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The greening of ERP: Stephanie Snaith, Gradient Consulting (July 2010)
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At Gradient Consulting, we work with the Business Excellence Model whose 2010 rewrite is
heavily focused on sustainability – viewing this as essential for all organisations in the 21st
century. As a result, we have turned a sustainability lens onto the ERP packages that we work
with every day, to see how they might support businesses adopting a sustainability strategy.
Clearly, as the world edges out of recession, there is a strong drive to create an economy
based on sustainability. This goes far beyond the green aspects usually associated with this
term: it’s about ensuring businesses work in partnership with their people, customers and
suppliers to secure both their own and the planet’s future.
At the same time, people’s trust in the bastions of society has been eroded and we are now
empowered to question business ethics in a way that has never been seen before. There is a
focus on the triple bottom line of ‘planet, people, profit’ – achieving a balance between
economic progress, social responsibility and environmental protection, which can lead to
competitive advantage.
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It's a vision thing: Nigel Underwood & Alex Nicoll, Design Assured (March 2010)
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The implementation of an ERP system is probably the most controversial, costly and energyintensive
IT project that any business can undertake. An ERP package will underpin the core of
the company, improving effectiveness and efficiency across its front and back-office activities.
It’s a project that will touch virtually every part and process of the organisation, more often than
not requiring a business change to meet the ERP system’s processes.
It is also a project that requires immense experience, and focus – the one thing that is
probably the most difficult to obtain. In addition, it is fraught with personal opinions and
agendas; everyone seems to be a solution architect and to know what’s best for the
business.
Then there is the debate on how you go about such an implementation: are there the skills
inhouse, should there be an SI (systems integrator) onboard, what about independent
consultants, what is the best way to frame the project?
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Host-age situation: Roger Fleury, Ardent Solutions (October 2009)
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As IT departments continue to operate on reduced budgets brought about by the recession,
companies are aiming to squeeze all they can out of their current IT systems to ensure they are
getting the most bang for their buck.
Yet at the same time, every organisation needs to be able to respond ever faster to new
revenue opportunities and markets – a shift in strategy that typically requires IT support and
investment in software tailoring at the very least. So companies face two key questions: given the major costs associated with maintaining and supporting traditional legacy systems,
and the severe constraints such systems impose in the ability to react to strategic change, will
this recession prove to be the end for un-integrated, ageing systems?: and while it may go against the grain to invest in any new technology today, how many
organisations can afford to be inhibited by their current IT infrastructure?
Those organisations that best withstand this tough economy will be the leanest and fittest and those that are able to react fast
to changing market conditions.
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Pushing the envelope: Dave Darling, Charteris (July 2009)
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It’s generally true that the more advanced a technology becomes, the less you notice it. Fly in a
First World War biplane and you won’t forget for one moment you’re flying in a plane: the
noise, the goggles, the wind in your face and the precarious progress will leave you in no doubt
at all.
But fly across the Atlantic in a modern-day jet and it’s easy to forget you’re in a plane at all;
especially if you fly at night, when big planes resemble flying cinemas, even down to the
dimming of the lights.
Similarly, when Charles Babbage’s partial prototype cogwheel computer performed calculations,
the grinding of its cogwheels left no-one in doubt they were seeing a machine in action, and a
pretty cumbersome one at that. But today, computers are so much part of our lives that we
often aren’t even aware of them.
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Making your system sweat: Frank Crewe, BSM Consulting (May 2009)
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During the growth years before the current economic downturn, many organisations implemented new ERP systems – yet
most have failed to realise the benefits which were envisaged in the original business case.
In today’s economic environment there is little appetite or cash to extend or replace these systems. This puts the onus on
companies to understand the reasons why the benefits have not been delivered in order to drive further returns from their initial
investments. The success of most ERP implementation projects is judged by the traditional ‘on time’ and ‘within budget’ metrics. Based on
these two criteria, many projects are deemed to be successful; the system goes in more or less on time and roughly within
budget.
However in most cases the original business benefits which were promised as part of the justification for the project are not
measured, and therefore it is not clear if they have been delivered. In Figure 1, we consider overall project success as a matrix
which takes into account the on time/within budget measure as well as the benefits delivery measure.
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Spending for survival: S Snaith & C Metcalfe, Gradient Consulting (April 2009)
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Right that’s it, we’re in a recession. Everything stops, we need to cut costs as far as
possible, including redundancies, put all projects on hold, stop talking to the supply
chain, cut marketing and training budgets and wait until the recession is over. Certainly,
all investment in our ERP systems must be shelved.
That could be the thinking in many organisations. But in fact this is an ideal time to
invest in ERP, with the potential that returns will be higher and investment reduced.
Looking ahead, organisations should be seeking to exit this recession in a position of
strength. To do this, it is vital that the business knows where its niche markets are, which
product ranges and contracts are most profitable and how it can leverage competitive
advantage. Unfortunately, many businesses simply don’t have this information.
When times were good, orders were flooding in and profits were being made, it didn’t seem important to stop and question
which parts of the operation were profitable. It was fine for the strategy to be simply ‘keep doing what we’re doing’.
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ERP means people: Paul Deed, SkillSet (February 2009)
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Over the last 10-20 years, companies have invested billions of pounds in enterprise resource
planning (ERP) and other enterprise-level IT systems – and yet the anticipated benefits still fail
to materialise.
In Skillset’s experience, companies can increase the returns from their ERP investments
systems in two main ways: applying change management principles to the rollout of new systems – focusing on what is
needed to change the way people work; and working with individuals and teams on process improvements, using Microsoft applications. Whether it’s implementing new ERP systems or undertaking a broader restructuring, most of the
companies we work with are introducing something new. In order to obtain the promised benefits, it is important to understand how to manage the change process effectively.
Unfortunately, many companies suffer unnecessarily by underestimating the work involved and by not acknowledging the effect
that people have on a process.
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State of nirvana?: Prof Andy Neely & Dr Bassil Yaghi, Cranfield (Nov/Dec 2008)
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Enterprise performance management (EPM) has taken the world by storm. AMR Research
estimates that $57 billion will be spent on EPM and related applications in 2008, around
$26 billion of this in the US. Gartner surveys repeatedly rate enterprise performance
management and business intelligence as the number one issue for CFOs and CIOs.
Gartner’s most recent prediction is that the revenues for enterprise performance management
and business intelligence will continue to grow at a compound annual growth rate of 8.6% until
2011. Meanwhile, Forrester reports that 5% of the queries it has received since 2007 have
focused on EPM and BI specifically.
Meanwhile evidence suggests that EPM and BI thrive in tough economic times almost as well
as in good times, not least because of the potential these technologies have to reduce
organisational processing costs. The promise of enterprise performance management is that it can help integrate disparate
management information systems – ERP, planning & budgeting, forecasting, financial
consolidation and statutory reporting, scorecarding and strategic performance management –
into a seamless whole, delivering the right information and insights to the right people so they
can make the right decisions at the right time.
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New business process revolution: William Edmond, Sapient (June 2008)
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Business process-centric approaches are changing the way we do business, once again.
Gartner recently identified business process management (BPM) as one of the top three
strategic technology considerations for 2008. This is primarily being driven by cost and
consumer pressures from increased competition within the globalised digital economy.
Businesses need to do more with less – translating into an imperative for a new level of process
agility and a culture of continuous process transformation, with a clear impact on organisations’
core ERP systems.
Enabling this requires a rethinking of organisational structures, governance and supporting
technology systems. The management discipline that guides this is business process
management.
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The road less travelled: T Lebarnoff & S Heinz, Diamond Consultants (April 2008)
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Not long ago, a US-based
international publishing
company started a longawaited
ERP project by
launching a small pilot in
another country. The
company’s plan was to
immediately follow that test with
a larger installation in its home
country.
Things didn’t work out as
expected. The initial ERP
installation failed – miserably.
The way the software had been
set up to handle specific
business processes wreaked
havoc in the organisation. To cite just one small example, the company had to hire 20 additional people in a call centre
to keep the operations running. The larger rollout was put on hold and it took eight long months to bring the overseas
business under control.
Unfortunately, what happened at this publisher is not uncommon. These days, ERP projects equate to big business.
Companies of all types are turning to the software to manage a wide range of functions – everything from finance
operations to human relations and procurement.
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Following the money trail: Jacob Varghese Vaidyan, Charteris (February 2008)
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Although enterprise resource planning systems are typically the single largest IT investment any
company makes, the business and financial implications of owning, maintaining or implementing
an ERP system are not always understood.
ERP systems are one of the most-used application in a company, alongside its email and
office applications. For most enterprises, ERP is also one of the cornerstones of their IT
strategy.
This article seeks to improve the understanding of ERP systems for senior finance
professionals by looking at these systems from the cost, benefits and business cycles points of
view. Firstly, let’s try and answer the question: why is it important for the CFO or any senior finance
professional in a company to know about ERP?
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At your service: David Hofferberth, SPI Research (December 2007)
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The term ‘ERP’ has moved beyond just core financials to encompass many of the other
applications necessary to build a world-class professional services organisation (PSO) and
increase both productivity and profitability. Some of these integrated modules include: financial management – the core solution required to accurately collect and report on
financial transactions; customer relationship management (CRM) – the running of client relationships to improve
effectiveness with communications, sales and services delivery; procurement management – the control of product and service purchases; human capital management (HCM) – the tracking of human resources from recruitment
through to termination; project and services delivery (PSD) – the initiation, planning, execution and close of projects and services; and business intelligence (BI) – the assembly and use of information to improve decision making.
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One for all?: James Neophytou, IBM (November 2007)
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It is generally agreed – both by consultants and companies who have implemented enterprise
resource planning systems – that to successfully introduce ERP software, you must review all
your current processes and align them with the best way to use the package.
For example, with a manual system you can ‘get away’ with poor data accuracy because people
will spot obvious mistakes and, since they know which data is uncertain, they can make
appropriate corrections. But not only do computer systems not allow for incorrect data, they
compound any data errors because each error affects all dependant and related data on all the
integrated modules.
So a culture of data accuracy is vital if an ERP implementation is to be successful. It is also
generally agreed that, with the possible exception of finance, all ERP modules have to be
implemented at the same time (big bang approach) as each module depends on the others.
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Magic bullet or flash in the pan?: Keith Bedingham, Verax (September 2007)
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Enterprise resource planning is as old as the hills. I found a definition of ‘management’ from before the Second World War
which describes it as “the planning and organising of resources (human, financial and physical) to achieve pre-agreed goals
and objectives.” If that’s not what ERP is about, what is it?
Wikipedia defines ERP systems as follows: “ERPs integrate (or attempt to integrate) all data and processes of an organisation
into a unified system.” It also says that ERP evolved from MRP (material requirements planning), a system of manufacturing
management that was not flexible enough to cope with frequent changes of sales forecasts. ERP is likely to include additional
functions including payroll and accounting functions.
As you can see, the above description tends to view ERP as an end in itself. Nothing in the definition gives a clue about what
ERP does, its benefits, etc. It is in effect a monitoring and control system that ought to provide information to managers to help
them make better decisions about running the business.
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Uncommon sense: Ian Henderson, MLG Management Consultants (June 2007)
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Common sense is, of course, anything but. Indeed when it comes to the implementation of
business systems it’s a lot more than uncommon – it’s as rare as rocking horse droppings.
This may result from the hype and ever-evolving jargon that surrounds modern packages and
methodologies – people don’t like to question things and thus send out signals that they aren’t
up-to-date.
It may also be that many implementations are now delegated to enthusiasts. ‘Train spotters’ is
the appropriate term, conjuring up the perfect image. “Yes, we’re using the MRP option VB for
bulk raw materials”, is spoken with the same hum of excitement as “my brother and I once saw
the Flying Scotsman and we had matching flasks”.
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ERP survival guide: Phil Robinson, BPIC (April 2007)
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The success rate for implementing not just ERP systems but all large software packages
has never been very good. In survey after survey, in the US, Europe and elsewhere, less
than one third of systems meet the basic criteria set out at the start of the
implementation.
Too many software engineers know how the software works but do not know how to
integrate it into the business in a way that delivers real business benefits. With ERP
packages costing hundreds of thousands or even millions of pounds, this is frightening.
The question is – how can you minimise the chance of failure or, more difficult, rescue a
package that is not delivering sufficient business benefits to justify the cost of
implementation? The good news is that, when properly implemented, an ERP package
can be the most cost-effective project a company has ever seen.
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Pick me, pick me!: Ceri Williams, The Integration Practice (February 2007)
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Should the ERP system drive the IS strategy, or should the IS strategy drive the ERP system?
Because when you examine the propositions underpinning ERP system deployment and IS
strategy, they look uncannily similar – integration of information, process automation,
economies of scale and rationalisation to name but a few.
So how can the two approaches co-exist? Are they in competition with each other or are they
complementary? This article explores this problem relationship, considers the typical areas of
conflict and how this can be turned into a creative tension that promotes both at the same
time.
ERP vendors are busily repositioning their packages as flexible, modular, composite services
platforms that contribute to the top-line. It is true that ERP systems are not the monoliths they
were; they now have extensibility and integration frameworks bundled in.
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ERP's emotional journey: John Rozek, SkillSet (January 2007)
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Major ERP change projects have been a fact of life in the business world for several years now – so why are there so few
examples of true success? ERP projects can only be deemed successful when teams have willingly adopted the new, effective
ways of working, are skilled in the new methods and are motivated in their work. And whilst the correct organisational structure
and the need for suitable business processes must not be underestimated, it is people who really make or break change.
The beautiful thing about human beings is that we are all individuals. Different personalities create the wide spectrum of human
behaviour – great for variety, but very difficult for the manager trying to implement an ERP programme.
Each person responds differently to change. Albeit to differing degrees, every person responds both emotionally and
motivationally to the new challenges.
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'Magnificent Seven' guidelines for success: D Ollerhead, Decision Focus (Oct 06)
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In the movie ‘The Magnificent Seven’, a besieged village seeks outside help to relieve itself from bandits. It winds up being
helped by seven talented gunslingers. Each has a different reason for responding to the villagers’ urgent call.
Organisations in business, besieged from all sides by competitive pressures, can sometimes seem a lot like that village. Faced
with the challenge of developing a really effective enterprise systems strategy that plays a crucial role in maximising your
competitive edge, it is all too easy for everyday business pressures to render the strategy excessively reactive rather than
proactive, or even for it to be sidelined completely.
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Sharpen your edge: Rob Morton, LogicaCMG (July 2006)
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You have invested significant capital into integrating your corporate IT systems and installing a new ERP software platform for
managing your customer relationships and supply chain; you’ve re-designed your processes to take advantage of the new
technology, maybe even offshoring some parts of the work process. yet still the results fail to impress analysts, shareholders
or, for that matter, your customers. Despite all the effort and cost of the ERP implementation, the returns seem slow in
materialising, and your people feel under as much or more pressure than before.
There are steps you can take to realise benefits more effectively, ‘sharpening your edge’ by rigorously engaging people in
achieving those benefits. Research shows that the ‘soft’ side of change – people-related engagement, for example – is actually
more important in turning enterprise-level technology and process improvement into superior performance.
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Who's running this business?: Malcolm Hunt & Tony Cowderoy, MML (May 2006)
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The success rate of ERP implementations has doubled since the techniques that lie at
the heart of modern ERP systems were introduced over 30 years ago. That looks
impressive until you compare it to the dramatic advances made to the functionality of
these systems over the same period. The sad fact is that still only a minority of
companies are getting a realistic return on their investment.
Surveys show that the success rate – where success means benefits that exceed the
costs – is still languishing at around 20%, meaning that a staggering 80% of
implementations fail to deliver any measurable net business benefit, although most can
be classed as technically competent.
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Breaking down the barriers: Colin Bezant, KPMG ERP Advisory Services (March 06)
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A global ERP solution can seem like a ‘holy grail’, a perfect solution to a CIO’s need to
standardise systems and processes across an organisation, while delivering a
competitive capability. Yet it appears that very few global ERP implementations are
delivering planned benefits and most have stopped far short of their original
expectations. Nevertheless, the demand for such solutions has never been higher.
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