Concept Soft

Concept Soft Concept is a recognized leader in enterprise management software industry in the Greater Arab region.

07/02/2013

ERP’s Big Bang Theory

One of the difficult decisions of an ERP implementation is the implementation strategy: do you take the big bang approach and get it done with quickly, or do you slowly phase in new processes and technology over time?

The answer is that it depends. The appeal of the big bang implementation strategy is that it focuses the organization for an intense and relatively shorter period of time than if the project were phased. This often helps address long-term resource shortages. It also condenses the pain and difficulty of an ERP project into a shorter period of time, although the pain is typically more pronounced using this approach.

The downside of the big bang implementation approach is that the project is often rushed, details are overlooked, and changes to business processes may not be the best ones for the organization. And, as mentioned above, the pain is often more severe due to the hectic nature of this approach. More often than not, my experience has been that projects that implement an overly aggressive big bang approach are more risky and result in less satisfaction with the system’s abilities to meet important business requirements.

The other end of the spectrum is to follow a slower, phased approach. This can either by functional business area or geography. The appeal here is that is allows project teams to take their time in the planning, customization, and testing of the system while continuing with day-to-day jobs.

The downsides are that these types of phased projects often lack the urgency and focus of a big bang project. It can also lead to “change fatigue,” which can cause employees to become burned out on constant change. Instead of getting the project over with in a shorter period of time, these projects involve constant change over longer periods, which can be draining to employees.

So which approach is the best? Both approaches have their clear pros and cons. At the end of the day, it is important to find a balance between both that works best for your organization. Implementation schedules need to be aggressive, but not to the extent that they cause you to overlook important details or make sub-par decisions. It is often helpful to do the project in multiple (but aggressive) phases to help focus the organization and create a sense of urgency.

06/02/2013

Does ERP Really Lead to Labor Cost Savings?

We’ve all seen the business cases related to how ERP will save X Corporation $X millions of labor costs in just a few short years. But how real are labor cost savings in ERP implementations?

The answer is that it depends. Most companies fail to go back and measure their post-implementation business results, so it’s likely that these companies are not realizing the benefits that they projected in their business cases. After all, if it isn’t measured, people probably aren’t being accountable for improving the results.

Labor savings is probably one of the toughest costs to realize. Even if and when ERP improves business processes and makes employees’ jobs more efficient, the dollar savings don’t just magically appear. To realize the savings, you have to do more work with less people, which means reductions in the number of full-time staff. This is the hard part.

FTE reductions and the correlating cost savings don’t necessarily require mass layoffs. Companies with aging workforces typically have a high number of employees eligible for retirement. Many companies have high turnover due to employee attrition. Other organizations have opportunities for employees to fill other jobs in other departments.

When building the business case, it is important to identify how labor cost savings will be realized. Will staff be reduced by re-assigning them to job vacancies or by simply not replacing employees as they resign? Or, will your organization be more aggressive and layoff people in areas that no longer need the higher levels of staffing? Whichever approach you take, it is important to clearly understand how you will realize labor cost savings. This requires tough decisions, as well as a thorough analysis of where the exact cost savings will be achieved.

In addition to identifying and realizing the reductions in staff, it is also important to identify how remaining employees’ jobs will change. How will their workloads change? What are the expectations in their new environment? Why are the job reductions necessary? These are all questions that should be addressed as part of an effective ERP organizational change management program. Ensuring that remaining employees are clear on their roles and expectations is even more important than the cost savings that you will realize from reduced staff.

All of these items are keys to realizing real, tangible ERP business benefits and should be the part of any effective ERP benefits realization plan.

02/02/2013

Strong ERP Implementation and Organizational Change Management Projects are Driven by Business Performance Improvement

Successful ERP implementation and organizational change management projects require a strong focus on business performance improvement. Business Performance Improvement demands that your core business processes be optimized for efficiency and are aligned to company goals. This will ensure maximum visibility and control, while also producing immediate and lasting improvements.

Optimized and Aligned Processes Require:
Processes aligned to strategic focus and goals
Ground truth process visibility
Quantified business value
Productivity impact driving top-line revenue and cost reduction
Customer value and service focus
Deploy technologies that drive your most critical process with automated workflows and integrated data that support increased throughput, consistently high-quality delivery, and timely and effective decision-making.

Enabling Technology Means:
Designed to identify and improved process capability
Vendor-neutral and selected on the basis of business value
Staged for ex*****on in rapid ROI phases
Focused on customer value and productivity gains via data and workflow integration.

A High-Performance Organization Encompasses:
A process-based, vertically and horizontally aligned goal system
Optimized organizational structure and authority relationships
Fact-and accountability-based performance management
Clear understanding of company direction and goals
Design your organization to excel, with coordinated and focused action across functions and levels, and with the leadership, structure and incentives to reliably generate high performance

This criteria set is at the forefront of Concepts Soft ERP implementation and organizational change management projects. Our experienced consultants, together with our proven methods and fresh thinking, will utilize this methodology to help organizations meet even the most challenging goals.

02/02/2013

ERP Software Clash of the Titans: SAP vs. Oracle

As our ERP research has shown, both SAP and Oracle eBusiness Suite (EBS) have strengths, weaknesses, and tradeoffs. Different clients have different needs, ranging from functional requirements, technical maturity, tolerance for risk, budget, and a host of other factors. The vast differences between these two ERP solutions are underscored by the fact that we often recommend different solutions for different clients in the exact same industry.

So what are the differences between these two solutions? Although there are numerous variances in the detailed workflows and functionality of the solutions, there are five key high-level variables to consider when evaluating SAP and Oracle EBS:

1.Best of breed functionality vs. more tightly integrated modules. The software strategy of the two vendors could not be much different. While SAP has built a solution primarily from the ground up, Oracle has grown primarily through acquisition of best-of-breed point solutions. For example, Oracle has acquired Demantra for advanced sales and operations planning, Hyperion for financial reporting, and Siebel for CRM, while SAP has built much of this functionality into its core ECC and All In One ERP solutions.

2.Product roadmap. SAP continues to build upon and enhance its core product offering, while Oracle is moving toward Fusion. While some may suggest that Oracle is more innovative or visionary in its technology direction, it also means that there may be more uncertainty with Oracle’s product lines. This is especially true for clients considering Oracle’s JD Edwards and Peoplesoft solutions.

3.Flexibility. Although very powerful, SAP can be more difficult to change as a business evolves. This is both a strength and a weakness: it is tightly integrated and helps enforce standardized business processes across an enterprise, but it can be more difficult to modify the software to adjust to evolutions to core processes and requirements. Oracle’s best of breed approach, on the other hand, can allow for more flexibility to accommodate changing business needs, but this strength can become a weakness when it becomes harder to enforce standardized processes across a larger organization.

4.Implementation cost, duration, and risk. Although both solutions typically cost more and take longer to implement than most Tier II ERP software, there are distinct differences between the two. Oracle has a slight advantage in average implementation duration and an even larger advantage in average implementation cost, at 20% less than SAP. SAP, on the other hand, has the lowest business risk of the two, measured via the probability of a material operational disruption at the time of go-live.

5.Business benefits and satisfaction. This is perhaps SAP’s greatest strength. Although Oracle has the highest executive satisfaction level of all ERP vendors included in our 2008 ERP Study of 1,300 implementations across the globe, SAP leads the pack in actual business benefits realized. Assuming the #1 reason most companies implement ERP software is to achieve tangible business benefits, this can be enough to justify SAP as a solid solution for many companies.

While the above points highlight some of the key differences, there are a number of similarities between the two. Both are aggressively pursuing Software as a Service (SaaS) and/or on-demand ERP offerings. Both are also more likely to take longer and cost more to implement than other ERP solutions in the marketplace, such as Microsoft Dynamics ERP, Epicor, and Infor, even when normalized to account for larger clients. And both are scalable, able to handle international requirements, and proven among larger organizations.


The key takeaway here is that, as with any ERP solution, SAP and Oracle both have their strengths and weaknesses. One solution may be the best fit for one organization, while not a good fit for others, even within the same industry. The only way to make sense of the pros and cons in a way that is meaningful to your organization is to engage in a robust ERP software selection process that considers your requirements, priorities, and competitive advantages to find the right fit.

31/01/2013

Don’t Let a $2M ERP Implementation Tell You How to Run Your $100M Company.

I had an interesting discussion with a prospective client the other day about the pros and cons of customization during an ERP implementation. As we outlined in a recent blog, most companies customize their enterprise software to a certain degree, which can elevate implementation cost, duration, and business risk.

However, this person had an interesting counter-point. Despite the potential risks and downsides of customization, there are upsides as well. Companies with true competitive advantages in their industry are likely to have one or more key business functions that are not addressed by leading ERP software vendors. The added costs may be immaterial compared to the potential upside, especially for a larger high-volume company. Therefore, customization can become somewhat of a necessary evil.

However, there are a few caveats to this perspective. First, as with any indulgence, customization can be acceptable only in moderation. ERP implementation failures often over-customize to accommodate an endless array of user requests, so it is important to have strong project governance and controls in place to ensure you are only customizing functionality that is absolutely necessary.

Second, don’t let customization be an excuse to choose the wrong software. An effective ERP selection process should w**d out the software solutions that are not a good fit for your operational needs, which will minimize your need to customize the software.

Finally, customization should not be a surrogate for leveraging the best-practices embedded in your ERP solution. If the functionality in question is not a core competency or competitive differentiator (think G/L or procurement), then carefully consider the processes that are built into the software. It may be difficult to change your business to fit the software, but it may be the lesser of two evils in such instances.

30/01/2013

Setting Realistic Expectations for Your ERP Project

From poor project management to overly optimistic deployment timelines, it’s not difficult to guess why so many ERP implementations fail to meet expectations. If an organization can maintain realistic implementation expectations, however, it will be less likely to experience ERP failure and more likely to achieve expected results.

When an ERP project is headed for failure, the warning signs are present early in the implementation process. Unfortunately, this is when these signs are most likely to go unnoticed. It’s not until business benefits aren’t achieved and ROI proves unspectacular that organizations realize they should have accounted for the unexpected when setting project goals.

Following are four tips for setting realistic implementation expectations and realizing anticipated business benefits from an ERP system:

1.Communication is key. Ensure that the project team has a clear understanding of what the organization expects as far as timeline, budget, business benefits and ROI. Regularly meet with executives to keep them up to date on the progress and make sure that project goals are forefront in their minds.
2.Regularly adjust expectations. Monitor ERP implementation progress and adjust expectations as necessary. By realizing that each stage of an ERP project is interconnected, organizations can reevaluate goals, adjust the project timeline and alter resource allocation as needed throughout implementation. This ensures that future milestones are not adversely affected by delays and missteps at the beginning of a project.
3.Don’t cut back on vital project components. Realize that organizational change management and business process reengineering are ERP critical success factors and ensure they are accounted for in the project strategy, budget and timeline.
4.Refer to benchmark data and expert advice. Use research to ensure your organization’s expectations are realistic and seek objective project assessments (or IV&V) from an independent source in order to align expectations with organizational goals as well as industry averages.

Setting realistic implementation expectations will require an investment of time, resources and money, but the payoff occurs when your organization achieves all expected benefits from its ERP software and experiences ERP success.

26/01/2013

Communication Tips to Ensure ERP Success

Chances are your organization’s ERP project team knows the value of cross-functional system training. Employees need education to understand how to complete transactions and perform day-to-day business processes in a new ERP system. Although training enables this level of understanding, much more is required to ensure end-users fully embrace the new software and actually use the system to do their jobs.

Communication with employees ensures that they understand the value of the new software and discourages them from relying on time-consuming and potentially hazardous workarounds. Communication is just as important as training so it should definitely be incorporated into your organizational change management plan.

Throughout implementation, the project team should communicate with employees on a regular basis. Most importantly, employees need to know how the new software will affect their business processes and day-to-day jobs. Memos, meetings and employees intranets are useful tools for educating employees about upcoming changes.

In addition to employees, the project team also should communicate with other key stakeholders. Customers, for instance, need to be prepared for any changes that the new ERP software brings to their interactions with the implementing organization. Topics that should be addressed include: precautions being taken to ensure on-time deliveries and how the new system changes the way orders are processed.

Although communicating with end-users and customers goes a long way in alleviating anxiety and confusion, there is one more important stakeholder group that organizations tend to overlook.

17/01/2013

Customization vs. Organizational Change Management: Which is Easier?

Any industry expert will tell you that ERP implementations are not just about technology. People and business processes matter more to the success of an ERP project than abundant IT staffing and strategic customization ever will.

Nonetheless, most organizations – no matter their convictions – will end up customizing their ERP software to some extent. According to Concept Soft 2012 ERP Report, only eleven-percent of respondents implemented ERP software with no customization.

Customization isn’t the only success factor organizations should consider, however. Organizational change management can also contribute to the success of an ERP implementation and significantly reduce the time and money spent on customization. Organizational change management is not necessarily easier than customization but it’s worth comparing the benefits and drawbacks of each in terms of time, money and effort.

Although costly and time-consuming, customization can bring a great deal of benefit to a company. To achieve benefits, however, organizations must have their priorities in order. For instance, if an organization customizes software in order to cater to the comfort of employees, the organization may end up ignoring inefficient business processes that need reengineering. The key to customization is enabling processes that are already optimized and supporting processes that offer competitive advantage. One of the benefits of customization is that it encourages organizations to evaluate business processes and carefully decide which processes should be standardized to fit the software and which processes necessitate customization.

Organizational change management also has “pros and cons.” Changing employees’ perceptions of new ERP software and communicating about new roles and responsibilities takes plenty of time and resources in its own right. Change management requires a significant monetary investment in assessments, training, communication materials, performance measurement and post-implementation audits. Although it can be an arduous process, the benefits of having a staff that are engaged and excited by the potential of an ERP system are perhaps without parallel.

Although neither customization nor change management initiatives are cheap – if the motives and deployment is right – the payoff is almost always worth it. A solid organizational change management initiative can markedly accelerate employee adoption and increase benefits realization. And appropriate customization can ensure that a vendor’s idea of “best practices” does not eradicate an organization’s key differentiators.

If your organization were to assess its current business processes and organizational culture, what would it find? Is your organization prepared to make the critical decisions imposed by new ERP software? If not, Concept Soft experienced ERP consultants can help your organization make the right decisions about customization and organizational change management. Be sure to download our 2010 Organizational Change Management Report for more information.

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