies maximize their investment in these large ERP systems, while realizing the commercial benefit of new business integrations?  How do companies unravel established workarounds and system customizations without risking a negative impact on the business?

In order to undo this “system erosion” of poorly executed integration projects, companies must adopt an approach built on Lean and Continuous Improvement principles that consider both process requirements and installed ERP system capabilities. This approach is supported by a measured, phased program methodology focused on delivering business value by considering ERP system capabilities - integrated across all (new and existing) business units of the company.

Continuous Improvement is a management / operational framework whereby organizations, business units, and individual teams methodically and routinely analyze and refine their respective operations to ensure that they align with and support the overarching strategic objective of the organization to the greatest degree possible.

Lean is a formal Continuous Improvement practice that focuses on eliminating waste and maximizing efficiency in business processes. Some of the specific Lean principles that apply to this approach are:

• Value: Identifying and focusing on the value that the ERP system can bring in simplifying and standardizing processes and data across the organization. Examples: Rationalizing master data to reduce duplication; automating workflow to simplify processes across functions.

• Flow:  Identifying and eliminating any bottlenecks or delays that impede the flow of information and processes across the organization Example: Ensuring all data have a single system of record; application interfaces with the ERP are seamlessly integrated.

• Pull:  Prioritizing and implementing changes based on the needs and priorities of the business and customers. Understand business rules and ensure these are configured in the ERP.

• Perfection: Continuously identifying and addressing inefficiencies in processes and ERP technologies. Continually assess system performance against business objectives.

The Lean model for ERP improvement projects is built on these 3 key steps:

1. Define Areas of Improvement
• Gather information from process experts to understand the problem to be solved
• Understand business requirements in terms of functional specifications and business rules
• Understand the ERP capabilities related to these requirements so that technical requirements are specified
2. Execute Improvement Projects
• Prioritize the identified opportunities with defined business objectives
• Create a program plan for delivering sustainable improvements
• Ensure agreed targets are met
3. Create Culture of Continuous Improvement
• Obtain executive sponsorship and leadership around these projects
• Dedicate the necessary resources to deliver improvements
• Organize around value creation from existing system capabilities

Fixing ERP system erosion cannot be addressed by fixing one-off issues based on the loudest voice pushing support tickets through the IT Support group.  Fixing ERP system erosion sustainably relies on following the approach of Lean / Continuous Improvement described above.  This approach guarantees that fixes are permanent and that business value is front and center of prioritizing system improvements.  Over time, your ERP system will become fully utilized to drive the business benefits that were promised when it was first implemented! 

Be the Digital Change Agent for your organization

Businesses in the 21^st Century still straddle the great digital divide. Even before this pandemic, we had workers on one side of the line working 24/7 from virtual offices, while others were working in factories and offices in jobs that depended on having a human interfacing directly with other humans or with machines.  On one side, we have companies with processes that are highly automated, while on the other side of the divide we have manual processes.  The global pandemic has only exacerbated these digital divisions.

In this ever competitive job market, the ever growing use of digital tools and the internet-of-things to increase connectivity and productivity, Change Agents are driving transformation in how we do business.  Change Agents are often early adopters of digital trends.  Many will start as advocates for specific technologies and, over time, develop into experienced business transformers.  They recognize the impact of digital transformation and are driven to help their organizations adapt.  Digital Change Agents are naturally passionate about, and interested in, technology and how it can transform the way we work.

Are you a Digital Change Agent in your organization?  And if you are, how do you succeed in adapting your organization and business processes to leverage digital technologies?  One way of doing this is by building your Digital Change Agent Network.  When building your Digital Change Agent Network here are the characteristics to look for:

• Desire to help others as part of the team
• Capacity (time) to help
• Respected by peers
• Expertise in subject/functional area or system

Some nice-to-have characteristics: existing superuser; knows the organization/ industry well; seen as a go-to source for help; fast learner; strong communicator; and/or training/coaching/listening skills.

Where do Change Agents come from? Change agents should be members of the stakeholder groups who will be receiving or implementing the strategy, project, or change. Change leaders typically reside in the business (as opposed to IT for technical projects). Change agents can also be external to the company, such as advisors who have expertise in the business area or system.  These external change agents can also bring specific expertise in business transformation management techniques, tools and processes.

How do you achieve digital change?

1. Get executive support – This is pretty much a prerequisite to any transformation initiative. If you’re in IT, it will help to have allies from the business side. The C-Suite can add weight behind your strategies, and your peers in marketing, sales, finance, etc., can help you “sell” them to your internal customers.
2. Interact with people – Technology experts tend to be introverts. If you’re one of them, you’re going to have to break out of your comfort zone. There is no substitute for talking to the people who will be using the technologies you deploy. It’s the only way to gauge the level of their resistance and address the underlying causes.
3. Speak their language – Working across the digital / technical divide means that you need to adjust your communication style. Remember, Jane in finance may be brilliant in her area, but if you start speaking in acronyms and cryptic terminology you may lose her quickly – and maybe even permanently.
4. Have a plan – Share your vision for what digital transformation means to the organization and how it will help you achieve your collective goals.
5. Keep it doable – Help your internal customers understand how your path to digital transformation will affect them personally. How will they still be able to do their job faster with less hassle? Make fewer mistakes? Spend less time at the office?
6.  Address their concerns – If you start talking artificial intelligence and machine learning, people will think “layoffs.” Help them see that doing more with less is about helping everyone perform their role to the best of their abilities and not about scaling back.
7. Go slowly at first – You need to assess the organization’s openness to change and then create a plan that lets people set a comfortable pace. With system implementation projects, and Agile approach is recommended.
8. Choose a champion – There’ll be at least one end user in the business that shares your passion for change. They can be instrumental in helping others manage the transformation. Champions are typically natural teachers, other-oriented, and well-liked by their peers.

Companies need to value Change Agents and have solid retention plans for these individuals.  Agents can become targets for poaching, by internal groups and by other companies. Change Agents need to have a development plan that provides a plan for increasing responsibility to encourage change agents to remain in their role. This journey should lead the individual, post project, to a senior role in the organization or the company's permanent continuous-improvement group. This can be a much bigger incentive than cash for Change Agents. Having Change Agents in regular exposure to senior leadership for coaching and development is also a huge motivator for these types of individuals.

Finally, using an external Change Agent often helps solve problems by simply bringing in a new perspective and approach to organizational change. A Change Management consultant can help illuminate problems and find solutions before they begin affecting the workplace, and in the process help develop internal Change Agents and Champions that will drive sustainable performance improvement and efficiencies.

When Operational Technology and Information Technology Collide

What happens when business units acquire or develop new technologies that support more efficient business practices, without the involvement of the IT department?   What may start as a good idea, and not initially seen in the domain of 'traditional' IT, may very quickly result in islands of technology with all of the characteristics of taditional IT - but owned and supported by the operational business unit.


For example, I recently helped a client in the utility industry that had developed innovative technologies that would drive tremendous value to their consumers, the industry and their own top line.  However, these technologies included infrastructure, applications and networks that overlapped those systems that were in managed by the IT department.   This situation had resulted in organizational silos; political tensions; and waste due to duplicated processes with a negative impact on the company bottom line.

CHALLENGES

• Little integration between corporate IT and business technology strategies.
• Multiple accountabilities and responsibilities around technology
• Corporate IT not seen as agile enough to adapt to maturing systems that support new business technologies.
• IT change request process perceived by business as too slow and bureaucratic
• Potential loss of intellectual capital and tribal knowledge due to losses in personnel through retirements and natural attrition.
• Lack of consistent project management discipline across technology projects.
• Security responsibilities split between IT and business units. At the same time, higher risk exists to system via more access points to new wireless networks.

KEY OPERATING PRINCIPLES


We quickly determined that we needed to establish a framework which the C-suite could agree on, before any solution could be found.  These key operating principles were:

• Corporate CIO is responsibile for establishing a technology governance model that should standardize technology policies, practices and procedures and communicate openly and often with the business.
• Corporate CIO needs to have overall oversight accountability for all technologies.
• The IT organization needs to be strategically and tactically aligned with business requirements to be flexible and responsive to changing needs.
• Business unit leadership needs to be accountable for support of operations-specific applications and should be closely aligned to the corporate CIO
• Technology infrastructure needs to be centrally managed throughout the company to help ensure standardization.
• Technology security (cyber and access) needs to be centrally managed across company.

BUSINESS IMPACT TO WAYS OF WORKING


Without going into the details of the solution for this specific client, it sufices to note that the above design framework had a real impact on the "ways of working" across the organization.  Any organizational tranformation initiative would include some or all of the areas below:

• On Technology Governance. Establishment of clear levels of accountability and enforcement of technology standards and policies, as well as strong relationship between corporate and business technology groups.
• On Project Governance. Establishment of strong working relationship with project managers across the company, in order to standardize project methodologies and tools, as well as develop the standards for project management across the company. If possible, leverage and build on existing project management and process standards.
• On Portfolio Management. Development of processes to support project and application portfolio management; assessment and implement tools to support these processes; establishment of procedures to make this work across the company.
• On IT Change Request Management. Migration of the current change request processes under a single group with all associated communications and clear, simple working procedures to ensure complaince while ensuring speed of change.

RISKS TO NOT CHANGING.
If this sounds like a lot of work, here are the risks of not making any changes.

• ‘Islands of technology’ will make integration of newer technologies with enterprise systems difficult.
• Multiple technology strategies – not aligned to business strategy - continued waste due to duplication of processes.
• No single accountablity around technology standards and policies - means no technology standards and policies.
• Limited visibility across company of technology projects may result in poor leverage of learnings and benefits and higher implementation costs.
• Multiple views and approaches to applying cyber security policies across company hieghtens risk to systems.
• Multiple views of technology across company will limit decision making at all levels of organization.

Managing IT in a downturn: Beyond cost cutting

According to the McKinsey report "Managing IT in a downturn: Beyond cost cutting", there are opportunities to drive business benefits even in a slow or bad economy. The authors state that economies around the world are slowing down, and companies are looking for ways to trim spending and improve the bottom line. Although information technology often represents a small fraction of the corporate cost base, senior executives inevitably turn their attention to IT budgets for substantial contributions.

Yet in some instances, IT investments deliver more value to a company’s top and bottom lines—by creating new efficiencies and increasing revenues—than any savings gained from traditional IT cost cutting.

The "sweet spots" for IT improvements during slowdowns include:

• Manage sales and pricing. Develop insights into customer segments and improve pricing discipline to increase revenues without increasing prices.


• Optimize sourcing and production. Rethink supply chains and logistics to improve the scheduling of deliveries and inventory management.


• Enhance support processes. Improve the management and use of field forces (such as installers and field technicians) and of customer support centers.


• Optimize overhead and performance management. Sharpen awareness of risk exposure and improve decision-making and performance-management processes.

How does Green Computing help your business?

Green Computing has come out of multiple programs over the past several years around protection of the environment, corporate social responsibility & sustainability. Sustainable development was defined by the Brundtland Commission as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

Green Computing is driven by technological developments, as well as by implementation of tools and processes that make more efficient use of computers. Some of these are simply "common sense" things that we can do to reduce consumption. Reducing power consumption saves money as well as the load on our resources - is a key factor in the strategic sustainability "triple bottom line" of people, planet and profits.

As the need to capacity and processing power increases, so does the need to cool down these more powerful processors – and increasing consumption of energy. Major initiatives are underway to address this issue, and over the next few years we will see newer cooling technologies being introduced that will reduce our reliance on noisy and power hungry fans on PCs. The Economist recently ran an interesting article how this issue can impact us closer to home.

These and other technological advances are fundamentally changing the way we use computers so that Green Computing becomes a reality – supporting sustainable development. HP has a range of energy efficient solutions built around their ProLiant Servers, while Dell have developed programs and policies around energy efficient computing. Intel too have multiple initiatives underway around Green Computing – from specific targets to reduce CO2 emissions with energy efficient processors to building lead-free and halogen-free devices. Sun Microsystems have created solutions around their Sun Eco Innovations around the ‘greening’ or data centers.

Applications that are run over the web as services (Software-as-a-Service or SaaS) also contribute to Green Computing, if they are built to support the following key principles:

1. Provision of centralized processing and shared services. This reduces the need to infrastructure on the client side, and thus less decentralized processing power.
2. Building of green SaaS data centers. Centralized data centers mean that the innovative technologies, processes and policies can be effectively applied.
3. Greening of the software development process. Using ‘lean’ coding processes like Agile Software Development, means simpler coding processes, faster delivery and fewer energy consuming processor calls.

Here are some of the many blogs where you can find more information about how Green Computing is supporting sustainability efforts around the world.

• Business Green
• Environmental Leader
• Green PC
• Greenmachineshop

Using Web 2.0 to Improve your Business

The growing number of user-driven, web-based appliactions is being called Web 2.0. We all have heard of the success stories around YouTube, MySpace, Blogger, eBay, and a plethora of other sites.

BUT, HOW CAN WE USE WEB 2.0 TO HELP IMPROVE OUR BUSINESS?

Driven by new applications and innovative use of existing applications, businesses are finding new and exciting ways to use Web 2.0 to grow their business.

I was recently sent a link to a site which I think will be of value to you in this regard: "The Entrepreneur's Guide to Web 2.0: Top 25 Apps to Grow your Business".

No doubt that this guide is already outdated :-)

Top Reasons to Upgrade your IT Systems

We live in a connected and automated world of alphabet soup systems - ERP, SOA, CRM, etc - fueled by innovations in software and hardware of an unprecedent scale.

We want to beat our competion by leveraging technology, and technology vendors want our business, which in turn drives investment into better systems that we can leverage.

As your business changes, your IT systems need to be kept aligned with your processes to support your business objectives. In the same way, your business will benefit from taking advantages of improvements in technology. So you may be sitting on software that is a few years old and under pressure to upgrade. Here are 3 good reasons to upgrade your software:

1. Taking advantage of new functionality offered. Sticking to older version means needing to build custom code for desired features that were not incorporated into a product. The newer releases may have the desired functionality built in. While converting to a newer release is a painful experience because of the modifications, it reduces risk. Your code no longer has to be tested each time a patch comes out for the language you used or the operating system changes.


2. Maintenance costs increasing, or hard to find skilled resources in the older versions. So needs to get on the upgrade bandwagon. Often it is difficult to find support staff to support older versions of software. Most people want to stay at or near to the current releases. Finding someone that is competent to work with an old release can be difficult and expensive.


3. Older versions are not compatible with newer hardware and you are locked into old technology. The hardware or operating system is no longer supported by the software vendor. I've seen this one bite companies severely over the years. Software companies shed low sales volume operating systems and hardware platforms to reduce support costs.

Turbocharging Data Access with SAP-BI Accelerator

Naeem Hashmi, Chief Research Officer at Information Frameworks recently published a paper on the new SAP-BI Accelerator that caught my eye. Below is my summary of the points he makes. For a complete copy of his paper click here.

Building a data warehousing architecture requires following a process that begins with defining user requirements as clearly as possible. This too is the case with SAP-BI (formerly SAP-BW). The reason that user requirements are so crutial to define correctly, is that the design and development of InfoCubes is key to how data will be accessed and information presented to the end user.

With a well designed data model, performance has not been an issue for most smaller SAP clients. Any performance issues could have been managed by aggregating data and user data navigation views. However, in larger applications with complex data structures - with time based, multiple-hierarchies, snow-flaked dimensions - data access performance degrades rapidly.

"Now Generally Available BI Accelerator Complements SAP NetWeaver® and Enables Customers to Analyze Large Amounts of Critical Business Information up to 200-Times Faster than Alternative Tools."

SAP Saphire Press Release of May 17, 06

SAP-BI Accelerator is an appliance (blade server) that sits alongside of the BI instance and that works with SAP-BI. Indexes and data are moved to the accelerator that is able to search indices and associated data at lightening speed.

With the SAP Netweaver technology, BI Accelerator serves as a cache at the SAP-BI application server and is at the same time a full InfoCube as well as an Aggregate. To the end user, this application does ad hoc data aggregation at high speed, on the fly, off the Cube based on user queries.

SAP-BI accelerator eliminates the need for aggregates in the data model. So SAP-BI accelerator will simplify data modeling, but will probably introduce (in the short term) some challenges in managing/ changing established processes and best practices. This does not do away with the need to based your design off user requirements, because you still need to build your Cubes, but it will certainly cut down on support costs due to ongoing development of views based on changing user requirements.

In the long term the intention of SAP is to make cubes optional ... but until then we will have to keep them in mind when developing data warehousing solutions in SAP.

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Cheap Technology - for Small Enterprises

Two articles caught my eye in this week's edition of BusinessWeek: The Next Cheap Thing and More To Life Than The Office. What these articles talk about are two ideas that have been around for a long time - that were perhaps ahead of their time.

"The Next Cheap Thing" talks about the use of 'thin client' devices, consisting of not much more than a keyboard, a mouse and a monitor that are linked to a 'server' with the capacity run the require applications and store data - remotely from the device. In this article, Stephen Dukker of NComputing talks about the price devices dropping from around $50 to the point where the "hardware would be essentially free". There are plenty of competitors out there in this market too.

"More To Life Than The Office" discusses Microsoft Office's rivals in the office productivity market. MS Office's (Word, Excel, Outlook, & Powerpoint) dominance in the market at around 95%, is being challenged by others that are competing on price and features.

So what's the connection? Why did these articles grab my attention?

These articles talk about how wonderful this cheap technology is for non-profits, schools, etc. And that is all great, but how do we apply these technologies to commercial enterprises.

Large commercial enterprises would not be interested in moving away from MS Office ... in the short term. MS Office would just be too hard (and expensive) to replace in most places. Not to mention that many comparable products are simply not good enough to fully replace the full suite of MS products used in most larger companies. However, the 'thin client' solution may have applications with certain company locations.

However, what I have seen of many small businesses, is that they simply need an easy to use cheap solution that does the job. A combination of a thin client set up with it's advantages, and suite of applications that support basic office functionality (Internet, email, word processing, spreadsheets, & presentation graphics) will provide a technology platform that will enable small business processes to be automated and thus drive improvement.

Check out a few options out there for cheap office applications:

• OpenOffice: Free office suite from Sun MicroSystems with about 40 million users worldwide.
• Ajax13: Free collection of Web applications that support some office requirements. Still early stages - but watch these guys, they are gaining about 10,000 new users per day (according to the BusinessWeek print edition)
• IBM Workplace: IBM's suite of office products with about 1 million users. Costs around $69.

Yes - there are other free word processing, spreadsheet, email applications out there. And if you are looking for a free web browser - Mozilla Firefox is the way to go.

... so with some creativity and know-how, you can maximize your productivity while minimizing your investment and cost of doing business.

. ... Now that sounds quite entrepreneurial - just what small business is about!!