ERP for SMBs

October 31, 2009

When considering ERP solutions, the key drivers are to spend sufficient time understanding the needs.  In fact, the very first question would be to assess if the business strategies are well established, and equally important, to assess whether the business processes and assumptions that drive the perceived need for a new ERP system are valid.  It is well known that a technology solution cannot fix an ailing business process, in fact, it will only make it worse.  This is important to SMBs considering an upgrade to their ERP system – if the issue is the business process, fix the process before embarking upon a upgrade.  Before embarking on the ERP system upgrade, it is imperative to assess the risks.  Risks are both intrinsic (internal operations, sales, marketing, finance, HR) and extrinsic (how they impact your customers and supply chain).  For SMBs also desiring to upgrade their ERP system, they must assess the existing software and really scrutinize whether the upgrade is going to bring the benefits that are desired. For example, one question to ask is whether a few customizations or enhancements or bolt-ins to the current software satisfy a majority of the requirements.

Assuming that there is a need for an ERP system or an upgrade exists, SMBs need to assess the true life cycle costs, benefits and risks of the upgrade.  It should be pointed out that the life cycle technology costs are but a fraction of the overall costs – the cost of implementing the change across the organization can be daunting.  A healthy bout of skepticism on the true benefits should be entertained.  More than 50% of ERP implementations according to researchers have failed to yield the promised benefits. 

Once the needs and benefits are established, from an IT Governance point of view, the mandate for an ERP system must come from the top and have complete support and cooperation of all key stake-holders.  ERP is not an IT driven, but a business driven project.  Selecting the appropriate vendor is a complex task.  It is best to bring an un-biased consultant to assess the product features against the needs to establish the degree of fit.  Simply attending vendor presentations is not adequate, as vendors attempt to change your business needs to meet their tool features.  

Implementation of ERP, is significantly more complex.  Most recommend an incremental approach as opposed to the big-bang to mitigate risk. Again, the critical aspect is having the business units manage the deployment, with IT just playing the role of a facilitator.

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Forgetting small projects?

October 22, 2009

IT tends to focus on infrastructure and applications that are strategic and mission critical to the enterprise.  Small projects that may be of potential value to business can get lost in the prioritization shuffle. 

There are challenges faced in procuring and managing small projects.  Most Fortune 2000 firms have good governance around procurement, but these processes are ideal for large projects.   The term “small project”s is relative, but for most Fortune 2000 firms, projects under $250,000 can be deemed to be small.  To a large extent, existing procurement practices are quite onerous for a sourcing a small project.  IT management is also challenged and seldom do these projects make it to the CIO’s radar. 

To alleviate these difficulties, it is critical to develop special governance around small project sourcing.  Measures should include developing a short list of providers who are specifically suited for small project sourcing.  Fortunately, the web has led to a whole new generation of providers who have the expertise, the proper methodology in developing and delivering small projects.  Many of them aggregate as a network of providers to give the benefit of one-stop procurement and total visibility into the complete life cycle of the project from sourcing to delivery.


Off-Shoring on the rise for Small to Mid-Sized Enterprises (SMBs)

October 5, 2009

A survey of more than 200 IT organizations found that among small and midsize organizations that outsource at least part of one IT function, the percentage using offshore service providers rose from 14% in 2008 to 24% this year.  Ref: http://www.computereconomics.com/article.cfm?id=1499

There are many reasons for this:
1. SMBs are seeking to reduce costs.
2. There is a better supply chain of off-shore service providers who cater to SMBs.
3. Traditional offshore providers are doing a better job selling to SMBs.
4. Web-based provider networks are gaining momentum.
5. The recession led to a pent-up demand for IT services.

Web-based brokerage solutions will readily facilitate off-shoring for SMBs. These solutions are built on a solid pre-credentialed Service Provider network to ensure that lower cost is not negated by poor quality.  These web-based solutions benefit both the SMB as well as the Service Provider.  SMBs benefit from low administrative costs and accelerated contracting.  They also benefit from selecting a vendor from a pre-credentialed network.  Service Providers get inexpensive access to the SMB market.