Moderator

Dana Gardner
• CNET Business Host
• President &
principal analyst,
Interarbor Solutions
 Featured guest
Brian Sommer
• Founder,
TechVentive, Inc.
• Fmr. senior director of
Andersen Consulting‟s
(now Accenture‟s)
software intelligence unit
Featured guest

Michael Krigsman
• President and CEO,
Asuret, Inc.
• ZDNet blogger
ERP = Enterprise Resource Planning
• A collection of application software
modules/functionality that often includes:
– Human Resources
– Accounting
– Manufacturing
– Supply Chain/Distribution/Logistics
– Procurement
– Customer Relationship Management
• Solutions often come with their own:
– Analytics
– Report Writers
– Business Intelligence
– Infrastructure Architecture
– File Management
– Integration Tools
– Etc.
 Why do companies
undertake ERP?
• Experiencing inorganic growth or
contraction (e.g., merger, divestiture)
• Outgrow existing system
• Current, old system incapable of meeting
new regulatory or other time sensitive
requirement (e.g., Y2K)
• Using ERP to standardize processes
corporate-wide
 Goodbye Golden Age
Golden Age of
Software
• 1970 – 2005
• Typical products:
– Transaction processing
– Automated manual tasks
– Internal data focused
– License/Maintenance Model
• More toolkit than solution
– Great business for integrator
• Built in an age of constraints
 Goodbye Golden Age

• Started off as a ROI savior for businesses

• Reduced back office costs from an average of 4% of total revenues to 1.5% today
• Drove economic productivity statistics from 1960s to mid-1990s
• Without productivity gains, focus has shifted to TCO not ROI
• Decades of diminishing incremental benefits are forcing structural change on the
industry
 Buyers of apps have changed
• Top execs now see application
software like a refrigerator
(replaced only when it wears out)
yet vendors want buyers to see it
as a fashion item (replaced every
season as new styles come out).
Vendors aren‟t winning this one.
• Top execs see application software Versus
as a yawner
– It‟s a cost of doing business
– It offers tactical not strategic benefits
– It is something they have no passion
about
 IT buyers/users
• What they want from • Why? They:
ERP vendors:
– Provide innovation scan – Are not technical
– Drive idea origination – Have no time
– Apply business lens to – Need help understanding
technology the business implications
of a new solution
– Improve processes to 1st – Are unfamiliar with other
quartile performance
levels (or better) best practices
– Bring them ROI not TCO – Need technology that
impacts top and bottom
line
– Plan for bringing the
technology into their – Are not integrators
world successfully
 The New Age?
Hybridized Apps
• Current vendors have tough (Innovative Tech
+ Business Apps)
choices to make:
– Become a low cost leader No Leader
Emerging
– Rediscover how to deliver real
ROI not lower TCO
• Low cost leadership only
possible if vendors:
– Have huge economies of scale
(i.e., large install base)
– Offer less capital intensive Low Cost
High Cost
Leaders
solutions for clients (e.g., hosting) Solutions
– Provide more extensive services
(e.g., process re-engineering,
process benchmarking, process
transformation) Most of the
• No firm seriously approaching Apps
Industry
novel ways of identifying,
integrating and exploiting Traditional
Functional
innovative technologies beyond Apps
status quo
 Vendors must enable events
• TCO not ROI – Settling for a less
acceptable solution
• Flight of Innovators, Early Adopters
from traditional ERP to SaaS & BPO
• Switching or upgrading costs are off the
charts - $1 Billion SAP installs!
• Believe technical innovation is all they
need to provide & that „partners‟ will do
the rest
• Fantasy world – Still expect businesses
to operate as they did in 1970

“CEOs want innovation not infrastructure” – Marc Benioff

 Different buyers will choose
different solutions
• Innovators
• Early Adopters

SIs, HR Service
Providers, Open
Source

• Innovators Custom • Innovators

BPO,
Shared Systems,
• Early Adopters Business
Services
• Early Majority BPO As Usual

• Late Majority
SaaS, • Laggards
The market may Hosted
well move away Systems http://www.valuebasedmanagement.net/methods_porter.html

from traditional • Early Majority

providers
How innovative will ERP vendors be?

Mimicry Derivative Innovative

• Functional Solution • Functional expansion of • Event-driven Solution
existing solutions
• SOA, SOAP, Hosted • Non-narcissistic,
Product • New enhancements to balanced view of
existing products business, economics,
• Comparable functionality
internal transactions
to SAP, Oracle, etc. • Evolutionary not
Introducing the Wheel revolutionary • New methods of data
Version 1.0 collection, aggregation,
• Designed for easier
synthesis
transitions for existing
clientele or to avoid
putting the install base
at risk of predation
The
New
Trinity Events

External
data
Limitless
vision

New technologies
 Key messages
• Competitive and buyer landscapes are
radically different than those present during
the last great ERP sea change (i.e.,
Unix/Client Server)
• Generic (i.e., cross-industry) solutions are
struggling to remain relevant
• New technical or economic approaches such
as SaaS, SOA, etc. are commonplace and
Undifferentiated – worse, CXOs are
uninterested
• Next buying binge may be great for BPO
providers not apps vendors – have CXOs lost
passion for back office solutions?
• People don‟t deserve the ERP they‟re getting
today – They need something better
 What are some of the
challenges?
• ERP implementations are complex,
involving business, organizational and
technical change
• Three distinct agendas must be
harmonized:
– Software vendor
– Implementation partner
– Purchaser
• How will value be delivered?
Implemention success or failure
• Almost always determined by BUSINESS and
ORGANIZATIONAL, rather than TECHNICAL
factors
• ERP implementations cause considerable
change, and therefore disruption, inside an
organization
• Careful management is critical
 ROI of an ERP implementation
• Consider implementation costs in addition
to software license costs
• Implementation costs include services
fees to the consulting firm (or software
vendor) performing the implementation,
training, and support
• Failure to consider implementation costs
can cause the project to go over-budget
and behind schedule
 Project initiation &
planning issues
• Unclear or unconvincing business case
• Insufficient or non-existent approval process
• Poor definition of project scope and objectives
• Insufficient time or money given to project
• Lack of business ownership and accountability
 Project initiation &
planning issues (cont’d)
• Insufficient and/or over-optimistic planning
• Poor estimating
• Long or unrealistic timescales; forcing project
end dates despite best estimates
• Lack of thoroughness and diligence in the
project startup phases
Technical & requirements issues

• Lack of user involvement (resulting in

expectation issues)
• Product owner unclear or consistently not
available
• Scope creep; lack of adequate change control
• Poor or no requirements definition; incomplete
or changing requirements
• Wrong or inappropriate technology choices
Technical & requirements issues
(cont’d)
• Unfamiliar or changing technologies; lack of
required technical skills
• Integration problems during implementation
• Poor or insufficient testing before go-live
• Lack of QA for key deliverables
• Long and unpredictable bug fixing phase at end
of project
 Stakeholder management &
team issues
• Insufficient attention to stakeholders and their
needs; failure to manage expectations
• Lack of senior management/executive support;
project sponsors not 100% committed to the
objectives; lack understanding of the project and
not actively involved
• Inadequate visibility of project status
• Denial adopted in preference to hard truths
 Stakeholder management &
team issues (cont’d)
• People not dedicated to project; trying to
balance too many different priorities
• Project team members lack experience and do
not have the required skills
• Team lacks authority or decision making ability
• Poor collaboration, communication and
teamwork
 Project management issues
• No project management best practices
• Weak ongoing management; inadequately
trained or inexperienced project managers
• Inadequate tracking and reporting; not reviewing
progress regularly or diligently enough
• Ineffective time and cost management
• Lack of leadership and/or communication skills
 What are some tips for
maximizing value and success?
• Define project scope accurately
• Define clear budget and time specifications
• Define the ROI clearly
• Avoid software modifications
• Use external consultants carefully
• Change management, documentation, and
training are important
 How do major ERP vendors
facilitate implementations?
• On-demand model: SAP Business
ByDesign, NetSuite
• Traditional model:
– Implementation toolkits (includes roadmap
and documentation)
– Packaged, productized services (fixed-price,
time, and scope)
– Pre-configured systems (includes tools,
documentation, methodology)
 Defining ERP
deployment success
• “Successful” ERP implementations meet the
following criteria:
– Project completed on-budget
– Within timeframe
– Fully accomplishing planned scope
• Processes now delivering to expected
performance levels (e.g., 1st Quartile
benchmarks)
• Implementation design permits quick, cheap
upgrades
 Conclusions
• Note that these points are all about
management, rather than technology.
• Projects fail when expectations are not aligned
with results; in a sense, that‟s the definition of
failure.
• Differences in expectations, goals, and priorities
are substantial contributors to non-technical
complexity, which is the underlying cause of
most IT failures.
Questions and Answers
 Featured guests

Michael Krigsman Brian Sommer