IT Focus - Plug in and go for ERP
ERP rapid implementation is flavour of the month, but it pays users to think twice, writes Nick Huber.
ERP rapid implementation is flavour of the month, but it pays users to think twice, writes Nick Huber.
It sounds like an offer your finance department can’t refuse. Software giants such as SAP, Oracle and PeopleSoft, are now marketing complex enterprise resource planning software that can be installed in less than three months, meet strict deadlines and stay well within budget.
And, when your business changes, the ERP installation can easily be altered.
Rapid implementation for small and medium-sized businesses is currently the hottest topic in the hyperactive ERP market. But these claims are being met with scepticism by seasoned industry observers and users. Some can barely stifle their sniggers.
Over the last five years ERP software, which controls business functions ranging from the accounting system to manufacturing, has gained a reputation for being expensive and difficult to install.
Horror stories abound concerning missed deadlines and inflated budgets.
Many will be apocryphal, but earlier this month Accountancy Age revealed a furious row which had broken out over a two-year SAP implementation project, at the University of Newcastle upon Tyne, which is due to go live next month.
The university admits it has gone £400,000 over budget but insists it has run to time and is set to deliver major gains in effectiveness.
Sources close to the project, however, claim the R/3 implementation is six months late and difficult to use.
Most of the ERP super-league vendors – SAP, Oracle, JD Edwards, Baan and PeopleSoft – have unveiled fixed-time implementations in a bid to appeal to the lucrative SME market.
This has been driven by the slump in demand caused by the Year 2000 problem on the large-company market. Most blue-chips already have a Year 2000-compliant system and few are prepared to risk a new implementation now.
This slowdown has sent a shudder through the big ERP vendors causing a rash of profit warnings, hence the move to targeting SMEs.
To win the hearts and minds of the mid-range sector, SAP and its peers have to overcome the perception that their software takes too long to instal.
To reduce implementation times software companies use ‘templates’ – a kind of one-size-fits-all software based on common practice in an industry – to minimise the amount of customisation required.
There are many rapid implementation schemes on the market but the godfather of them all is SAP’s Accelerated SAP (ASAP).
Set up in the UK two years ago, ASAP is based around a tried and tested methodology for implementing R/3 and software templates.
But unlike more recent schemes from rival vendors it only promises to reduce implementation times. It does not guarantee a maximum time for software projects.
Peter Robertshaw, manager of SAP’s product marketing group in the UK warns that customers who opt for the ‘pure’ ASAP programme need to make decisions quickly about changes to their business during the software project.
‘You can save money in consultancy fees,’ boasts Robertshaw. ‘But we bring in rules such as having to make business decisions within 48 hours.
Discussing business functions adds time to projects.’
SAP is also planning to introduce new flavours of ASAP for areas including upgrades, data warehouses and making software compliant with European Monetary Union.
SAP’s rivals have been quick to catch on to this trend and are now pushing their own rapid implementation schemes.
Earlier this year PeopleSoft announced its mid-market strategy. And in March Oracle, the US database and ERP vendor, launched a rapid implementation service called FastForward.
FastForward, which originated in the US, offers financials and manufacturing modules ‘shrink wrapped’ for 25, 50 and 75 users.
Oracle claims it can implement a financials application in 30 days at a cost of around £170,000 for 25 users. It is sold through partners including Cap Gemini and ICL
It has also launched a 99-day implementation service for process manufacturing.
It is still too early to judge the success of the initiative – UK customers have not yet been revealed – but Neil Brooks, Oracle’s UK applications marketing manager, is confident the service will become a standard Oracle offering.
‘IT has a reputation for being a blank cheque,’ he says. ‘But now people are finishing projects within thirty days,’ he says.
But with ERP software becoming more complex with each release a successful implementation depends on company staff being well-trained in the new software.
But others in the software industry warn finance departments that the current vogue for speedy implementations is largely misguided. Trevor Salomon, marketing director for JD Edwards, the ERP vendor, believes users should pay more attention to the capacity they have to change the application after it has gone live, rather than becoming fixated with the implementation time.
‘If the speed is the only measure of a project, then a 90% fit is pretty good. But what about the day after the implementation when you acquire a company,’ he says. ‘In the real world your business needs to change.’
JD Edwards’ answer is based around a technology called Idea to Action, a wizard-based feature written into JDE’s One World suite. This aims to let finance directors and accountants adopt business processes – invoicing, for example – by following click and point guidelines.
Salomon also suggests the ERP companies with the highest-profile rapid installation schemes are promoting them to counter their reputations for lengthy implementation times.
‘One or two companies have become tainted,’ adds Salomon.
But a fast and glitch-free ERP project also depends on the human factor – how well prepared employees are for the new system.
NETg, is one of the companies specialising in ERP-based training. The West London-based software trainer provides 70 CD-Rom courses based on the diverse modules of SAP’s R/3 applications.
Glynn Jung, team leader for NETg’s SAP team, argues that while one-to-one staff training before an implementation is ideal, most companies are too big for this to be practical.
‘Around 80% of a company’s IT skills can be delivered by distance learning,’ he says.
‘These are generic skills like posting an invoice.’
Jung stresses, however, that he has yet to come across many successful rapid implementation schemes for small and medium-sized companies. He argues that many small companies lack a clear idea of how to measure the success of a rapid implementation and how to change business processes to accommodate the new software.
‘An accelerated implementation will only work when companies change the way they operate and exploit all the functionality,’ he says. ‘I haven’t seen major successes in the SME market.’
So how can users find the best rapid implementation deal?
The sheer variety of schemes is bewildering, and most of them are in their formative days. The Big Five consultancies work with most of the main ERP vendors and offer a more independent perspective.
KPMG, for example, has its own rapid implementation service called Rapid Return On Investment (RROI).
It originated in the US and offers pre-configured Oracle, JDE and SAP applications so customers do not have to customise vast chunks of the software. ‘We get the pack up and running quickly so they can get 80% of its functionality from the version,’ explains Chris Gant, partner in KPMG’s ERP practice.
Despite the fact that he implements enterprise suites from the leading ERP companies, Gant argues that many of the latest implementation schemes are little more than slickly repackaged old services – a kind of rapid implementation ‘lite’. ‘Many companies are just rebadging what they did previously although ASAP has more teeth,’ he says.
The most common mistake companies fall into, says Gant, is to just re-instal their old systems, with all their faults.
He adds that users also need to realise that the technology embedded in each ERP application has its own drawbacks.
‘A company like SAP has lots of switches and cross-dependencies in its software,’ he says. ‘You can design it to do anything you want but its harder to change once you’ve set it up.’
Other consultants recommend PeopleSoft as the one to watch for rapid installation.
Rob Coomber, European practice director for Cambridge Technology Partners, the consultancy and systems integrator, says it has seen its PeopleSoft practice take off in Europe over the last year. ‘We work with all the main ERP vendors but PeopleSoft has really come to the fore for us,’ he says. ‘We’re talking about just months to instal and sometimes less.’
A less dictatorial approach
Intriguingly, Coomber predicts that the raft of fixed-time implementations will force consultancies to take a less dictatorial approach to clients.
‘The traditional approach for doing an IT programme is for the IT consultants to take over half of your IT team and tell you what you’re doing wrong.
But you can save money by partnering with consultants and resellers,’ he says.
But there are alternatives to the services offered by the ERP giants.
Mid-range vendors – such as Navision, Great Plains and Maconomy – insist they have always been in the business of rapid installations and their software is quicker to instal and more flexible than the ERP giants are.
Yash Nagpal, managing director of Navision, the Danish financial software specialist, says its speed of response boils down to object-orientated architecture, a common feature among Scandinavian software vendors like Maconomy and Damgaard.
‘The software packages coming out of Scandinavia are far more adaptable for quick implementations,’ he says. ‘Rapid implementation is hear to stay and users are becoming more savvy.’
Rapid ERP is set to become a standard feature on the software landscape, rather than just another pre-millennial trend. It appeals to small and medium-sized companies, with limited time and budgets and opens up a lucrative market for the ERP vendors.
But there are pitfalls for finance and IT departments to ponder. The effectiveness of rapid installation schemes is still hotly disputed, because the ERP giants lack a track record in dealing with small and medium-sized companies.
Companies will also face increasing pressure to make far-reaching business decisions quickly during a rapid implementation, limiting the scope for software tailoring. Rapid installation contracts should not be signed in a hurry.
HOW TO MAKE THE RIGHT CHOICE
Selecting an appropriate solution means asking the right questions: the following points offer a guide.
– Do the benefits of a rapid ERP service – reduced installation time and lower costs – outweigh the potential drawbacks – less time to make decisions about business processes and less freedom to tailor the application to your business?
– How easy will it be to add extra functions and modules to the application after it has been installed?
– Does the vendor have a track record in rapid installations? Ask for reference sites.
– Is there a maximum time and price for the installation written into the contract? Accelerated SAP promises to reduce the overall implementation time, but it does not say by how much.
– A rapid installation might reduce fees paid to outside consultancies but decisions about changes to your business processes will have to be taken more quickly – within 48 hours, for instance. Ideally this will require a special team within the company authorised to make these decisions.
– When choosing a software vendor don’t automatically presume that the best known vendors, such as SAP and PeopleSoft, will have the best deal for you’re business. Shop around and consider mid-range vendors such as Great Plains, Navision and Maconomy.
CASE STUDY: HOW ANGLIAN SPLASHED OUT
When Anglian Water signed a £20m deal for SAP’s R/3 package last year it was determined to implement the software in only 12 weeks. But this was no small task. It involved training 1,700 staff across several hundred sites in software modules ranging from HR and payroll, to financial management.
Anglian, which outsources its IT operations to Computer Sciences Corporation (CSC), decided to draft in an outside training partner, DACG, which specialises in providing education and support for companies installing ERP software.
Tom Roberts, Anglian’s business change manager, was the person responsible for making sure that all parts of the business were properly trained before the SAP software went live.
‘We chose DACG because it had an excellent track record and reference sites we could check regularly,’ he says.
DACG developed around 40 courses for the implementation. The training was a mixture of computer-based training, for basic SAP skills, and instruction from DACG consultants for more in-depth, role-based training.
To accommodate these diverse training needs Anglian set up six permanent training rooms.
The emphasis throughout was on providing informal workshops, but Roberts points out that cost centres were threatened with financial penalties if their staff didn’t bother to attend the training courses.
The average attendance rate was 94%.
‘We didn’t want people to be trained too early or at the last minute,’ recalls Roberts. ‘We had no contingency time at all so we needed a high level of attendance.’
And once the staff had completed their training programme they were able to test out their newly learned skills on machines in a controlled but realistic ‘playpit’ environment.
The package went live as planned 12 weeks later but Anglian staff still receive support through an online windows-based helpline installed by DACG.