ERP Implementation - What is expected from you?

Often, I have seen discussions happening between the business users, the implementation partner and the IT Team in an organization on who will do what and this becomes one of the bottlenecks in success of a project. Lately, when I was addressing a CIO Conference on the subject of transforming business with the help of ERP and advanced ERP products implementation, this question popped up again and forced me to try and document expectations from each team so that it can work as working standard for the organizations as well as IT vendors.  I will be publishing my understanding of expectations from each team in the next series of posts as I think I have the requisite experience and exposure to ERP implementations in all roles viz. Business User, IT Consultant as well as a CIO across the globe and in multiple industries. To start-with, let me try to put together the expectations (in-fact I would like to mention small activities also which the other two teams expect from the 3rd team) from the IT Team of the organization which is implementing an ERP Solution. I have divided the expectations in 3 major sections that are given below:

Pre-Implementation Expectations from IT Team:

• Finalize broad scope of work, create and float RFP to potential partners
• Select product and its fitment into existing architecture, footprint, industry and solution
• Evaluate Vendor proposals on technical competence, past experience and commercials
• Arrange executive sponsorship, drive steering committee creation in the organization
• Drive creation of core user group from all stakeholder teams in the organization
• Arrange for logistics like sitting area of core users, implementation partner team, desktops, phones etc.
• Decide on project plan, major milestones and key success factors with steering committee 
• Plan for Application Instance Strategy (Development, Test etc.)

During Implementation Expectations from IT Team:

• Organize business users and implementation partner teams interactions
• Drive sign-offs from business on requirements and other major project milestones
• Monitor project success vis-à-vis project plan
• Arrange all requisite IT infrastructure for the project
• Decide on data upload strategy (how much data, from which systems, by when etc.)
• Extract data from legacy systems and arrange cleaning by core user team
• Provide inputs on solution fitment into existing solution
• Provide inputs on key design elements
• Approve/Reject Customization(s) suggested by implementation vendor
• Freeze requirements
• Arrange business users participation during key milestones like Solution Design & Demonstration, Testing etc.
• Arrange training for core team users by implementation partners
• Ensure proper staffing of resources by implementation partner
• Arrange steering committee meetings for project health check regularly
• Ensure core team users impart training to other intended users
• Drive change management steps in the organization for faster acceptance of new application
• Plan production cutover testing and planned downtime as per application instance strategy
• Review key success factors delivery by implementation partner
• Take final sign-offs from core team for going LIVE
• Drive steering committee for GO LIVE readiness decision

Post Implementation Expectations from IT Team:

• Hand hold business users to run the new system for first month
• Set-up central help desk for post implementation related issues and queries
• Monitor and resolve any IT infrastructural related issues
• Handle change management issues with the help of steering committee
• Arrange short refresher trainings for end users to reduce mistakes in new application
• Ensure proper documentation of project is provided by implementation partner
• Ensure complete and proper knowledge transfer from implementation partner to application support team

If I can get valuable inputs from readers, I would like to add/delete/modify to these working standards do that it really becomes useful tool for the organizations and vendors alike and helps in making ERP Projects more successful for all stakeholders.

  

Financial Business Intelligence - Can it be successful without financial consolidation?

Today's enterprises do not have a simple structure with multiple business entities at multiple geographies, large number of joint ventures, subsidiaries, acquisitions, de mergers etc. and all this is adding to complexities of financial reporting. Add to this, different currencies, legal requirements, ever changing leadership formats of reporting and you have a substantial challenge in front of you. 

A typical structure of a large transnational organization will have parent organization with multiple subsidiaries and some of these subsidiaries would have acquired few other companies which might have their own subsidiaries in few countries. Then there will be different business lines or verticals which operate independently or have joint ventures. Now, consolidating the financial data from all these entities is a challange and most of the time your transactional system or ERP will not be able to help in this specially if more than one system is being used in these entities. Another important point is that the business intelligence tools will also not be able to help in giving the correct information as data is available in piece meal and the real picture is not captured.

While deploying a business intelligence solution, it is imperative that our data is first consolidated with the help of either a financial consolidation tool or the module of the Enterprise Performance Management tool you have deployed. The major benefits of data consolidation will be:

• Get a single source of truth: These provide a single version of the truth to support financial management and statutory reporting
• Accelerate reporting cycles: Substantially reduce the period closing cycles and deliver more timely results to internal and external stakeholders across the globe
• Improve transparency and compliance: Helps reduce the cost of compliance (as stipulated by the Sarbanes-Oxley Act, IFRS, electronic filing, and other regulatory requirements) and support disclosure requirements, such as sustainability reporting
• Perform strategic analysis: You will spend less time on processing and more time on value-added analysis

Deployment of Business Intelligence tool will be much easier and highly useful if it is done after financial consolidation exercise and will help you in getting expected results. (Yes, the scope of this article is only financial business intelligence and not includes supply chain intelligence etc.). The benefits that you can reap after deploying your BI tool can be:

• Aligning the enterprise with its KPIs
• Assist leadership take faster and fact based decisions
• Simulation of scenarios and doing what if analysis
• Allocation and re-allocation of costs and overheads across entities without distrubing the transactional system entries
• No need to look at multiple sources of data

All above can be reaped in a much better way of we consolidate the financial data first and then utilize the BI tool to provide the required dashboards and reports.

Replacing an existing ERP Solution: To go for it or not?

In today’s world ERPs exist in almost all those organizations which have a vision to excel and we all know that not all ERP projects are successful. Whether it is the product features, its fitment to your business, managing the requirements and expectations of users or executive sponsorship – there are many reasons which can throw an ERP project haywire. Needless to say that ERPs can make or break an organization’s vision based on the success they achieve with it.

Looking at intense competition between top ERP product vendors and extreme pressure on their sales teams to achieve higher than ever targets, they tend to not only outsell others but also, at customer organization’s expense, try to convince them to move their existing ERP solution to their platform showing rosy pictures. Some of us fall in trap based on our satisfaction level with existing solution and some of us manage to escape. This article is for those of us who are considering replacing their ERP solution with a “perceived” better one. Let me look at some of the points that need to be taken care before we take up this journey, if at all:

ERP Implementation and Baby Birth: Like birth of a child, an ERP implementation is a process that is planned and takes lot of time. In the process of implementation, there are lot of pains and caring which is very similar to pains and caring we see during the pregnancy period of a “to be mother”. If you have parented a child, then there is no need for me to explain what it is like and how critical it is to the life of people around that child. Similar is the story of ERP. Also, as you are never sure that the 2^nd child will be a better version of first one, you are never sure what will be the fate of the other ERP product that you are going to implement replacing the existing one. Extreme caution is the word to focus on.   

Best of the breed solutions:  A good alternative to replace your existing ERP solution can be adding a best of the breed business specific solution to the existing solution. This way, you can avoid the pain of replacing the entire solution which will also bring change management issues. Say, you are on XXXX ERP product which does not offer a pertinent transportation & logistics solution for your business and the sales team of rival product convinces you that their product is better than your existing product. Don’t jump on replacing right away. Explore more solutions in the market and there is a 75% probability that you will find a smaller, more agile and manageable best of breed solution which will be to talk to your existing ERP product and you will not only save on cost but also tha agony that went through when you implemented ERP first time.

Upgrade existing solution: It is highly likely that your ERP product vendor is also aware of the issues that you are facing and they have already come up with the newer version of the product which takes care of your additional requirements. Check out on this and if yes, consider upgrading. Normally, if you have bought the annual maintenance and software assurance from your existing vendor, the upgraded product is available to you free of cost.

Look at bigger picture: On the contrary, if you have acquired a new business that have a different ERP solution and it is important for you to bring them into same platform to achieve economies of scale and improved synergies, replacing their ERP solution with your won or vice versa, might makes sense. Evaluate and take decision.

So, if you review the above points before taking a decision on replacing your existing ERP with a new one, I am sure you life will be a lot less stressful.

Best Practices: PLM and QMS Integration for your organization

The impact quality can have on corporate performance is often misunderstood and underestimated by manufacturing organizations. If we examine the design-make-deliver processes, there are a number of workflows where the incorporation of a closed loop quality management initiative would yield tangible benefits. Largely, it has been observed by InfoVerto that manufacturers that have implemented a PLM and quality management interoperability solution, are better able to manufacture products and subsequently get them to market quicker and at a higher quality, all while streamlining operations across the design, make, and deliver process. To present it with facts, organizations with PLM and Quality Management Interoperability had 83% overall equipment effectiveness (OEE), 80% successful new product introductions (NPI) and 90% on-time and complete shipments whereas organizations without PLM and Quality Management Interoperability had 81% overall equipment effectiveness (OEE), 75% successful new product introductions (NPI) 88% on-time and complete shipments. This data bring two facts – 1st that PLM & QMS interoperability makes organizations more efficient and 2nd that there are some best practices that if followed can make your organization better equipped. To go a little further, in fact, across the board, these manufacturers are able to achieve an 83% OEE rate, which shows that these companies are better utilizing their assets because of improved quality capabilities, as well as, enjoy 6% more successful new product introductions. In the case of certain industries, even a 1% or 2% increase can have a significant impact; a 6% advantage can translate into millions of dollars of business. In addition, these manufactures were also able to achieve 90% on-time and complete shipment rate. Companies that have yet to implement system interoperability between and QMS software can use this research to understand the best practices implemented by those companies that have, and use this information in their strategic as well as tactical actions.

Up until this point, we've addressed the importance of having PLM and QMS software interoperability. And while this interoperability is a key enabler, achieving Closed Loop Quality Management takes more than a technology implementation. It takes an enterprise-wide commitment to quality, a culture of operational excellence, and providing employees with the right quality information, at the right time, and in the right context. When looked at in their entirety, this set of business processes enables the incorporation of quality management into the complete lifecycle of products and processes across engineering and manufacturing.

In a nutshell, the best practices that will help companies achieve closed loop quality management and are associated with improvements in a number of key performance indicators are:

• Standardize processes for responding to adverse events across the enterprise
• Executive sponsorship for closed loop quality management
• Perform quality planning early
• Invest in PLM and QMS software interoperability

Financial Consolidation: A pre-requisite for BI Tools Deployment

Today's enterprises do not have a simple structure with multiple business entities at multiple geographies, large number of joint vetures, subsidiaries, acquisitions, de mergers etc. and all this is adding to complexities of financial reporting. Add to this, different currencies, legal requirements, ever changing leadership formats of reporting and you have a substantial challenge in front of you. 

A typical structure of a large transnational organization will have parent organization with multiple subsidiaries and some of these subsidiaries would have acquired few other companies which might have their own subsidiaries in few countries. Then there will be different business lines or verticals which operate independently or have joint ventures. Now, consolidating the financial data from all these entities is a challange and most of the time your transactional system or ERP will not be able to help in this specially if more than one system is being used in these entities. Another important point is that the business intelligence tools will also not be able to help in giving the correct information as data is available in piece meal and the real picture is not captured.

While deploying a business intelligence solution, it is imperative that our data is first consolidated with the help of either a financial consolidation tool or the module of the Enterprise Performance Management tool you have deployed. The major benefits of data consolidation will be:

• Get a single source of truth: These Provide a single version of the truth to support financial management and statutory reporting
• Accelerate reporting cycles: Substantially reduce the period closing cycles and deliver more timely results to internal and external stakeholders across the globe
• Improve transparency and compliance: Helps reduce the cost of compliance (as stipulated by the Sarbanes-Oxley Act, IFRS, electronic filing, and other regulatory requirements) and support disclosure requirements, such as sustainability reporting
• Perform strategic analysis: You will spend less time on processing and more time on value-added analysis

Deployment of Business Intelligence tool will be much easier and highly useful if it is done after financial consolidation exercise and will help you in getting expected results. (Yes, the scope of this article is only financial business intelligence and not includes supply chain intelligence etc.). The benefits that you can reap after deploying your BI tool can be:

• Aigning the enterprise with its KPIs
• Assist leadership take faster and fact based decisions
• Simulation of scenarios and doing what if analysis
• Allocation and re-allocation of costs and overheads across entities without distrubing the transactional system entries
• No need to look at multiple sources of data

All above can be reaped in a much better way of we consoildate the financial data first and then utilize the BI tool to provide the required dashboards and reports.

Role of ERP & Data Accuracy in Mergers and Acquisitions

Mergers and Acquisitions have become an inherent part of the global enterprise strategies and looking at the pace of acquisitions, mergers and de-mergers that are happening these days, it is important that organizations come up with detailed frameworks and leverage them to speedily complete the process of acquiring, merging or separation of entities. This will not only reduce the cost of activity but will also make sue that we cover all aspects during the process with no surprises left for later stages. ERP has a large role to play in these mega activities as it is seen that lot of issues can be reduced if ERP can be leveraged correctly. Obviously ERP’s role will be governed by the consistency, accuracy and completeness of data as the data in it will be a core factor to take multiple decisions in the process.

The benchmarks for divesting a company or merging with a newly acquired company have climbed in last couple of years to 6 - 8 weeks. Along-with this, internal re-organization exercises like creation of new regional business, moving production from one plant to another or compliance related changes also are eligible to be part of M&A activities in terms of their similarity of sub activities. These also have quite stringent benchmarks these days and are possible to achieve only with the help of ERP.

To execute the above talked business objectives, a comprehensive global data strategy is critical and must be part of the overall enterprise strategy. The scope of the data strategy must be coordinated and owned by a data management team that operates as a business cross-functional team. To ensure business sustainability and growth, the ERP system needs to be able to support data process changes in a focused, fast, and flexible manner (the front end) and must include the swift re-alignment of data and data hierarchies to reflect internally or externally driven changes to the business context. Also the introduction and scale of shared services will need to be enabled and even accelerated to provide a slim, cost-efficient, and service-driven back end. Business modernization, operational efficiency, and successful mergers and acquisitions all rely on accessible, timely, high quality data.

ERP can help you to define, measure and monitor the integration of new businesses with parent business and it is important that you come out with a framework which leverage your ERP, your ETL tool and the business logic for smooth integration of data integration. One of the popular frameworks is as below:

To measure the success of mergers and acquisitions transactions, it is imperative to set up clear criteria related to the data dimension. Otherwise, the business case will be incomplete. The cultural change is critical for any merger or acquisition. A tremendous effort will be required in this area to ensure a successful change management. Therefore, introducing and executing a proven data excellence framework supported by a robust platform is a mandatory accelerator to deliver an efficient data integration and to support a business driven data governance while the organization focuses on the cultural challenge. 53PSVV3Q4S2M

Best Practice: 5 ways to implement strategic sourcing and save cost

The biggest objectives of sourcing operations are to save cost and make sure that right material is available at right time. Since both pull each other in terms of getting one of them fulfilled makes the other one unfulfilled, it has become a dire need for the industry today to move from the tactical ways to improve the efficiencies in sourcing operations to the strategic ways so that more organized and intelligent purchasing decisions are taken as a process.

The today’s strategic sourcing initiative can be facilitated using following 5 ways:

• Automated sourcing or eSourcing: This is the most important and the best way to achieve higher efficiency from your sourcing process. Automation of activities like RFPs, supplier negotiations on lead time-price etc. and other online requests like advance shipment notice, changes in delivery schedule will make sure that the delay in communication is least and the manual errors are avoided. This also can be supplemented with supplier base, item category and process knowledge to support online negotiations and maintain advanced sourcing results
• Contract Lifecycle Management solution: Lot of times, we fail tot rack the key milestones in our contract and either lose on discount or lose the already calculated potential savings. Activities like creation of contract, approval management, maintaining the service level agreements and key data analysis helps the sourcing team to execute and monitor the supplier contracts much more efficiently and hence can bring good savings
• Spend Analysis: Do you know, even the best managed organizations have only 70% spend under management. This is an area which offers a lot of space to improve and availability of this spend data helps not only drive deflation with suppliers, it also provides you opportunity to aid your other sourcing efforts. Spend Management tools will add to your ability to extract data from multiple systems, its transformation and enrichment and reporting in user friendly formats. You will be able to see data on the basis of vendors, item price, item category or UNSPC codes which will immensely help you in negotiating with your vendors and improve cost savings
• Collaborative Sourcing: It is time to include your suppliers as well as customers in your sourcing cycle not from costing perspective but from item lifecycle value creation perspective. You need to start exploiting your suppliers innovative skills to your advantage by collaborating more with them and collectively reach your targets of cost savings
• Reverse Auctions: We all know that reverse auctions are auctions where the bidder is the seller and not the buyer. This concept forces competing vendors to reduce their bids in order to win a particular contract and in process you get the cost savings. Implement a reverse auction system in your organization and start using this for at least the high volume commoditized products and items. In addition of the savings, this is more transparent and competitive way of sourcing which takes the whole process to a strategic sourcing level. One caveat though, most of the suppliers do not like this process as this squeezes their margins and does not help in long term relationships with suppliers. Implement it but balance it in such a way that your partnership with current suppliers is not impacted.

I am sure above practices and tools have the potential to help you achieve your strategic sourcing objectives and can bring cost savings to your operations.

SCM Best Practice: Improve supply chain visibility to reduce working capital

Reducing working capital is one of the strongest challenges all organizations face these days and moreso aftr recent ecomnomic downturn when it was again proved that CASH is KING. One of the very effective ways to reduce your deployed working capital, is by increasing your supply chain visibility and leveraging the same visibility to lean your processes by removing bottlenecks or to release excess/buffer inventory that holds up the working capital. The big questions now, is how to increase the supply chain visibility and what are best in class organizations doing to achieve this? Another one is, how to make sure that the way we want to increase our supply chain visibility (SCV), gels with the overall organizational strategy? 

Well, the answer to the first question is that it is upto us to evaluate our options and decide but before that, it is recommended to have a list of options in the area of maximum pain so that a proper presearch can be done. The major methods that the best in class organizations take to improve their supply chain visibility are highlighted in the attached picture here:

Not all of them are required and it is highly likely that you already have one or the other method or system in place but that doesn't mean that you have complete supply chain visibility and you have all the information available to go for the transformational change in the organizational processes. It is recommended to check of above systems/methods and evalaute whether your comapny will need this or not and if it is deployed, what will be the ROI on this (also in terms of how fast the working capital can be reduced and how much).

The above picture does not provide all the options but this list is based on the major challenges that organizations face. In case, your organization face a different challenge, let me know and I will glad to help to identify the right method for you to improve supply chain visibility.

Improve Reverse Logistics for making SCM Green & to Increase Revenue

Reverse logistics is the largest part of the broader supply chain management process called as returns management. Returns Management, in addition to catering to handling returns that come back from customers due to various reasons, also puts in place, processes to reduce the number of returns by doing some reverse engineering with the help of departments like warranty, product quality, marketing and testing – but still the major portion of a returns management process is management of returning goods from the customer, that starts with customer’s request to return the item and ends with putting away that item in the pertinent warehouse. This part of returns management is called as reverse logistics and lately, the scope of reverse logistics has been increased at least in the best in class organizations, and now it includes facilitating smooth refund to the customer as well as ensuring a good percentage of items getting either recycled or re packaged to be sold to new customers in different product categories. This is the need of the hour for all of us to put more focus in, and this will help us not only to increase our revenue (discussed later) and to make our supply chain greener (recycling). Let me first break down few broader sub processes of Reverse Logistics so that we can focus on the pertinent parts:

• Customer request register and finalize modalities/approvals (if required)
• Organize the returns, their journey back and putting them away in warehouse
• Credit customer for the returns
• Re-cycle/Repackage returned goods and keep them ready for selling

Now, to make sure that you increase revenue from your returned goods, it is imperative that you need to increase the percentage of the returned goods that can be sold back by recycling or re-packaging while keeping in mind the compliance related stuff where those can not be sold as new again. All this can be achieved to the closest by following strategies:

• Ensure that the process of customer approaching you and returning goods is smooth not just because you need to compliant against some practices but to make sure that the customer satisfaction increases rather than decreasing by returning the goods sold by you. A smooth and customer friendly process will increase their confidence in your product quality, minimize their purchasing risks (so they will come again to you) and increase your brand value
• Revisit & Leanergize your process of picking the returned goods from your point of sale or retailer, organizing their safe and cost effective journey to your warehouse and to your supplier’s warehouse (in case of buy items) and putting away the goods in your warehouse in earmarked sections. This will make sure that your:
• Cost of returning goods is lowest – For example: using the same trucks/vehicles that bring goods from your suppliers, to send the returned goods to them can save cost of shipment
• Quality of goods is not diminished during transit
• Picking the same goods for reselling is easiest and transparent
• Early identify the goods that need repair before being sold again and have a process in place to make sure that repair required parts reach directly to your or suppliers depots where they can be rectified – This will save multiple journeys for same parts
• Recycle the packaging material of returned goods for good corporate citizenship and a cleaner and greener supply chain
• Separate out the physical receiving sub-process from the account credit sub-process and allow for gaps between physical and accounting such as, out of a returned pallet only part may be moved back to inventory and another part of it may be credited to your customer
• Integrate your IT systems such as handheld scanners, warehouse management system and accounting system share the information and are in synchronized at all times – for faster and cost effective process of returns

Since this area is huge, the strategies can go on and on but there is a need to identify which ones suit our own organization and execute them to the plan to achieve increased revenues as well as greener supply chain contributed by efficient reverse logistics management.

Top game-changers in today’s supply chain

Supply chain keeps on evolving and organizations keep on experimenting with different solutions and permutations & combinations to improve its efficiency. There are a few activities that are widely regarded as the game-changer activities in supply chain as these have the potential to improve the effectiveness and efficiency of your supply chain and hence place your organization on growth path. I have tried to list down few of them as per my discussions with industry leaders and peers at different forums:

• The mandate for measurement: You can not improve what you don’t measure – this is a well known principle and in post recession world when performance management has become one of the key focus areas, the need for measuring and measuring right metrics has come to the fore like never before. First of all, we need to identify what all metrics are most important for us, then we need to iron the conflicts like inventory reduction is more important for me or order fill rate. These metrics needs to be prioritized and a calculated weightage needs to be attached to them before measuring
• Benchmark with the best: Measuring the metrics is fine but how much can you improve? Can you reach 100% forecast accuracy or 100% fill rate for that matter – ofcourse, not in most industries. So, what do we do, we need to define our targets and the easiest way is to look up to the best performing student in the class. Identify your best in class competition and benchmark your metrics against them. Attach a timeline and phases to the improvement program and do a regular monitoring of progress
• Collaborate: Let us stop talking about collaborating and leveraging each other’s expertise within the organization and start actually collaborating. The concept of collaborative planning, forecasting and replenishment is not a theory only so let us implement it in the organization. Today, as I said earlier in one of my articles that organizations do not compete, supply chains compete and these supply chain which run across the organizations, can not complete without active and transparent collaboration. We need to collaborate with our vendors, our customers and our internal people in multiple departments to bring more efficiency and ownership in the system
• Make your S&OP relatively independent of supply chain risks: Well, this may sound magical and hard to achieve but this can be achieved and yes, without building buffers in the system and increasing working capital. Few of the methods of doing this are by strategizing the distribution system, take tactical local decisions, build partnerships and develop contingency plans
• Reduce waste and variability: In other words, look for the opportunities wherever lean and six sigma can be deployed. Lean reduces waste and cycle time whereas six sigma focuses on reducing variability. These concepts are not new in manufacturing or supply chains but still deliver the best to results and we should never consider these out of fashion at least in today’s world. Please note that it is not that simple to reduce the number of product variants or sales channels but identify the real opportunities and act as per a well thought out plan
• Reduce time to market: Your product lifecycle management strategy is extremely important to manage complexity in conceptualizing, designing, prototyping and mass producing the new products. This includes minimizing finished product SKUs, minimizing components, and better management of products as they reach end of life and are retired as new products are brought on board. Companies should continuously perform SKU rationalizations to keep their product lines fresh and competitive

Have a relook at your supply chain strategies and check out if the above game changers are in place for your organization or you need to take certain actions to make sure that you are ready to fuel the growth in future.

Evaluate your ERP Service Provider before awarding the project

As we entered in 2010, business bid goodbye to recession and economy started looking up once again. ERP projects, once again have become the toast of the IT landscape of an organization and the service providers have revamped their sales pitches as well as stories on their successful projects with magnified benefits. Lot of times, SMB organizations get lost in these sales pitches by the flashy service providers and take a decision that backfires after some time when they see either the quality of the resources is not as expected or the provider did not have prior experience in their niche industry or the provider under quoted just to build their competency in that area/technology and lacks any best practices, tools or prior experience. There are more reasons other than these 3 which start pinching the SMBs.

Though key research websites like Gartner, Forrester, AMRResearch etc. keep on evaluating the service providers and sell their reports to their clients but still either these reports do not cover some aspects that SMBs will want details on or these SMBs are reluctant to buy these costly reports just to know which service providers are good. So, what do we do to tackle this? I understand that not all smaller companies have the expertise and the resources to do a research on this subject and come out with their own decisions but a checklist of parameters will always help them to ask the prospective providers certain questions which can assist to take informed decisions.

Normally, we tend to gather information on:

• Size and reach of service provider
• Related industry Expertise
• Global capabilities like offshoring and BCP, DRP
• Prior experience in related technology
• Related technology practice size
• Success stories/case studies
• Alliances, Awards and other industry recognition
• Experience in Implementation and Support of ERP applications
• Length of period they are in business
• Financial stability

Above information is very important but is not sufficient at least for SMBs who have less capacity to take risks. The additional parameters that I suggest should be part of your evaluation exercise are:

• Ability & pace to deploy resources (can be gauged from their average bench size)
• Specific language skills availability (specially for European organizations)
• References from few customers in similar industry
• Geographical presence and experience
• Accelerators availability for related technology
• Project Management resource pool & success stories
• Change Management and Knowledge Management practices
• Training tools and techniques
• Automation capabilities in testing
• Related industry specific process experts availability
• Quality control and management practices
• Process re-engineering experience
• ERP related products or enhancements/bolt-ons availability
• End to end solutions capability that includes licensing co-ordination, server sizing, application hosting, solution deployment and support
• Production cut-over or black-out period practices
• SLA based performance report card from previous engagements
• Attrition management to make sure project is not negatively impacted by it
• Thought leadership examples
• Finally check the billing rates, overall cost, productivity track records and their overall value creation ability

Though some of the parameters can be measured easily by building a cross question list and seeking answers from prospective vendors but some will need deep dive and probably a site visit of short listed 2-3 vendors will be extremely helpful in evaluating and selecting an ERP service providers that can partner with you for the business transformation exercise you are planning to take in your organization.

5 Best Practices for better ERP Integration Testing

Testing is the most important part of an ERP project and the success of this phase significantly drives the overall success of the ERP project in terms of timelines, cost, meeting expectations and defect free design. We all know that all above lead to increase in spending in the project and in addition of the loss of opportunity to use ERP more effectively for the business growth, we end up reducing ROI of ERP. In this article, I wish to share the best practices that will help you to ensure that your integration testing is done in best possible manner.

• Never skip the pre-work: Before you jump to system integration testing, please make sure that –
• All end to end test scripts are ready
• All testers are identified and their dedicated testing windows frozen
• Testers are trained sufficiently to test their respective pieces
• Dedicated rooms are blocked for them to come and test the application with all integrations
• All in scope integrations should be ready before testing
• All components are unit tested successfully before integration testing
• Testing success factors and metrics is well defined and agreed beforehand
• 80% of data conversion is complete before integration testing
• Bulk of test data is ready and guidelines for creating more test data, are in place
• Legacy systems outages are not scheduled during integration testing window
• Daily testing handouts are prepared so that testers know their agenda for the day
• Defects identification is the key: The main objective for integration testing should be to identify the defects and while most of the focus should be on the test scenarios that are applicable in 90% of the cases but exceptions should also be given equal importance and a well communicated plan should be in place to handle these. Divide the whole exercise into 3 major parts:
• First will need only modular testing but will still complete the end to end scenarios involving single or a smaller set of modules
• Second will be end to end testing involving multiple modules covering all the related integrations and these scenarios are driven by business functions rather than application modules
• The third part is about trying to break the system which is more popularly called as negative testing where you need to test those scenarios when the system is expected to not give the desired results. For example, an order line for a hazardous material should get approved by compliance manager – this is expected behavior. The negative testing scenario here is to check if order lines with non hazardous material are also getting routed through compliance manager which is not expected
• Continuous Progress Reporting: Even a small time lost in integration testing can delay the whole project and also can defeat the whole purpose of testing due to following reasons:
• Testers not able to devote time in testing as planned
• The test scenarios are not complete
• System is not ready with the components on time
• Unplanned issues that prevent testing to continue on planned pace etc.

Due to this, it is very important that daily status reviews and progress dashboards are shared with all the key stakeholders and required actions can be taken on time to avert the delay and to maintain quality of testing. Also, daily defect tracking reports are required to be shared with all along-with the progress of the service provider team to resolve those issues. Faster resolution of those issues that have the potential to prevent further testing in one of more business functions will be facilitated if reporting dashboards are discussed with relevant stakeholders

• Defects resolution: Resolution of defects is as important as identification of defects during integration testing so the best practice is set-up dedicated rooms for technical team members who can provider real time help to the testers to resolve the defects as well as help them overcome training related issues so that testing can continue seamlessly
• Test results documentation: The best practice for documenting test results is the usage of a testing tool that can record the test scenarios, their results and can provide the ready to use progress dashboards. This will reduce the manual effort to compile the testing data and will also build a future repository of the test cases that can be used in further regression testing cycles during system enhancements or large application patches

Hope, the above best practices will help the organizations in completing their ERP integration testing cycles in much better way. In case of any questions, I can be reached by clicking here.

Get best results from your ERP Project

ERP implementation is one area that is one of the least (arguably) affected by the ongoing recession as it brings almost immediate benefits to an organization most of the times. As we know, all ERP projects are not successful and do not deliver the value to the organizations that they are supposed to deliver, I thought of listing down the most critical success factors that drive the success of an ERP Project. Let us go over them today one by one:

• Business processes and requirements are a top priority. Too often, companies get tied up in the technical capabilities or platforms that a particular software application supports which is not as important as to check how your business operations will run and what your key business requirements are. Once you have this defined, you can more easily choose the software that fits your unique business needs
• Define key metrics to measure return on investment from ERP including post-implementation performance measurement. This requires doing more than just developing a high-level business case to get approval from upper management or your board of directors. It also entails establishing key performance measures, setting baselines and targets for those measures, and tracking performance after go-live. This is the only way to truly realize the benefit potential of ERP
• Ultra strong project management and resource commitment. At the end of the day, your company owns the success or failure of a large ERP project, so you should manage it accordingly. This includes ensuring that you have a strong project manager and your "A-players" from the business to support and participate in the project
• Executive sponsorship. Any project without support from its top management will fail. Support from a CIO or IT director is fine, but it's not enough. No matter how well-run a project is, problems arise (such as conflicting business needs), so the CEO and your entire C-level staff needs to be on board to deal with some of these
• Spend 80% time in planning and 20% in execution. An ERP vendor's motive is to close a deal as soon as possible. Yours should be to make sure it gets done right. Too often, companies jump right in to a project without validating the software vendor's understanding of business requirements or its project plan. The more time you spend ensuring that these things are done right at the beginning of the project, the less time you'll spend fixing problems later on
• Handle change management well. ERP systems involve big change for people, and the system will not do you any good if people do not understand how to use it effectively. Therefore, spending time and money on training, change management, and job design is crucial to any ERP project
• Make sure you understand why you're implementing ERP. This is arguably the most important one. It's easy to see that many big companies are running SAP or Oracle and maybe you should too, but it's harder to consider that maybe you don't need an ERP system at all. Perhaps process improvement, organizational redesign, or targeted best-of-breed technology will meet your business objectives at a lower cost. By clearly understanding your business objectives and what you're trying to accomplish with an ERP system, you will be able to make a more appropriate decision on which route to take, and that may or may not involve ERP

It is important to understand exactly what you are as an organization now and what you want to be in the future. This includes everything from understanding your strengths, weaknesses and core competencies to the areas you would like to improve. Making these decisions in the midst of an ERP implementation can be a very rushed process, and making key strategic decisions like these in a sloppy fashion will create significant pain and confusion in the future.

The key takeaway is that ERP cannot be implemented successfully without clear requirements, which are critical to ERP success. By the same token, clear requirements cannot be defined until business processes are well defined. And business processes cannot be defined until organizations establish a clear sense of strategic direction. Organizations should ensure that these areas are taken into consideration during their ERP assessment and software selection processes.

7 Best Practices for ERP Data Conversion or Migration

I will not talk about the process of data conversion or data migration during an ERP project but would like to share the best practices that will help us achieve a better data quality index in your new system. To start-with, we need to keep our focus clear on what are our success factors or how will we measure that the job has been done completely. Per my view, we have four major success factors or key metrics which are required to be measured at the end and these are:

• Data Accuracy
• Data Consistency
• Completeness of Data
• Validity of Data

One of my earlier posts provides details on how to measure these metrics. Coming back to the best practices, let me list them down below:

1. Complete your pre-work: The ingredients of the pre-work are:
• Identification of source legacy systems & source business units
• Find out which system is best to provide data on what as there might be duplicate data in systems
• Identification of data owners, data cleaners and data verifiers
• Chart out a dedicated project plan for data conversion (data migration)within the ERP project plan with a dedicated owner for this activity
• Decide on the size and period of data that needs to be converted with business logic (Tip: The thumb rule is to have last 2 years of transactional data and the open transactions in addition of all master data)
2. Workout Sessions: Plan extensive work out sessions between legacy system owners, consulting vendor team and the data owners to nail down different opinions and approaches and come out with a common approach, format of capturing data and segregation of manual as well as automated steps in data conversion
3. Clean and Re-clean: No data can be clean enough to be converted to the new system and it is highly recommended to clean the data in terms of not only removing special characters, junk characters etc. but also similar looking names of customers, suppliers, employees, buyers etc.
4. Plan about the deltas: After you extract the data from legacy systems and do your activities like cleaning, segregating and finally conversion, there will be some time when the transactions are still being done in legacy systems and data is still being created in there which is not part of your data dump. Plan in advance to handle this situation and how would you transfer that small deltas from different systems to the new system
5. Sequence out the data loads: Identify the dependencies of one data on the other and plan the sequence of conversion accordingly. For example, employees need to converted first and then buyers can be converted. This will not only save time and effort but will also make some automatic validation in the system to improve on data accuracy
6. Test the cycles twice: Before actual conversion or migration of data, it is strongly recommended to test the conversion run at least twice and validate the data correctness, completeness, consistency and validity as these simulations will bring out potential issues which can ironed out for the final data conversion run to production system. Also, include the load testing of data conversion as part of test runs
7. Verify the Data: Plan to have random verifiers from the business user fraternity to verify their data in addition of the verification done by the identified data verifiers. This will ensure successful conversion of data

The most important part of the data conversion or migration is regular communication and co-ordination between separate teams (specially if we have multiple legacy source systems) and I have seen in my experience that following the simple rule of sharing ideas, works miracles in data conversion.

Best Practices for ERP Deployment

ERP deployment or implementation is one activity that engages the whole organization and has organization wide impact in terms of changed and more efficient processes, improved and defined ownership, better customer responsiveness etc. among many others. It is a known fact that deploying a world class ERP needs an equally good effort from the organization where it is being deployed and we have many examples in history where organizations failed in their endeavor and had to spend much more to reach their goal. Also, it is not about success or failure but it is about how efficiently, faster, smoother and cost effectively you can manage to deploy this monstrous software to get larger benefits in future. This objective of ours, drive us to find out the best practices that will help us in this initiative. Let me take a shot at listing down the best practices in this article so that enterprises can benefit from this. The list will have some of the ever known, tried and tested best practices with a blend of some new practices that are relatively less known, so have a look: