Easier ERP Implementation?

Historically, enterprise resource planning (ERP) has the reputation of being a project that takes longer to implement than the tenures of those who OK’d the implementation. Then in the face of the year-2000 crisis, ERP implementations became quicker and, dare say, somewhat easier. What happened?

Instant gratification is still not part of implementing ERP, but neither are massive up-front organizational changes; large software, maintenance, and licensing costs; consulting services running at a multiple of the licensing fees; implementations stretching for nearly a year, if not multiple years; and a time-to-benefit that stretches patience and shortens careers. At least not as much as what it used to be when implementing ERP. So what have the major ERP vendors done to facilitate ERP implementation? Here’s a rundown.

 

The Template Approach

Some ERP vendors use templates to configure very complex—some might add generic—ERP systems. The ERP system typically includes the “best practices” in the industry of much larger enterprises, say Fortune 500 companies. For example, look at how SAP Solution Manager is used. This tool is basically a centralized storehouse for implementation—and beyond. It consists of a methodology for implementing SAP, including project plans, time lines, milestones, detailed implementation guides, and versioning control, as well as monitoring tools to report on implementation status. Project managers outline and define their company’s business processes through a graphical interface, determining which of the company’s systems are running which business processes. Along the way, people pick and choose from a catalog of SAP standard business processes, creating a template that meets the user company’s specific business requirements. (For multi-site enterprises, all of the company-specific information can be packaged into templates for implementing ERP at remote facilities.)

After the ERP implementation, the tool supports help desk functionality, database monitoring, user-configurable alerts, and testing (e.g., functional tests and systems integration tests). Because of the centralized database nature of this tool that’s operational from the very start of the ERP implementation, “there are no more lost documents, undocumented tests, unsolved problem messages, or emergency calls to consultants who have left your company,” according to Thad Dungan, director of global solution marketing, Automotive, for SAP (Detroit, MI; http://www.sap.com/industries/automotive/index.aspx). The upshot: faster ERP implementations.

Or, look at what Oracle has. Its Business Flow Accelerators are basically wizards that configure a template for implementing proven business flows. In practice at a user company, Oracle goes through a process it calls “discovery,” which includes survey questions and interviews with a user company’s executives about how they run their business. For instance, does the company operate LIFO or FIFO inventory, what does the chart of accounts look like, and what are the bill-to and remit-to location? Based on this information, Oracle sets the “business parameters” in the ERP software to match the user company’s operation.

True, many ERP vendors do the same thing. What Oracle then does is feed these responses into a configuration tool. By smacking the “configuration” button, presto! there’s a configured ERP system using business flows that match the user’s operations—based on Oracle’s experience in the relevant industries. “What formerly took weeks to do can be done in an afternoon,” claims John McGlynn, industry business unit leader, Automotive, for Oracle (Detroit, MI; www.oracle.com/industries/automotive/index.html). It also leads to reduced consulting fees.

Oracle has been seeing some of its major customers, many of them growing through acquisitions, implementing ERP in roughly three months at facilities around the world. SAP has also seen faster implementations of its software; Dungan says 61% of all SAP ERP implementations have been accomplished in less than nine months. (Obviously, numbers regarding implementation time are a function of the complexity and size of the business.)

Of course, this all assumes relevant functionality is embedded in the ERP code to begin with. Points out McGlynn, “If the functionality is not resident, there are no features and options to activate. That’s a dilemma independent of [the ERP vendor].” Not surprisingly, then, when sticking with the “safe and narrow,” such as finance and human resources, says Kevin Mixer, research director, Automotive and Heavy Equipment Industries, AMR Research (Boston, MA; www.amrresearch.com), “ERP is a ‘drive through.’ But as soon as you go to your core business practices”—start implementing the logic and workflows that differentiate an enterprise from its competitors—“buckle up, it’s a long road” in terms of customizing and associated consulting services.

 

Industry-Specific ERP

Pam Lopker, president and founder of QAD (Carpinteria, CA; www.qad.com) doesn’t agree with the template approach. “A mega suite, by definition, has software for a couple of dozen different industries. The software is so complex that it’s difficult to implement in any given company.” Instead, Lopker believes ERP should match the user’s industry. Focus on the industry, then focus on the subverticals. “Give them everything they need to run their manufacturing, finance, distribution operations.” After that, matching the user’s specific enterprise becomes relatively easy.

Agreeing with that is Dave Van Noord, vice president of global product management for Infor Global Solutions (Northville, MI; www.infor.com). He says ERP vendors can’t just come in with some generic “this-thing-works-for-everybody,” deal out some best business practices, and then expect the user company to do just that. In automotive, he says, “you don’t get to pick your customer’s best practice; your customer picks that for you.” And automotive ERP does have some “crucial” best practices that ERP needs to handle innately, such as electronic data interchange, release accounting, kanban and just-in-time sequencing, and vendor managed inventory.

QAD and Infor, to name two ERP vendors, have separate ERP applications by industry. These are not one-off customizations by vertical; these are separate applications that contain industry-specific functionality. QAD, for instance, supports six verticals within manufacturing. Explains Lopker, QAD doesn’t “preset anything for automotive. We ship our standard product with our standard modules for automotive. We have some modules, such as release accounting, that are only used by automotive.”

 

Function-Point Implementations

Some enterprises find that a more “function-point” orientation is faster when implementing ERP, says Mixer. These companies get “quick deployments out of the box [by] picking a module of ERP capability and rolling it out globally where it makes sense.” One caveat: While that may work in financials and human resources, says Mixer, that doesn’t “necessarily map to the workflows in the manufacturing environment,” which is far more complex, industry-specific, and enterprise-specific.

Another strategy that seems to speed up ERP implementation is to use “greenfield” plants as a blueprint—a template—going forward. Mixer points out that several companies are investing in ERP infrastructure and manufacturing workflow processes—in China. They then slowly bring that implementation west, “riding the curve of production capacity as they need it”; that is, the user companies apply the “blueprints” from the greenfield plants to update their European plants and, last, their North American plants. This strategy, adds Mixer, often yields a more seamless enterprise better able to share information between applications.

Yet another strategy to facilitating ERP implementation combines old and new approaches. The Microsoft Business Solutions (MBS) Group (Duluth, GA; www.microsoft.com/BusinessSolutions/Industry/Automotive.aspx) works on developing “core level functionality” that meets the needs of the average manufacturing facility. Says MBS partner Jerry Czernel, who is vice president of operations for AIM Computer Solutions, Inc. (Fraser, MI www.aimcom.com), “Less could actually be more.” His company strips away all the extraneous code that small- to medium-sized automotive suppliers don’t use, such as having an ERP package that’s translated into several languages. While a core of “best practices” are a good foundation for ERP, at some point, says David Weger, MBS senior product manager, automotive industry, “the customer wants that ‘last mile.’ There’s always some customization that comes about.” At that point, MBS relies on its partners and independent software vendors to bring in industry expertise, dive deeper into the software code, and modify the ERP system for the user’s specific business needs.

 

The Little Things

Then there are the subtleties of system design and implementation services. For instance, ERP vendors are writing their user interfaces with the terminology users feel comfortable with. First there’s the ERP language defined by APICS; second, there’s the language from the automotive industry itself. Here’s a simple example from Lopker. “Trade management” in consumer packaged goods means managing promotions management, that is, pricing, rebates, and coupons. In automotive, “trade management” means handling the billing and receivables for suppliers because the OEMs don’t want to handle them separately.

More help comes from the type of people available for implementation consulting and service; nowadays they are more likely to be dedicated to the user’s industry. “You’re not going to train a services person who hasn’t lived and eaten automotive for the last five-plus years,” says Lopker.

Van Noord ticks off some other, “more common sense stuff”: Have a good, solid project management methodology and team; incorporate training and education throughout the implementation; get management buy-in and clear ownership within the user company; and limited customization. Yes, Van Noord muses, there is the possibility that ERP is easier to implement today because many user companies are implementing it for the second time. But equally important are the tools, the best practices, and the software code now inherent in today’s ERP systems. The business logic encapsulated in the software to run manufacturing businesses has become much more sophisticated than what it used to be, he says, yet the implementation time is much shorter, as well.