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New business process revolution: William Edmond, Sapient (June 2008)
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Business process-centric approaches are changing the way we do business, once again.
Gartner recently identified business process management (BPM) as one of the top three
strategic technology considerations for 2008. This is primarily being driven by cost and
consumer pressures from increased competition within the globalised digital economy.
Businesses need to do more with less – translating into an imperative for a new level of process
agility and a culture of continuous process transformation, with a clear impact on organisations’
core ERP systems.
Enabling this requires a rethinking of organisational structures, governance and supporting
technology systems. The management discipline that guides this is business process
management.
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The road less travelled: T Lebarnoff & S Heinz, Diamond Consultants (April 2008)
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Not long ago, a US-based
international publishing
company started a longawaited
ERP project by
launching a small pilot in
another country. The
company’s plan was to
immediately follow that test with
a larger installation in its home
country.
Things didn’t work out as
expected. The initial ERP
installation failed – miserably.
The way the software had been
set up to handle specific
business processes wreaked
havoc in the organisation. To cite just one small example, the company had to hire 20 additional people in a call centre
to keep the operations running. The larger rollout was put on hold and it took eight long months to bring the overseas
business under control.
Unfortunately, what happened at this publisher is not uncommon. These days, ERP projects equate to big business.
Companies of all types are turning to the software to manage a wide range of functions – everything from finance
operations to human relations and procurement.
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Following the money trail: Jacob Varghese Vaidyan, Charteris (February 2008)
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Although enterprise resource planning systems are typically the single largest IT investment any
company makes, the business and financial implications of owning, maintaining or implementing
an ERP system are not always understood.
ERP systems are one of the most-used application in a company, alongside its email and
office applications. For most enterprises, ERP is also one of the cornerstones of their IT
strategy.
This article seeks to improve the understanding of ERP systems for senior finance
professionals by looking at these systems from the cost, benefits and business cycles points of
view. Firstly, let’s try and answer the question: why is it important for the CFO or any senior finance
professional in a company to know about ERP?
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At your service: David Hofferberth, SPI Research (December 2007)
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The term ‘ERP’ has moved beyond just core financials to encompass many of the other
applications necessary to build a world-class professional services organisation (PSO) and
increase both productivity and profitability. Some of these integrated modules include: financial management – the core solution required to accurately collect and report on
financial transactions; customer relationship management (CRM) – the running of client relationships to improve
effectiveness with communications, sales and services delivery; procurement management – the control of product and service purchases; human capital management (HCM) – the tracking of human resources from recruitment
through to termination; project and services delivery (PSD) – the initiation, planning, execution and close of projects and services; and business intelligence (BI) – the assembly and use of information to improve decision making.
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One for all?: James Neophytou, IBM (November 2007)
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It is generally agreed – both by consultants and companies who have implemented enterprise
resource planning systems – that to successfully introduce ERP software, you must review all
your current processes and align them with the best way to use the package.
For example, with a manual system you can ‘get away’ with poor data accuracy because people
will spot obvious mistakes and, since they know which data is uncertain, they can make
appropriate corrections. But not only do computer systems not allow for incorrect data, they
compound any data errors because each error affects all dependant and related data on all the
integrated modules.
So a culture of data accuracy is vital if an ERP implementation is to be successful. It is also
generally agreed that, with the possible exception of finance, all ERP modules have to be
implemented at the same time (big bang approach) as each module depends on the others.
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Magic bullet or flash in the pan?: Keith Bedingham, Verax (September 2007)
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Enterprise resource planning is as old as the hills. I found a definition of ‘management’ from before the Second World War
which describes it as “the planning and organising of resources (human, financial and physical) to achieve pre-agreed goals
and objectives.” If that’s not what ERP is about, what is it?
Wikipedia defines ERP systems as follows: “ERPs integrate (or attempt to integrate) all data and processes of an organisation
into a unified system.” It also says that ERP evolved from MRP (material requirements planning), a system of manufacturing
management that was not flexible enough to cope with frequent changes of sales forecasts. ERP is likely to include additional
functions including payroll and accounting functions.
As you can see, the above description tends to view ERP as an end in itself. Nothing in the definition gives a clue about what
ERP does, its benefits, etc. It is in effect a monitoring and control system that ought to provide information to managers to help
them make better decisions about running the business.
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Uncommon sense: Ian Henderson, MLG Management Consultants (June 2007)
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Common sense is, of course, anything but. Indeed when it comes to the implementation of
business systems it’s a lot more than uncommon – it’s as rare as rocking horse droppings.
This may result from the hype and ever-evolving jargon that surrounds modern packages and
methodologies – people don’t like to question things and thus send out signals that they aren’t
up-to-date.
It may also be that many implementations are now delegated to enthusiasts. ‘Train spotters’ is
the appropriate term, conjuring up the perfect image. “Yes, we’re using the MRP option VB for
bulk raw materials”, is spoken with the same hum of excitement as “my brother and I once saw
the Flying Scotsman and we had matching flasks”.
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ERP survival guide: Phil Robinson, BPIC (April 2007)
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The success rate for implementing not just ERP systems but all large software packages
has never been very good. In survey after survey, in the US, Europe and elsewhere, less
than one third of systems meet the basic criteria set out at the start of the
implementation.
Too many software engineers know how the software works but do not know how to
integrate it into the business in a way that delivers real business benefits. With ERP
packages costing hundreds of thousands or even millions of pounds, this is frightening.
The question is – how can you minimise the chance of failure or, more difficult, rescue a
package that is not delivering sufficient business benefits to justify the cost of
implementation? The good news is that, when properly implemented, an ERP package
can be the most cost-effective project a company has ever seen.
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Pick me, pick me!: Ceri Williams, The Integration Practice (February 2007)
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Should the ERP system drive the IS strategy, or should the IS strategy drive the ERP system?
Because when you examine the propositions underpinning ERP system deployment and IS
strategy, they look uncannily similar – integration of information, process automation,
economies of scale and rationalisation to name but a few.
So how can the two approaches co-exist? Are they in competition with each other or are they
complementary? This article explores this problem relationship, considers the typical areas of
conflict and how this can be turned into a creative tension that promotes both at the same
time.
ERP vendors are busily repositioning their packages as flexible, modular, composite services
platforms that contribute to the top-line. It is true that ERP systems are not the monoliths they
were; they now have extensibility and integration frameworks bundled in.
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ERP's emotional journey: John Rozek, SkillSet (January 2007)
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Major ERP change projects have been a fact of life in the business world for several years now – so why are there so few
examples of true success? ERP projects can only be deemed successful when teams have willingly adopted the new, effective
ways of working, are skilled in the new methods and are motivated in their work. And whilst the correct organisational structure
and the need for suitable business processes must not be underestimated, it is people who really make or break change.
The beautiful thing about human beings is that we are all individuals. Different personalities create the wide spectrum of human
behaviour – great for variety, but very difficult for the manager trying to implement an ERP programme.
Each person responds differently to change. Albeit to differing degrees, every person responds both emotionally and
motivationally to the new challenges.
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'Magnificent Seven' guidelines for success: D Ollerhead, Decision Focus (Oct 06)
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In the movie ‘The Magnificent Seven’, a besieged village seeks outside help to relieve itself from bandits. It winds up being
helped by seven talented gunslingers. Each has a different reason for responding to the villagers’ urgent call.
Organisations in business, besieged from all sides by competitive pressures, can sometimes seem a lot like that village. Faced
with the challenge of developing a really effective enterprise systems strategy that plays a crucial role in maximising your
competitive edge, it is all too easy for everyday business pressures to render the strategy excessively reactive rather than
proactive, or even for it to be sidelined completely.
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Sharpen your edge: Rob Morton, LogicaCMG (July 2006)
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You have invested significant capital into integrating your corporate IT systems and installing a new ERP software platform for
managing your customer relationships and supply chain; you’ve re-designed your processes to take advantage of the new
technology, maybe even offshoring some parts of the work process. yet still the results fail to impress analysts, shareholders
or, for that matter, your customers. Despite all the effort and cost of the ERP implementation, the returns seem slow in
materialising, and your people feel under as much or more pressure than before.
There are steps you can take to realise benefits more effectively, ‘sharpening your edge’ by rigorously engaging people in
achieving those benefits. Research shows that the ‘soft’ side of change – people-related engagement, for example – is actually
more important in turning enterprise-level technology and process improvement into superior performance.
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Who's running this business?: Malcolm Hunt & Tony Cowderoy, MML (May 2006)
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The success rate of ERP implementations has doubled since the techniques that lie at
the heart of modern ERP systems were introduced over 30 years ago. That looks
impressive until you compare it to the dramatic advances made to the functionality of
these systems over the same period. The sad fact is that still only a minority of
companies are getting a realistic return on their investment.
Surveys show that the success rate – where success means benefits that exceed the
costs – is still languishing at around 20%, meaning that a staggering 80% of
implementations fail to deliver any measurable net business benefit, although most can
be classed as technically competent.
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Breaking down the barriers: Colin Bezant, KPMG ERP Advisory Services (March 06)
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A global ERP solution can seem like a ‘holy grail’, a perfect solution to a CIO’s need to
standardise systems and processes across an organisation, while delivering a
competitive capability. Yet it appears that very few global ERP implementations are
delivering planned benefits and most have stopped far short of their original
expectations. Nevertheless, the demand for such solutions has never been higher.
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Future of ERP: Sukumar Narayanan, Perot Systems (January 2006)
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The concept of enterprise resource planning (ERP) – where all kinds of data including
whole departments and functions such as manufacturing, purchasing, finance and
payroll are integrated into one single database – can offer major opportunities for
business.
When ERP was first born in the 70s, it was principally used in manufacturing, and
started simply with the amalgamation of single-site manufacturing efficiencies using a
general ledger, with applications primarily running on mainframe computers. In the 80s,
ERP capabilities grew and organisations could extend this framework to include
operations and finance. However, the technology really took off during the business
process re-engineering revolution in the early 1990s. The emergence of client/server technology and the graphical user
interface made interacting with these systems in an online real-time fashion much more feasible. And by the late 90s,
these systems were being extended to include advanced constraint-based planning, scheduling and customer
relationship management.
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ERP for the middle classes: Adrian McNay, Touchstone (September 2005)
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Most medium-sized companies have the same problem. They have a number of
business applications within their businesses – finance, CRM, procurement, production,
payroll – and none of them talk to each other. The result can be as follows: 1. A manager raises a requisition within the procurement system. This requisition is
approved, at which point an order is placed with the supplier. Details of this commitment
also have to be entered into the finance system. The supplier delivers the goods. The
procurement system needs to be updated and the commitment within the finance system
needs to be updated. The invoice arrives and the procurement system needs to be
updated, as does the finance system. The finance system generates a cheque to pay
the invoice and the procurement system again needs to be updated. Each stage of the
transaction, from order though to cheque, gets duplicated within two separate systems. 2. The credit control department chases a client for £10 on the same day that the account manager is trying to close a
new large order. The account manager doesn’t know the debt is outstanding, because they don’t have access to the
finance system. Credit control don’t know that there is an order to be closed, because they don’t have access to the
CRM system. 3. Management are not able to produce a single report identifying what their top 10 customers have spent over the last
six months, and what they are predicted to buy over the next six months. Instead they have to produce two different
reports from two different systems, using two different report writers and spend time correlating the information.
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Consolidation game: AMR Research (August 2005)
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Market consolidation was the dominant story in the enterprise resource planning (ERP) market in 2004. The entire
market was affected by the uncertainty from the very public and acrimonious battle between Oracle and PeopleSoft.
And even the improving US economy and IT budget increases were unable to inspire the kind of ERP spending that
seemed likely given the pent-up demand coming out of the recession.
AMR Research’s recently released study, ‘Market Analytix Report: Enterprise Resource Planning, 2004-2009’, estimates
that European ERP market revenues will increase 7% annually over the next few years. But in
focusing on the 2004 market, the report identifies a number of key trends.
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ERP exposed: Ken Gorf, West Trax Applications (July 2005)
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Large enterprises around the world rely on ERP systems for both operational purposes
and financial reporting. In doing so, the ERP systems become an integral part of the
corporate governance and legal compliance landscape.
Whilst most IT managers’ attention seems to be focused on document retention,
reporting quality and security, there are much broader issues to consider to ensure
good governance and compliance with regulations such as Sarbanes-Oxley, IFRS and
Basel II.
In particular, managers must demonstrate they have appropriate processes in place to
support good value and risk management. Auditors are also now focused on verifying
the processes that produce data, in addition to the reported information itself.
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Fine whines: Richard Zaltzman, The Forum Concept (May 2005)
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It is unlikely to be compared to fine wine, but the ERP offering is maturing. A bottle
poured down the neck of the business was once viewed as a panacea for creaky
bespoke legacy systems, lapsed support contracts and functionally managed
businesses. A good bottle promised a transformation to a slick process-driven
organisation, with ‘best practice’ embedded throughout the enterprise and integration at
the heart of everything.
Unfortunately, this Vin du Table was drunk rather young and left many with a bad
hangover, wistfully reminiscing about the vintage they had just poured away. Today,
implementation seems to be getting easier on the palate. Mistakes are still happening –
despite a solid five years of implementation experience gained since the Y2K-inspired gold rush days of the late 90s –
but lessons are being learned and heeded in some quarters.
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State of the disunion: Simon Bragg, ARC (April 2005)
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The pace of consolidation within the ERP marketplace increased rapidly last year and a
new landscape is now emerging. A small number of suppliers are looking to dominate
the market for large, mid-sized and small-company ERP solutions. And while customers
can expect support for existing solutions in the short term, they will probably face tricky
upgrades in the future.
Overall, ERP company performance was generally good in 2004. Many companies saw
growth in their service and licence revenues.
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ERP: back in business: Debbie Mackenzie, Absoft (July 2004)
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The analysts are all agreed. The economy has turned the corner and investment in
major IT systems – ERP included – is on the up. But in which direction, apart from up, is
it headed and what are the consequences for vendors, VARs and consultancies? For
several years, the market for ERP services was one of the hottest in the history of IT
consulting. A confluence of key events and disruptive technology gave rise to an
unprecedented spending spree.
The perfect ERP storm of the 1990s was created by a number of factors. There was
corporate fever for downsizing and re-engineering at a time when many organisations
had decrepit application bases – and most organisations thought ERP software was a
means to downsizing.
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The art of change: Stephen Duffy, Xayce (April 2004)
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The art of implementing ERP-based financial & accounting systems has moved on. Over the last few years, this activity
has generated a wealth of methodologies and approaches, ensuring that the risk of technical failure is minimised –
terms like prototyping, blueprinting and industry templates are common. Allied to this, most accounting suites offer more
functionality than necessary, and customers of packages such as SAP, Oracle and PeopleSoft are more accustomed to
switching functionality off rather than finding it missing.
In some senses, it is like buying a very expensive car – indeed the term ‘Rolls-Royce solution’ is commonly used –
where you doubt that you would ever use the third memory position on the passenger’s seat, or the satellite tracking
memory for your three most common destinations.
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