As this Spring is both the 10th
anniversary of my consulting practice and the 10th anniversary of the
start of the Y2K panic I thought it would be appropriate to start with a review
of some of the key Visual ERP shortcomings before looking forward to Solutions
for the future.
“…my first CDM saves the client $90,000 per
year”
In the late 1990s pre-packaged ERP solutions
such as Visual Mfg allowed many SMBs (Small and Medium Businesses) to get into
the ERP market. The allure and promise of fully integrated information systems
that had been available only to large corporations were all that was needed to
convince many SMBs that greater profits were just an ‘implementation’ away.
Looking back ten years later with hindsight it’s not surprising that the many
of SMBs who implemented these systems in the wake of Y2K have painful memories
of their experience and have realized only modest benefits on their bottom
lines. During my first Visual ERP re-implementation project back in 1998 I
recall the client describing their original implementation as more of a
“salvage operation” than an implementation; another declared that “the
operation was a success but the patient was deceased!”
Why was the task of implementation so
challenging? Some managers feel it was simply a difficult task while others
believe they made a poor product selection in the rush to avoid the Y2K
meltdown. Beyond the problems of insufficient resources, user training, etc., I
believe there are also both ‘mechanical’ and ‘cultural’ problems with ERP for
small business.
Many SMBs had misguided expectations about
how their new ERP system would deliver value. An ERP system is an information
engine; it is a data management tool that delivers value by cost-effectively
managing large volumes of data and providing compiled information. But most
SMBs do not have huge volumes of data to manage and there are few if any
management employees that depend exclusively on a single source of information
to perform their job functions, so much of the value from this type of
mechanical savings is not realized in a typical SMB.
User productivity is enhanced through
features such as Search but with generic UIs it is very difficult to streamline
work-flows. Some clients have complained that their ERP system has actually
bloated work-flows and reduced the productivity of their staff. This is
particularly evident when transactions need to be modified or removed. I recall
one client remarking that when he added up all the different windows he had
visited to perform a particular task he concluded it took far more time than he
had patience. To be even-handed, he noted that the Search functionality did
save time retrieving information but this was more than offset by all the
windows surfing. This user’s experience points to the second mechanical
shortcoming of commercial ERP for SMBs and reflects the law of Delayed Cost
which states the cheaper something is to purchase, the more expensive it is to
operate and maintain. What made the ERP affordable in the first place, namely
its generic UIs (user interfaces) and one-feature-set-for-all makes it more
awkward and costly to operate; its various standard UIs must be made to fit
each particular business processes and SMBs often find themselves having to
redesign their work flows to accommodate this limitation.
Another dimension of Delayed Cost is ‘feature
block’ where a user needs to perform a task but is blocked by the absence of a
required feature.
When the early ERP implementations were
initiated in the late 1990s it became clear quite quickly that SMBs would have
to adopt an absolute commitment to both data quality and process adherence.
Unless users have followed their processes rigorously and data is accurate the information
that flows from an information system is untrustworthy and of no value. This
new unwavering commitment to data and the processes that support it reflects a
major cultural shift because it requires modifying core business values and the
operating principles that support these values.
Streamlining Work-flows with CDMs
(Client-Defined Modules)
So what initiatives can SMBs take to improve
productivity and ROIs in the future? Improving the productivity of work-flows
is simply a matter of building better UIs that are either configurable or have
been tailor made to fit the work-flow. I call this second type a CDM
(client-defined module). Large ERP systems typically offer configurable UIs
that allow users to build custom interfaces with little or no programming;
these are great but expensive.
I believe that CDMs are the best option for
SMBs because they directly address the essential mechanical problems of feature
block and task bloat while being relatively inexpensive.
CDMs deliver value by doing what many SMBs
expected their ERP would do in the first place, namely, streamline existing
work-flows. CDMs are made-to-measure application widgets that facilitate a
specific business processes so instead of having to surf between a set of
generic windows and menus in order to accomplish a task, a CDM provides all of
the features and information required to perform the user-defined work flow
through a single or very small set of windows with the absolute minimum of
keystrokes, mouse clicks, searches and menu selections. In addition they allow
many of a user’s implicit assumptions to be codified further streaming the
process. Typically, CDMs for processes that are long and repetitious offer the
best returns and the savings and project budgets are easy to calculate. For
example, one of my first CDMs currently saves the client $90,000 per year by
saving 10 minutes on each of 20,000+ orders entered. The ROI to date on this
add-on is in the 100s of thousands of dollars. But even on a much smaller
scale, a CDM that shaves five minutes off a process that occurs five times per
business day by employees that earn $25 per hour is worth $2,600 annually. With
a typical life cycle of 5 years that represents a savings of $13,000.
CDMs have other significant benefits too.
They are not limited to performing functions within the ERP domain. In fact
they can be programmed to perform virtually any function you desire; they can
be modified and enhanced very easily and they can integrate other systems and
software artifacts both inside and outside of the network domain; they can
easily consolidate a series of sub tasks and searches into a single event or
automate a series of tasks; they can send email notifications and consume web
services; and they can reduce the licensing costs by
operating against the database directly in the same way that many third party
reporting tools function. As stand-alone programs built on the .NET platform
they can be browser-based web apps with a zero client-side footprint, windows
forms apps or even mobile device apps. CDMs reduce a SMBs dependence on the
maintenance programs and policies of the ERP vendors too. When you need a
feature added to a CDM you don’t have to wait five years or be told that there
is insufficient demand from the customer base so you will just have to make due
with the features you have.
Because CDMs are small plug-in type
applications similar to the vendor supplied executables, they can be designed
and developed in a series over time; they can be turned on or off and as each
CDM proves itself and begins returning value, the next CDM project can be
initiated. This incremental development model is easy on cash flow and results
oriented. CDM projects are typically short, easily defined and deliver great
ROIs that can be calculated quickly and easily.
If you would like more information please
drop me a line at mikeperkins@mpvsystems.com.
