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Fast-path Implementations - Are They Good or Bad?

Written By: Predrag Jakovljevic
Published On: July 5 2002

Introduction 

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.

To 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.

Many 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?

Like 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.

Fast-path - 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.

Often 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.

While 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.

The 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.

Fast-path - 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.

SMEs, 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.

To understand many of the minus issues, we must first read the fine print on the fast-path program. The devil is usually in details.

To 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.

While 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."

Perhaps 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.

The 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.

Last 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.

SME 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.

Summary 

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.

Most 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.

For 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.

About the Authors 

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.

He can be reached at Olin@ProcessERP.com

Predrag 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.

 
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