Do you remember the TV show "Name That Tune"? It was popular in the 50's
and 60's so only the more senior members of the readers will remember
it. Contestants bid for the right to "Name That Tune" by bidding lower
and lower the number of notes they would hear as a clue. "I can name that
tune in five notes", said the first player. "I can name that tune in four
notes", said the second. "Three", said the first, and so on. This old
game reminds us of the selling game played by ERP players a few years
ago and now being played by most vendors in most software categories.
They claim that they can implement their solution faster than the competitor's.
"I can implement in 60 days", said the first vendor. "I can implement
in 45 days", said the second, and so on.
win the game, some vendors put together standard programs, for example
SAP's AcceleratedSAP - ASAP (subsequently renamed to ValueSAP and Accelerated
Industry Solutions), Oracle's FastForward, or Peoplesoft's Select (recently
renamed to PeopleSoft Accelerated e-Business Solutions) program to name
some (for more information, see SAP
Claims Big Gains In The Low-End Battleground and PeopleSoft
Joins The Hunt For SMEs). Over the last few years the market has seen
a plethora of fixed-scope and fixed-price applications, pre-packaged vertical
solutions with industry templates, limited education and training, implementation
tools, attractive support programs and hosting services with catchy names,
all aimed at making it faster, simpler and cheaper for enterprises well
under $500 million to use them.
of these programs guarantee the length of time and the cost of the implementation.
To be able to make these offers, vendors must predefine as much of the
total solution as possible. The software may come pre-configured for your
industry, the number of options on how business processes will work may
be very limited, the technical environment may be limited to a few combinations
of hardware and software. So, you have to ask the question - Is this approach
good or bad for the user?
most business decisions, this is an issue of trade-offs. No single answer
works for all companies. You have to make a list of plus and the minus
points associated with the decision and see which side wins.
- The Plus Side
The vendor will guarantee both the cost of the implementation and the
schedule. In a world of budgetary uncertainty, these are very big pluses.
Since the basic concept is getting the software live fast, you begin to
gain the benefits of the new system sooner, "faster time-to-value" as
one vendor boasts. In ideal cases of perfect preparation and due diligence,
fast-path implementations are measured in thousands of dollars instead
of millions, and months or weeks instead of years.
the software comes pre-configured to reflect what the vendor considers
to be the best practices in your industry. Since most companies want to
improve their business practices with the new system, this is another
big plus. These industry templates have been devised with the idea to
minimize customization and are based on the practices and processes that
have proven efficient in the past. Smaller and fledgling enterprises often
have undeveloped or sub-optimally developed processes and, therefore,
they might benefit from leveraging ERP vendors' experiences in refining
these rapid implementation programs have initially been devised by Tier
1 ERP vendors to penetrate the small-to-medium enterprises (SMEs) market
segment, there has recently been an increased awareness that this methodology
might not be a bad idea even for large customers. Traditional ERP systems
within large corporations have, as a rule, been heavily customized, which
required immense human (read consultants), time and money resources.
pro et contra of modifying software was discussed in "Should
You Modify an Application Product?". Thus, many vendors have increasingly
been encouraging their prospects to minimize modifications and implement
their software out-of-the-box (in a 'plain vanilla' mode) regardless of
the company size. Indeed, over last two decades, ERP vendors have garnered
ever more out-of-the-box functionality, which makes them suitable to satisfy
the customer business requirements without serious modifications. Major
ERP players currently offer several dozens of applications that cover
a broad scope of business needs. They have also tailored their applications
for a number of vertical industries/markets.
- The Minus Side
While the predetermined time and cost of the implementations are benefits,
they are short-term benefits. Additionally, there is always some form
of trade-off in the name of expediency. The features traded might have
been functionality, customizability, platform options, solution scalability
or extensibility. While some of the minus points that come with the fast-path
approach are short-term, most are long-term issues.
like their bigger brethren, generally operate in a dynamic, competitive
environment and have global, multi-site operations that are either wholly
owned or that function in a supply chain relationship. Consequently, all
these companies need some level of support for advanced functionality,
scalability, supply chain management (SCM), customer relationship management
(CRM), e-commerce, and distributed computing environments. And they have
to accomplish these endeavors with less (or completely without) IT staff
and a much more limited budget compared to their bigger counterparts.
For these reasons, the fast-path ERP vendors' offerings for smaller enterprises
have generally had only a limited success.
understand many of the minus issues, we must first read the fine print
on the fast-path program. The devil is usually in details.
fix the time and cost the vendor must eliminate or fix those things that
can be variables. For example, many of the fast-path programs deal with
only a single site, acceptable for some business but not all. Often the
fast-path program requires a fixed set of hardware and software options.
If the options offered reflect your environment, then this is not a negative.
If they do not match, it means your IT organization has a new set of support
needs at an added long-term cost.
fixed costs and implementation time are attractive, it is questionable
whether an enterprise can make use of all the offered processes. With
most fast-path programs, you must adopt the pre-configured business processes
with limited or no options for changing them, even if the software will
allow alternative processes. This means that the people and procedures
in your business must change to match the software. This issue was also
explored in "Should
You Modify an Application Product?"). The trade-off here is what
the fast-path approach's business processes offer versus what is best
for the business. If the fast-path's "best practice" is not what is right
for the business, using its approach means a long-term negative impact
on the benefits of the system."
you are considering installing the fast-path's standard business practice
and then changing in the future to what is best for the business. Look
at this approach with skepticism - this means two implementation and change
management efforts, it may also not be possible with all products (some
products cannot be changed after they are initially implemented without
heroic efforts). Some companies will not be able to make use of this quick
approach if they simply cannot eliminate some steps that are specific
to their internal business processes (e.g., in case of regulatory requirements)
and these are not supported by fast-path offerings.
fast-path often does not include some items that most implementations
require, for example data conversion or integration to existing systems.
These items will be required and their time and cost will fall outside
the fast-path project but must be considered. If the data conversion or
integration has a lead time longer than the fast-path approach, then only
the fixed price benefit of the fast-path is meaningful.
Software modifications are forbidden. Even a simple form modification
(e.g., to accommodate the company's logo) may cost you dearly as it goes
outside of the contract's scope. The relative merits of modifications
are fully explored in the above-mentioned article and involve more trade-offs.
Further, there are often surprises lurking in the need to integrate existing
legacy systems and/or islands of information with the new software application.
but not least, some employees (whose 'buy-in' you need badly) might expect
too much from the new system, which always leads to requests to add more
functionality in midstream (so-called dreaded 'scope creep'). This would
consequently defeat the purpose of installing the fast-path system in
the first place.
Market Success Factors
The key factors of success in business applications for the SME market
segment are price, speed of implementation, vertical focus, product scalability
and scope expandability, and a single point of contact. While, some bigger
vendors seem to have captured many of these, there is still an ample room
for improvement. A perfect example is the rigorousness of the vertical
solutions qualification procedure that SAP has imposed upon its indirect
channel. A SAP Certified Business Solution (CBS) partner is supposed to
provide a sound business plan and marketing strategy, solution packaging
strategy, customers willing to be pilot sites, and meet a number of other
stringent requirements. The fact that SAP has so far qualified only three
vertical solutions, primarily for the service industry sector, serves
as a proof how excruciating the effort to exceed the value proposition
of incumbent mid-market vendors may be.
Is a fast-path approach good or bad? Only you can decide what is best
for your business. Make a plus and minus list to find out. Make sure to
establish your needs and to negotiate them upfront. For some, start-ups
or recently merged businesses with no standard way of doing things and
no set IT environment, a fast-path may be a great idea.
Tier 1 vendors offer their own version of SME solutions with programs
for rapid, lower-cost implementations. While vendors' endeavors in that
regard are highly commendable, the caveat emptor approach is still applicable.
Although some smaller companies would be well off with scaled-down versions
of rapidly implemented, Tier 1 software applications, for many companies
this may not necessarily be the best solution. For many businesses, the
fast-path approach will mean a short-term win and a long-term problem.
mid-market companies today's dynamic business environment means the survival
of the most agile and flexible. When evaluating a software application,
companies often fall for a snazzy user interface or raw number-crunching
power. However, a flexible system should also offer features like tools
and templates, cross-reference checks, and many other parameterization
utilities that provide significant system changes without changing source
code. Make sure that what you select now will keep abreast of the technology
changes in the future. It may sometimes be more beneficial to implement
the right solution slowly than to rush the wrong one into place. Low cost,
quick fixes seldom mean the best long-term solution.
Olin Thompson is a principal of Process ERP Partners. He
has over 25 years experience as an executive in the software industry
with the last 17 in process industry related ERP, SCP, and e-business
related segments. Olin has been called "the Father of Process ERP." He
is a frequent author and an award-winning speaker on topics of gaining
value from ERP, SCP, e-commerce and the impact of technology on industry.
can be reached at Olin@ProcessERP.com
Jakovljevic is a TEC research director with a focus on the ERP market.
He has over 13 years of manufacturing industry experience, including several
years as a power user of IT/ERP, as well as being a consultant/implementer
and market analyst. He has been certified in production and inventory
management (CPIM) and in integrated resources management (CIRM) by APICS.