7 Ways To Reduce Erp Implementation Expenses And Minimize Problems

Traditional ERP Implementations

Traditional ERP implementations are incredibly risky, for the partner deploying them as well as the customer. This is why no one supplies the elusive fixed fee. The potential risks are just an excessive amount of.

The existing Dynamics NAV project costs were high because legacy methods can be very expensive. The standard implementation follows a number of phases originally set out by Microsoft inside a waterfall project framework. Waterfall project management software is proven to get higher priced compared to the modern "agile" approach, which can be based on LEAN techniques.

The approach that is employed by virtually everyone since ERP has been online is to bill "Time and Material." Because of this customers buy enough time spent by consultants, nomatter how good or bad they may be. This moves the danger from the implentor towards the customer almost entirely.

In fact you may still find massive risks for your partner with these waterfall projects. I have seen Most cases where partners were sued or threatened when these projects go very badly.

I began considering how we needed to change this after reading a LinkedIn post that shared articles on why "Time and Material Billing is Unethical." I had been really struck through the arguments. Mcdougal asked a question which i think summed it fantastically well:

In case a restaurant charged you to the time and material that it latched onto cook your steak, how would you feel?

This probably sparked my first real thoughts about how to stop like a serious amounts of material business.

ERP Pricing is incredibly unpredictable

Among the first videos which i uploaded to YouTube was my explanation of why traditional costing of ERP implementations was outrageously inaccurate. I've spent the years since working out methods to remove that inaccuracy.

Obviously the simplest way to give accurate estimates ended up being be fixed fee. The trouble is that traditional approach can be so dangerous for your partner. It makes it really scary to supply a fixed fee. if you don't still do it, you have a large amount of trouble. I've worked very difficult to develop an approach that I think is unique.

Applying LEAN Thinking to ERP Implementations

You will find there's movement to apply LEAN thinking to service activities. Generally, LEAN is approximately removing waste from the physical product, nonetheless it is true to projects too.

I developed my very own variations of waste in ERP projects.

First - there is time spent through the wrong resource.

This is typically when someone who costs too much does something somebody who will be paid a lot less are able to do, or can do it faster.

Second - you will find unnecessary steps

I've found such things happen when people perform steps to "cover their butts." A great deal of project management software falls into this. It also occurs consultants (compensated on hours billed) push unnecessary work.

Third - you'll find wasted tasks

Sometimes customers want to do items that we, as ERP consultants, know will not work. In the traditional implementation we've no economic motivation to stop it.

Lastly - you will find there's "bleed" of data

This is usually for the customer. Typically it's when the customer doesn't remember their training because they do not spending some time doing work in the machine enough.

Why ERP Implementations Have to Change!

When we started doing cloud based ERP implementations with Microsoft Dynamics NAV it had been common for purchasers to pay for $100,000 for the software and pay $200,000 because of their implementation.

As soon as you enter in the whole world of the cloud, where Microsoft Business Central is $100 a month per user, things change. It's hart to tell a client they are going to spend $2000 monthly for software but still pay $200,000 for implementation.

And we all did what our customers do. We set a price we thought industry would support, and that we worked backwards to manipulate our internal costs and make money doing that. Our clients are manufacturers. They have to estimate an expense, after which follow it. They can not visit their customer and say "we have to bill you more because we were inefficient within our production process." They would close shop instantly.

The modern procedure for ERP implentations.

I'm much more of a manufacturing expert compared to a technology expert. Few manufacturing companies think with regards to projects with project managers (Engineer to buy could be the exception). They often think when it comes to operations managers and standard work instructions.

I applied this thinking to ERP projects. It helps that we all do is implement ERP for suppliers.

Here's include the main steps that helped us dramatically reduce the risk (and costs) of ERP projects.

We only do one type of projectFocusing exclusively on manufacturing, along with small facilities, meant we will refine and have better with every project. We look with the process as a repetitive, repetable process. This kind of gets reduce the up front form of the job plan etc. The job management disappears altogether, and we reduce that waste enormously.

We offset easy but tedious try to the customerWhen a $200 by the hour consultant does what comes down to a clerical task, that is certainly waste. We train the customers can use to complete a number of the tedious tasks. Apparently , forms of greater created by the consumer. Business Central produces a lots of this easier since it has great tools for customers to accomplish tasks that was previously hard. There are two of those especially that are key: Reports and knowledge Loading

We train people to edit formsCustomers determine what they need their invoice to appear like. They understand where they need the deadline day on his or her PO. It is way easier whenever we help them learn to switch these things than do it for the kids.

We train people to load data in the systemData loading can be a task we assign to some co-op student after a few hours training. The reality is, when customers "get" how this is accomplished - they are doing a far better job cleaning their data and things go much smoother!

We keep exercise sessions shorter and VideoPeople forget what they are taught. Without question of life. There is a lot on the plate. Also, the more time a person spends in training - the more they "zone out" and begin to reduce focus. We keep training sessions short, and record them all as videos. People absorb countless can simply review what they've got forgotten. What this means is we absolutely must train remotely. Travel time can be a killer (and totally waste)- so we can't travel.

We keep your project tight, and discourage changeTraditional ERP partners encourage extra work. Additional work means extra profit. Not for individuals. When we execute a Business Central project, we discourage any changes in the original project. Our projects aren't super restrictive - but they do limit the options we will implement in "Phase 1." Keeping the plan tight, there's a lot less "creep" and the boss is often much happier.

We still bill for customizations, but discourage them as well Customizations would be the a very important factor we simply cannot predict - and then we also discourage them. Considering this new model, we discover customers require a lot fewer also. They trust us more to know what we're doing. Occasionally a customization is simply a no-brainer, and in those cases we support as well as encourage them. Even so - we now have less than 50 % the customization we accustomed to.

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