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About ERP Systems

It is not business as usual, and they will have two jobs to do!

Michael Roman - Sunday, January 23, 2011

It is not business as usual, and they will have two jobs to do!

I enjoy performing ERP implementations.   It is even more enjoyable when the management team is properly prepared before my arrival.  One such project was with a manufacturer that made water purification equipment for municipalities.  The client site was on the east coast; they met me at the hotel on Sunday afternoon for dinner, drinks, and an overview of what the project entailed.  There were five of them and me.  The team was the President / CEO, the VP of Operations, the VP of Finance, the VP of Sales and the Director of Human Resources.  At that time, an ERP Vendor employed me and I was going to be the only ‘consultant’ on the project.  That meant that I was to do all the training, manage the project, write the status reports to both my company and to theirs, manage the data conversion, create the data for the conference room pilot (CRP), work with the departments on their individual mini-implementations before the CRP and manage the CRP itself.  That is if the implementation made it past the training. 

I was impressed with the President, he was a listener and asked his team for their input when I raised questions.  It was a refreshing approach, one I had seen very little of during my three years of doing ERP Implementations for this ERP vendor. 

The client had bought the full suite, from HR through manufacturing including the planning pieces of Rough Cut and Master Scheduling and the customer interface pieces of Sales Force Automation and the Activity Help Desk.  I was looking forward to working with this company. 

During our discussions, I learned that they had already attended ERP education and that this Senior Management group was the Steering committee and the people I was to train on the use of the software.  This group would manage the implementation project and they would train users in the new departmental procedures as well as how to use the new ERP Software. (This would shorten the implementation cycle by at least 1/3).   For me, this was a first; usually the senior managers distanced themselves from the real work because they did not want to be associated with a failure.  I learned that that attitude general was the reason that a number of ERP Projects failed.

They told me their timeline was 9 weeks; I told them it was an aggressive schedule.  The Operations VP told me that this project was getting in the way of other projects and needed to be complete before other projects started.  I asked if this was the only company project and the Ops VP said, “Absolutely, we already have our regular jobs and this one”.  He added, “It is difficult enough doing one job, and the thought of doing an ERP Project for more than 3 months is too much of a disruption to the normal business to languish beyond that timeline.  We just want to get back to our regular jobs and we want our people to do the same.”  The company president reinforced the statement, “It is not business as usual, and they will have two jobs to do.  We cannot overwork them for too long.  Too long is 10 weeks”.  Another first!  This company president and his management team were truly concerned about the work force.

We did the software training off-site for several reasons.

    1. It allowed a free flowing discussion
    2. Sometimes heated debates ensued, which was to be expected  and concerns that someone (outside of this group) would misinterpret the discussions did not exist
    3. We could focus on the activities at hand, without interruptions about other business matters
    4. We could discuss the pros and cons of options and the implications to the overall effectiveness to the business without others misinterpreting the intent of the discussions

Using this group to focus the ERP project performed economies of scale.  To reinforce the training, users input data from the legacy system.  We did not convert data.  Instead, at the same time as the training occurred, legacy data was scrubbed and input.  This removed a good part of the implementation activities and created a momentum for the implementation.  Users could actually see the light at the end of the tunnel and know it was not an oncoming freight train.  The other unique part of this client’s project was that the management team wrote the user guides.  The rational was that if the management team was to ask for data, they needed to understand the method for data production, the reliability of those data, and the validity of the data.  Being intimately associated with the details, gave them a unique perspective and effective method to manage the company with the actual data the ERP Software produced! 

The implementation progressed as planned.  It also survived the replacement of the Operations VP.  Five weeks into the implementation, he had a sudden heart attack and died.  Here, their planning paid for itself.  Instead of looking for an outside replacement, the Purchasing Manager, became the VP of Operations, a position he was educated and trained to perform.  The company president and I worked with him after hours to bring him up to speed.  He lived up to the demands of the new position.

One of the things that the company had learned at their ERP seminars was succession planning.  If that plan had not already been in place, the ERP Implementation would have suffered.  Because of their foresight, we minimized the possibility of a delay by the simple plan of preparing for it.  The delay was minimal; the project did not suffer a loss of momentum.  Instead, the company president took delight that the project stayed on track and on budget; the Purchasing Manager was excited about the promotion to VP of Operations; and my company loved the fact that we had another successful user.  It was a win-win-win.  The ERP System was operational in 9 weeks!

This company was remarkable for a number of reasons:

    1. Education occurred before the software was in place
    2. The education occurred at all levels of the company
    3. New processes were in place before the software
    4. The management team worked harder than the users.  Thought this is rare in the companies with which I work, sad to say that many companies are not comprised of real leaders.  This team was comprised of real leaders and lead by the best one I have ever met
    5. Managers were teaching the users.  This removed a number of ‘garbage filters’ and allowed the managers to show users how the job was ‘to be performed’
    6. Users understood that the boss knew what was possible with the new software and bought into the project because of the leadership shown by the management team

Smile when you do that

Michael Roman - Friday, January 14, 2011

ERP Selection and Implementations are a major focus of Manufacturing Practices.  We prepare the clients for success by:

    1. Educating the client company before the selection process
    2. Structuring the teams for the selection and implementation process
    3. Helping them “LEAN” the business processes before the selection process
    4. Clearly identify the key business activities before the selection process
    5. Finding software that fits the business processes
    6. Training users in software functionality
    7. Testing the business processes
    8. Reviewing the business about a year after the “Go Live” event

The mechanics are very successful, and people have fun when we do our work.  Helping people enjoy the activities is very important to us.  A colleague, Bob Green taught me that.

Bob Green was VP of operations for number of manufacturing companies before becoming an ERP Consultant.  Bob and I worked together at a company doing ERP Implementations.  He did the Distribution Modules and I did the Manufacturing modules (most of the time).  We talked about forming a company and striking out on our own but that never happened.  Bob died of heart failure before we could get our ducks in a row.  Bob and I always had fun doing our work and our clients enjoyed themselves; Bob taught me that fun was an important part of our jobs, and his influence was contagious. 

In honor of Bob, here are some of the lessons he taught me:                

Start Every Meeting with a Smile

Smiles become contagious with time.  Smiles are disarming and most often met by returned smiles as well.  You never know when a smile is just what someone else needs.  Bob started every conversation and meeting with a smile regardless of the point of the conversation.  Even when Bob was upset with a client, a colleague, or even me, he started the conversation with a smile.  I think part of Bob’s success was due to his smile.

End Every Meeting with a Smile

Closing is a skill.  Whether the closing is for a sale, an educational lesson, or a conversation, the most important closing activity is to have the participants feel good about the activity when it is over.  Smiles go a long way to help ‘close’ the activity.  Bob sometimes upset people and me for things he did, but seldom for what he said.  That smile at the end of the conversation made you think that there might be some grain of truth in his comments.

Have People Tell People Two Things about Themselves

Manufacturing Practices holds an introductory meeting with the management and project team when we do implementation and selection projects.  The meeting has three main functions.

    1. We use it to introduce the teams from our organization
    2. We use it to get to know the team from their organization
    3. We set the tone for the work that is to follow

The “I am such as such and I do whatever” speech is a standard activity when consultants work with companies.  We get to know them and they get to know us.  However, the other activities are not standard.  The advantage is that it gives us the opportunity to set the tone for what is to follow.

We have all parties tell one of their most embarrassing moments and one of their greatest accomplishments.  We do our introductions and stories first.  This tells the client that we are all in the “same boat”, that we will never ask them to do something we would not do ourselves, and it lets everyone understand that we intend to have ‘fun’ while we perform this very important work for their company.

Appoint a Person at Each Meeting to Tell a Funny Story

At the client site, we start each meeting on a light note.  At each meeting, someone is responsible for telling a funny story.  It takes a few meetings for everyone to remember to do that, so I have a number of stories ready to tell in case someone forgets.  Again, the point here is to have fun and not to take ourselves too seriously.

Have a Contest to Create a Funny Tag Line for the Project

This one requires the help of the management team.  The company sponsors a prize for the best ‘slogan’ or "project tag line".  The rules are simple, people in the company submit the slogans to my team or me; we review them and work with the management team to pick the “best” slogan. Management usually awards a “Dinner for two” certificate to the winner and we throw in a gag gift like a “Pimp my Cube” kit. 

At one company, the head of engineering won the contest with a picture from a Gary Larson calendar.  The picture was of some fish standing outside of the fish bowl that was on fire.  The caption read, “Of course, you now realize, we are equally screwed!”  The Head of Engineering was the only person in the organization who wanted to keep the previous software. So, he had a little fun with the team with his tag line.

Appoint a Person to be Responsible for Taking Weekly Pictures of the Project Team as They Work, Post it in the Lunchroom and Allow People to Post Funny Comments

Everyone has fun with this one.  Of course, there are rules, like no profanity, or suggestive tones.  Some very funny comments appear and even management contributes to this one.  One of those I remember was of a picture of me as I walked away from a meeting.  The president of the company commented, “Here’s Mike Roman, presenting his best side to the camera”.

At each weekly Status Meeting Pass a “Can Do Award” to the employee with the best attitude

One of the companies I worked with warned me about working with “Coni”.  Everyone said she was difficult, short tempered, and the reason she worked in Accounts Receivable was that she “liked” being mean to people. 

Coni won the attitude award every week for the 15 weeks I worked with that company.  She and I are still friends and she sends me jokes at least once a month.  (I think the people in the company were having “fun” with me.  Coni was a real delight!)  At the last meeting, whoever won the award gets to keep it.  Manufacturing Practices usually sponsors this award, and we present a flashlight with the words, “Follow me” on it.

Find the humor in everything

Now, back to Bob.  Bob did not want the traditional funeral or remembrance ceremony after his death.  Instead, we gathered outside of his favorite park in the hills just outside of Las Vegas and scattered his ashes.  It was a somber affair, no wind and a little warm.  Just as we began to spread his ashes, a breeze blew those ashes over every one present. Christine, Bob’s widow commented that Bob wanted everyone to take part of him home.  We did, in our eyes, in our hair, on our clothes, and most importantly in our hearts.  Christine’s laugh and comments made everyone else laugh as well - a nice send off for a dear friend.

On properly defining an ERP Project Plan

Michael Roman - Tuesday, January 04, 2011

On properly defining an ERP Project Plan

I am continually amazed at some of the short cuts some Manufacturing and Distribution companies attempt to take in their efforts to select and implement an ERP System for their company.  Recently I had another firsthand experience with a company, so let me tell you about it. 

A firm contacted me and told me I was a perfect fit for their ERP implementation project.  On this cold call, they told me there were implementing a package with which I was familiar.  I had never had experience with the firm making the call.  The HR Director that contacted me was elusive when I attempted to learn how they got my name, so I assumed it was a reference from a former client.  After several hours on the phone with the HR Director discussing the project, my head was spinning from all the red flags that were waving.  Here are the specifics:

The IT department choose the product for the company

During the initial interview, I asked an important question, “Please describe the steps your organization took to find the ERP System purchased”.  The HR Director explained to me that he did not understand what that process was but he was sure that everyone was dedicated to making it a success.  I asked how he knew.  He said, because “the CEO said this would be the package that the company would implement”.  I asked whom the person in the company that was driving the project.  He explained to me that the company had a new Director of IT who had just finished implementing an ERP system at another organization and that he was the person who chose the software for the company.  I asked what type of manufacturing experience he had.  The HR director told me that the IT Director was an MBA from a small school in the south and that he usually described himself as a computer nerd.  He said he was unclear of the manufacturing qualifications of the IT Director but he received excellent references before he was hired for his new role, which was two rungs up the latter of success from his previous role as a programmer.

I did not say anything but this was a red flag.  Usually the people involved in the company operations find software that best fit their business processes.  This reduces the risk of ERP implementation failure because those people have a stake in making the project a success.  Having a computer programmer responsible for the project was an additional red flag; titles play little in the success of a project like an ERP System implementation.

The IT Department was directing the project

I then asked another leading question that experience shows is critical in ERP Projects.  I asked, “Who is directing the ERP Implementation”.  The HR Director told me that the Corporate Director of IT was in-charge of the project.  I asked him if his company was an Information Technology Company.  He seemed puzzled.  He said, “I have already explained that we are a manufacturing company”.  I then asked why the manufacturing (or operations team) was not ‘in-charge of the project’.  He explained that their plate was too full to take on the project.  I explained to him that experience shows that unless the Operations team has “skin” in the game, the project had a slim chance of success.  I then asked him to review the 1995 and 2009 Chaos reports for support of that position.  I also explained that if manufacturing was ‘too busy’ to direct the selection of the ERP project they probably would be too busy to be involved in the implementation as well. 

Red flag number two!  As stated in the previous section stakeholder commitment is vital to reduce the risks associated with implementing a new business system. 

The Project sponsor was the CFO

I asked another important question, “Who is the Corporate Sponsor”.  He told me that the CFO was sponsoring the project.  I asked him what the CFO’s role in the project.  He said he was not sure but he did know that the CFO would be reporting progress to the CEO and Board of Directors.  I asked how the CEO chose the CFO as the corporate sponsor.  The HR Director said that is an easy question to answer.

The HR Director told me that the CFO was the least busy of all the C level people in the company and that the CFO had implemented Quick Books in the company in only a few months.  I asked if they were keeping the Quick Books for the accounting system and learned that Quick Books was only a stopgap measure.  The CFO would be using the new ERP System’s account system.  This was not necessarily a red flag but usually manufacturing company VPs of Operations or Manufacturing assumed the role of Corporate Sponsor.  It did suggest that the Operations team was not totally on board with the project as suggested by the answers about the role that operations had in the project.

Project Leadership was not evident

I asked the HR Director what his commitment would be to the project and he told me, “I will make sure that everyone in my department attends the appropriate meetings”.  I asked him if he knew the difference between involvement and commitment.  During the next several seconds of dead silence, I explained, “at breakfast, the chicken is involved but the pig is committed”.  I then explained that he needed to be committed to ENSURING that people in his department could perform their roles with the software.  I explained what I saw as successful leadership efforts.  He then explained that he was a Director and had little direct contact with the people in the HR department.   I asked if other Director level people would be supporting the ERP implementation in the same manner and learned that all other Directors were using the same approach.

That was a RED FLAG!  From experience, I knew that each department head had to be committed to making their employees successful users of an ERP System and not just involved.  If people in the department did not see leadership commitment, their dedication usually ends at the lip service stage.

The IT Department Defined the Project Plan

I asked the HR director if he had ever implemented an ERP System before and he told me no.  He said that his HR information did not belong in that computer system.  He said that his department kept meticulously details in of all training and compliance information in their own system.  He said that there was little in the way of HR information in the new computer system.  I asked him if there were other computer systems in use at the company.  He said yes, the planner and buyers used a standalone system and so did the production scheduling team. 

I asked the HR director if there was a project plan for the implementation and he told me yes.  He said that there was a one-page plan that showed when each country would be complete with the implementation.  The eighteen-month project would implement the ERP System in fifteen plants in four countries in just eighteen months.

His words caught me completely off guard.  I explained that I usually created a plan from the bottom up and got consensus from both the user teams and management team to create a valid plan that had buy-in from both groups.  I explained that my project management efforts were usually successful because of the commitments that both teams made.  He then said, “We don’t need consensus, the management team has set the date in stone and everyone will meet the date”. 

The Company wanted to hire me as an Employee for a two year period

The HR director continued the conversation.  He asked if I was interested in the position.  I said I really needed to think about it.  He tried to close the deal by dangling something in front of me.  He said that he was going to sweeten the pot.  He said, “We will make you an employee of the firm for the full time of the implementation or eighteen months, whichever is less”.

At this point, I responded.  I said that I needed a day or two to review my schedule and determine if I could find the time to accept the offer.  He arranged for another meeting a few days later.  At that point, I open my business contacts and found the name of a competitor.  An hour later, I called the HR manager.  I said, “I am sorry but after reviewing my schedule, there was no open space available for your project.  I have the name of a colleague that might be interested in the project the name and number are….”  The HR director said, “You know what, he’s the consultant that gave me your contact information.”   I laughed, wished the HR director good luck and hung up.

The project has very little chance of success and as much as I know that I might be able to turn the project around, I realize how short sighted the company is.  This company already made key errors in the implementation project.  Here is a summary:

1.       An ERP Implementation is a company wide effort and responsibility belongs with the “C-level” people. Shifting ownership to another party is refusing that responsibility.  Asking an outsider to play the role of employee for a short time to shoulder the management of the project is again failing to accept responsibility for the success or failure of the project.

2.       Management is not in touch with the employees in the organization.  By offering me the role of project manager, they were building a layer of isolation between themselves and their employees. 

3.       When the Operations team has no stake in the project, the project has little chance for success.  The usual reason is that in large part, an ERP system in a manufacturing company formalizes the operations areas of the company.  Operation Management buy-in is required to make the project a success; the company must see the project as being the directive of the Operation’s team. 

4.       ERP Implementation is a give and take between management and the user community, because users are the weakest link in the chain.  If users do not embrace the technology, there is NO change of success.  Management must assist the users in achieving that understanding.

Besides that, my competitor is smarter than I originally gave him credit for being.

 

I thought I knew why companies implement ERP Systems

Michael Roman - Tuesday, December 28, 2010

I thought I knew why companies implement ERP Systems.  After all,

1.       I managed ERP Projects as a user multiple times

2.       I have consulted on more than 60 successful ERP projects

3.       My ERP Consulting firm is more than 6 years old

4.       I have authored a book on ERP

5.       I sit on an APICS Certification Committee

6.       I am still in touch with many of my clients

However, an “ERP GURU” recently released an article that said I have been doing it wrong.

The GURU says that although there are many reasons to implement an ERP System, “One of the key reasons is to incorporate best practices" into the business.  I have been doing it wrong for almost three decades!

My clients and I have had have had a single vision for the project.  The reason we implement their ERP System is to create an opportunity to contribute to their bottom line.  We establish policies to help focus that effort and users translate the company policies into processes and procedures to support those policies.  We do define KPIs, we do set expectations for cost reduction, we set expectations to increase inventory turns, and we set expectations to increase customer service as well.  We do that by streamlining the processes they used and closely matched them to the software.  Where their processes produce a marketplace advantage that the software does not have, we change the software to match their processes.   Now I find out that my approach is in error.  Hmm… what do I do?

I could start by calling all my customers and tell them we did it wrong and that we need to go back and do it differently.  OK, I will test that idea out.  Let’s see, I will call Karen and have a talk with her.  We have not spoken for a while; it will be good to catch up on things.

“Good afternoon, Karen, this is Mike Roman, how are you?  Good… What about your son?  GREAT news!  I knew he’d be a great hockey player!  Are your folks doing well?  Oh, they have both retired.  Now they spend their fall and winter where?  No kidding!  Are your sister and brother both well?  Wonderful!  Good to hear that and still working there too; they must really like what they do.  I am so glad you three still work together, you are all so very lucky.  Yes, the girls are all well and so is Susan, thanks for asking.  How is the company doing?  Wow, great news, good niche for a focus too!  Hey, I know you are busy, so let me get to the point of my call.   I just read an article by an ERP guru and I wanted to tell you we did your ERP Implementation all wrong and need to redo it.  What, of course it is billable.

How long will it take?  Well, if we are going to do it right, it will take a long time.  Because the GURU said that companies implement ERP System to incorporate best practices into their business operations.  Well, he is the GURU so he must be correct!  No, I never claimed to be a GURU; I am just a person that helps companies focus their processes to increase the company’s bottom line.

Why will the new implementation take so long?  Well, we have to find out what the ‘best practices’ for your industry are.  Why?  So, we can change your processes to match them, of course.  I do not know who the experts are, that is one reason why the implementation will take so long.  We have to find those experts, and ask them.  You said what?  Ask your clients?  They are the experts!?  Why do you say that?

Yes, Karen, you are in business because of your customers.  Yes, Karen, if you do not satisfy your customers, you will not be in business long.  Yes, Karen, if you engage them in product design sessions, and you give them a good price for the product, if your bottom line is in the black, and if your customers continue buying and if you continue to meet their expectations by definition, you are satisfying your customers.  OK, Karen, you might be on to something.  Maybe your customers are your business experts.  What, that is what I educated you and your team to understand?  Oh, yes, so I did.  No, Karen, I am not a guru; I am just a person that helps companies focus their processes to improve their bottom lines.  I guess if your ERP System does that for you, we implemented it correctly.

Thanks for your time, Karen, that means a lot to me; please give my regards to your family and the team.  It was great speaking with you again.  Bye!”

Well, I guess the ERP GURU and I have a difference of opinion.