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| Management Briefings
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Flight time: Ian O'Toole, BSM Consulting (June 2010)
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A key benefit of ERP systems is the efficiency to be gained from the integrated processes
they support. But these integrated processes depend on accurate and well-maintained data,
and any ERP implementation will involve the migration of data from one or more legacy
systems.
Depending on the scale and complexity of the implementation, this can involve anything from
keying in small amounts of data to electronically migrating large volumes of data. Most
implementations will demand the latter and a significant effort in preparing and cleansing the
data for the migration.
This article explains what is required in a migration project, from planning through to
implementation.
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ERP: good, bad and ugly?: Tony Wild, Dawson Berkeley & Partners (April 2010)
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ERP is probably the most powerful commercial system in the world. Most major organisations
run ERP systems. And many companies are now on their second or third-generation of such
systems, so they are experienced and looking to gain greater efficiency through more advanced
features.
Because ERP systems have been in general use for 10-20 years, there is a wealth of
knowledge about their application and management. They run the majority of large
multinational manufacturing groups as well as many diverse enterprises. The continuing
development of applications and package options also enables users to have more advanced
and specific uses.
Of course, when they first appeared, the main benefit ERP systems brought was a great
advance in control for enterprises. This was spurred on by the failure of many older systems to
cope with the millennium (years starting with ‘2’000 were not available).
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Leaning towards ERP: John Dean & Ian Henderson, MLG (February 2010)
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Some people feel the need to always be in one camp or the other. Mods or rockers,
trainspotters or anglers, EastEnders or Coronation Street. The same factor appears to push
many people into either the lean or ERP camp.
Why should this be? Well, there are no doubt psychological reasons relating to the child inside
each of us needing to belong to a club. However, when it comes to business methodologies,
perhaps the basic reason is that sowing the seeds of doubt and confusion sells books and fills
seats at conferences.
Dare we say it as management consultants and interim managers ourselves, but maybe the
debate is stirred by people who see it as a way of encouraging companies to seek professional
support for change programmes?
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Left with a legacy: Michael Burns, 180 Systems (September 2009)
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Legacy systems usually get a bad press. Yet older systems often contain functionality not found in more modern ERP systems,
and would be expensive to replace. As well, the legacy system often gets the job done, so many would argue that ‘if it ain’t
broke, don’t fix it’.
On the other hand, legacy systems clearly lack the improvements made to software over the years, such as a graphical user
interface, ad-hoc reporting tools and easy customisations like adding user-defined fields. In addition, the legacy systems are
often maintained by ageing boomers, who may not be readily available now and will certainly be less available in the future.
One way round the problem is to enhance the legacy system by putting on a graphical user interface or ‘screen scraper’.
Again, if the underlying database can be accessed directly or through tools such as ODBC, a modern report writer can be
deployed. Another possibility is simply moving data to a data warehouse and using business intelligence tools to get at the
information.
A compromise solution is a best-of-breed approach maintaining some components of the legacy system.
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Does ERP do lean?: Anthony Chrumka, Logica (June 2009)
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Since their emergence in the early 1990s, ERP systems have established a wide user base in
medium to large-scale companies. Even today, there are still plenty of firms installing ERP for
the first time and existing users upgrading or extending legacy systems.
Over the same period, a significant number of companies have expressed similar interest in the
‘lean’ approach to performance improvement.
Lean promises to deliver what companies feel they need to be competitive: shorter lead times,
less inventory, improved quality and reduced cost. Lean systems thinking becomes particularly
attractive to companies faced with low-priced competitors or during periods of recession.
With so many companies using ERP and looking to adopt lean, now is a pertinent time to ask:
can ERP do lean? Are the two systems mutually supportive? Is there synergy? Compatibility?
ERP is an enterprise-wide IT system that acts as the main database for a significant number of
modern organisations. Lean, meanwhile, is primarily a management philosophy that focuses a
company on continuously improving the way it competes and operates.
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Are you a winner or loser?: James Campbell, Logica (March 2009)
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Organisations have been continually revising their enterprise business processes and systems –
whether changing existing processes internally, outsourcing entire processes to a third party or
introducing new processes altogether. And many different approaches have been tried: total
quality management, process re-engineering, introducing new ERP technology and lean
manufacturing, to mention but a few.
But which approaches are most successful? To find out, and to assess the impact of enterprise-level
business process change, Logica Management Consulting and the Economist Intelligence
Unit conducted a multi-industry survey among 380 executives in Western Europe.
The survey results show that companies are spending significant amounts on major business
process change initiatives – and will keep doing so for the foreseeable future. Nearly three-quarters
of the executives say their organisation spends 1-6% of its revenue every year on
business process change, with one in twelve spending 7% or more.
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Shock of the old: Frank Crewe, BSM Consulting (January 2009)
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Twenty-five years after the philosophy of enterprise resource planning (then known as
manufacturing resource planning or MRP II) first emerged on the scene, many organisations still
struggle to implement new business systems and often fail to realise the benefits which were
envisaged in the original business case.
With all the knowledge that has been built up during the last quarter of a century, and with
today’s systems being more powerful, more functionally rich and more reliable than ever before,
why is this the case?
Most organisations find it necessary to review their strategy relating to ERP systems every
seven to 10 years. This usually happens because the requirements of the organisation have
changed or because the existing systems have evolved to a point where they are difficult to
manage or it is no longer economical to develop them further.
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Cutting costs from cradle to grave: David Dutt, Ernst & Young (September 2008)
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Is your (undoubtedly expensive) ERP system leaking your hard-earned revenue? Before you
answer emphatically ‘no’, may I suggest you pause for a moment, because the next question is
going to be ‘How can you be so sure?’.
The wealth of benefits and opportunities offered by ERP systems are well-documented – as are
the challenges of implementing them successfully.
As the first letter of the acronym indicates, ERP systems are designed to operate at the
enterprise level with their related business processes. However, the key enterprise area of
governance, risk and compliance (GRC) has not kept up with the integrated world of business
processes and ERP systems.
I am not referring here to the GRC functionality and tools provided by ERP systems and other vendors but to the overall
approach taken to GRC by organisations, and the policies, procedures and mechanisms by which GRC is designed,
implemented, operated and embedded. The costs of not keeping up are high indeed.
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Do you speak geek?: Ian Robinson, ThoughtWorks (August 2008)
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Building enterprise software is a social activity. With IT now a fundamental pillar of many
business activities, sustainable business and IT initiatives require input from a diverse group of
people – and so communication and collaboration are key.
Yet the results are often very disappointing. This article outlines a way to maximise
communication in ERP and other enterprise-level software projects. To identify, define and solve the needs of the business, enterprise software teams are required
to make models, or representations, of the business. In the course of the project, many different
kinds of representation can be made: from natural language representations of a business
problem, through logical and conceptual representations of a solution, all the way to executable
representations – the working code itself.
At each step, some representations prove to be more useful – more expressive, powerful or valuable – than others.
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After the party's over: Stephanie Snaith, Gradient Consulting (May 2008)
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Well that’s it then – you’ve gone live, temporary staff and vendor representatives have left the
building and the old system has been switched off. Your stakeholders have seen all their
objectives delivered, the users love the new ERP system and don’t sigh wistfully for how things
used to be. The new system seamlessly supports working practices and there are no errors or
issues outstanding.
If this were always the case, there would be no need to write this article – but in my experience
this just doesn’t represent reality. Most ERP investments fail to deliver all that was desired at
the start of the project. But businesses do not have to accept this; there is a lot that can be
done to optimise an ERP solution.
ERP serves as an all-important information pipeline that links finance, manufacturing, logistics, sales and other departments.
This allows the various departments to share information and to smoothly process transactions.
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Innovate to accumulate: Kartik Iyengar, Wipro (March 2008)
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Organisations continue to evolve – either through organic or inorganic growth. As such, they
require an IT environment that can easily be adapted to support changing business requirements.
For example, when there is a merger or acquisition, organisations need to support a multitude
of new IT applications and processes across their value chain. And unless your IT environment
is adaptable, it will be very difficult to achieve rapid post-integration benefits.
That is why companies are looking for an holistic business process platform from which they
can manage change.
In the changing world of Web 2.0 and mash-up corporations, there has to be a new approach to
solving this perpetual nightmare. So as a solution here, I’d like to propose ‘reverse-engineered
composite applications’ or ‘reverse-engineered xApps’ – otherwise known as ‘RexApps’ .
It’s time that IT helped the business to monetise their enterprise applications and SOA initiatives – and I believe this approach
will do that.
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Moving mountains: Rod Horrocks, Procertis (January 2008)
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Many people underestimate both the power and the difficulty of change. This is especially true
when it comes to implementing systems that, by every rational measure, should result in
improvements for all concerned. Why is effective change so difficult to achieve? And why,
despite their best efforts, are organisations so often disappointed in the results?
The answer is they need to set technology criteria to one side, and focus on the context in
which their business processes operate. Put technology back in the box, analyse the real needs
of the business first, and master the forces of change.
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Maximising performance: Ken Perrello & Mike Hartley, Deloitte (July/August 2007)
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These days, IT directors know that information technology plays an increasingly vital role in nearly every strategic initiative –
customer relations, marketing, globalisation, R&D and outsourcing, to name a few. What was once a technical, back-office
concern has undergone a sea change. Many corporate boards now consider IT to be an untapped mine rich with possibilities
for their companies’ future results.
This is confirmed by a Deloitte survey of 455 directors at publicly traded companies, each with revenues of more than
$1 billion, and across 35 countries. We asked these directors to name their most pressing IT issues, such as how to become
more involved in IT strategy, how to link such a strategy to their companies’ performance, and how to monitor and justify IT’s
costs and return on investment.
But while the survey shows that directors recognise the importance of IT, challenges still exist – namely how to treat IT issues
within the context of the board’s role and how to grapple with IT’s inherently complex nature and rapid pace of change.
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Marriage made in heaven: Jim Correll, Oliver Wight (May 2007)
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For years, companies have often felt they must choose between two approaches to
manufacturing process control: ERP or lean manufacturing. Most have installed ERP systems,
but many aren’t getting the results they were looking for.
Is lean the answer? Are ERP and lean mutually exclusive? Both have powerful capabilities, and
every company needs to understand how they relate to each other. For many, the best
approach is to learn how to apply the combination in their environment. The payoff can be
world-class results. ERP is a combination of software and processes that provide the capability to manage a
company’s resources, which include people, equipment and facilities.
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Do the right thing: Ken Gorf, West Trax (March 2007)
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A European study carried out recently by West Trax examined the true value users derive from their SAP enterprise resource
planning systems. The results show that some organisations with more than 500 users are wasting millions of euros every
year.
Industry analysts such as Gartner, AMR, Nucleus and Butler regularly express doubts about whether enterprises gain real
value from investments in IT. They point out that while organisations may make great efforts to justify their projects on the
basis of expected long-term ROI and business alignment benefits, most fail to conduct ongoing post-implementation reviews to
track strategic metrics, such as realised value and benefits against the original goals.
After system rollout, many organisations focus on monitoring purely tactical metrics such as service levels and support costs –
they don’t measure the actual value delivered. The problem with this approach is it offers no indication of whether the system
is delivering its full potential to improve the performance of the business in terms of adding value, increasing productivity or
maximising competitive advantage.
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Seven blunders of the ERP world: Rod Horrocks, Procertis (December 2006)
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How did ERP become one of the most tarnished silver bullets of business change – and what
can we do to unlock its potential? The technology keeps advancing and the underlying
rationale for ERP hasn’t evaporated: we still need to reduce inventory, slash the costs of
delivering products and services and make our operations more flexible. Yet the best ERP
implementations we see in today’s businesses struggle to deliver 20% of the headline
promise.
The problem isn’t with the concept, or the enabling technology, or the complexity of deployment.
The failures all point to one source: the (mis)management of implementation. By recognising
the classic mistakes that implementors make, and following some straightforward management
guidelines, you can unlock the benefits of ERP to create the efficient, responsive business you
need to compete.
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Delivering the goods globally: Tony Evans, TEA (September 2006)
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Currently, two types of software package serve the ERP software market for
internationally scaled businesses. Firstly there are those systems that are available
across a large number of countries, address local requirements (language, currency
handling, inventory accounting, financial rules, etc) and can be used independently
across the world. This type of system has been used by companies adopting a common
(but not integrated) systems strategy.
A second type comprises applications that can be used to support integrated pannational
operations in a single implementation. These offer the same functionality as the
first group, plus much more comprehensive support for transfer pricing, goods-in-transit
visibility and control, and group structures. Other features supporting pan-national ways of working include multilanguage/
multi-currency order taking in a single site, and enhanced decision support in areas like where/when to supply
from, where/when to manufacturer or buy-in and, where applicable for faulty goods, where/when to repair/replace/buy.
SAP R/3 is the leading package in this second type of ERP system.
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If you're not going to make money from ERP – don't do it: P Summerfield (Aug 06)
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The papers are still busy telling us that the majority of IT programmes fail to deliver value to the
business, and that this trend has increased with major ERP programmes and in the public
sector. It is a very sad fact that whilst ERP and IT have come a long way from 25 years ago, far
too many companies are still not gaining the full benefits from their investments.
So, am I suggesting that companies should stop investing in their ERP programmes? Absolutely
not. In fact I believe that the investment should increase if anything, but a change is long
overdue and we need to focus on the ‘tipping point’ of benefits-driven ERP/IT. I should explain myself here. Of course, all organisations spend time building strong business
cases to justify the major investment in their new solutions and they sign this off at board level
before spending their hard-earned money. The processes surrounding this are sometimes
nearly as complex as the implementation itself. The business is asked what they need and the
plan is built around this. The ERP programme director/manager has a budget to work to and this is given sharp focus during
the steering committee meetings. The programme runs and finally goes live. There is a massive interest and pride in delivering
everything on, or even under, budget.
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Buried treasure: Martin Southern, Shark Finesse (June 2006)
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Unusually, our work takes us deeper into the world of business cases for ERP than anyone else I know. But before you stop
reading, I can confirm that this is not an advertorial – as the majority of readers are never likely to be our future customers.
So relax, because now we will share with you some real-life experiences of business cases and provide a light-hearted insight
into the murky world of ROI (return on investment) and business case justification for ERP installations. Not interested in this
subject? Well bury your head in the sand at your peril – because like everything else in life, there are always lessons to be
learned, and no-one knows it all. Businesses exist to generate profits, fulfil their planned objectives and to an extent serve the community at large. Good
business decisions are essential to protect long-term business strength and ensure benefits for everyone. But what constitutes
a good business decision and how can these be determined from an economic perspective? Let’s take a simple example…
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Better business performance: Cliff Mills, PMP Research (April 2006)
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Organisations, both large and small, need to deal with a range of challenges to survive
and prosper in the increasingly competitive business climate. The adoption of enterprise
software solutions has been one route that many businesses have chosen to meet these
demands.
But how well are companies progressing in the ERP and enterprise area, and how do
they perceive their enterprise solutions? To find out, PMP recently interviewed 100
senior IT and management staff for their views on their deployment.
The survey found that controlling and managing costs is still seen as the most crucial
issue facing managers but not far behind is the continual requirement to improve the
service delivered to customers and hence retain customer loyalty.
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Seven steps to successful ERP: Tony Wild, Dawson Berkeley & Partners (Feb 2006)
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A visit to a company using ERP systems can be disappointing. This potentially wonderful
system often does not produce the benefits that it should – usually it gives good results
in many areas, but does not do all the things originally expected. This should be a
warning to prospective ERP implementors, but not a deterrent. For the future survival in
business, companies must use integrated controls across the company – and these are
embodied in ERP.
The barriers to getting ERP working properly are fundamental to introducing any change.
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