Welcome!

Microservices Expo Authors: Elizabeth White, AppNeta Blog, Gopala Krishna Behara, Sridhar Chalasani, Tirumala Khandrika

Related Topics: Java IoT, Industrial IoT, Microservices Expo, Microsoft Cloud

Java IoT: Article

ERP and the Art of Action

The importance of knowledge transfer and alignment in ERP implementations

In his book The Art of Action (2011), Stephen Bungay identifies three gaps that frustrate the ability of organizations to translate plans into actions that lead to desired outcomes. He calls them the knowledge, alignment and effects gaps. Here, I wish to reflect on Bungay’s perspective by reviewing these gaps in terms of the selection and implementation of enterprise resource planning (ERP) software.

ERP software exerts a significant influence over the way an organization manages and monitors its performance. In large organizations, ERP software can touch hundreds, even thousands of people given that today’s ERP software may have a significant organizational footprint encompassing accounting, supply-chain, manufacturing, human resources (HR), customer relationship management (CRM), environmental, social and governance (ESG) and performance management activities. ERP software is at the heart of organizational management in the world’s leading businesses.

However, most organizations approach the selection and implementation of ERP software with some trepidation. The stories of failure are legion. There are well- documented examples of businesses brought to their knees by poor selections and out- of-control implementations. Spiraling budgets, burnt-out implementation teams and legal actions between buyers and sellers are a fact of life in the world of ERP.

Often, much of this spiralling cost, team stress and organizational risk is a direct result of the uncertainty and friction generated from Bungay’s three gaps. I’ll begin by introducing a typical ERP selection and implementation process and then discuss Bungay’s gaps in the context of ERP selection and implementation

The ERP Selection and Implementation Process
Figure 1 outlines a typical ERP software selection process. At the end of this process, buyers know very little about exactly how the ERP solution they are buying will meet their business needs, because the knowledge transfer from vendor to customer is of the order of just a few days of demos and customer reference checks. Therefore it’s hardly surprising that significant knowledge and alignment gaps exist even before any implementation process begins.

Fig. 1 – Typical ERP Software Selection Process (condensed)

Selection process

Figure 2 outlines a typical ERP ‘pre go-live’ implementation process. Knowledge and alignment gaps can surface at any stage of this process. And these gaps may be wide enough to have the potential to derail the project timeline or cost or cause some customers to consider switching their implementation partner. The Effects gap generally comes into play after implementation and during the initial pre go-live phase.

Fig. 2 – Typical ERP Implementation Process (condensed)

Consequently most ERP implementation projects, especially those informed by project management methodologies such as PRINCE2, are particularly concerned with managing risk. Unfortunately many project managers are not focused on actively mitigating risks caused by knowledge and alignment gaps and this is because many project managers either don’t recognise these gaps or don’t know how to mitigate them if they do. So let’s examine Bungay’s three gaps in more detail.

The Knowledge Gap
Bungay defines the Knowledge gap (p.45) as, ‘the difference between what we would like to know and what we actually know’ and a situation that prompts the ‘collection of more data’. In this context, the knowledge gap frustrates the ability of organizations to plan for an on-time, on-budget and on-benefit ERP implementation project.

Today’s ERP systems from market leaders such as SAP, Oracle and Microsoft (AX) are both broad and deep in terms of their functions and features. Much of the challenge in implementing these systems lies in figuring out how to configure the system to get the functionality you want with the minimum impact on operational (in- use) complexity. Gaining the knowledge required to design and build a fit-for-purpose solution is the key challenge for implementation partner, while communicating the information needed to enable this is the key challenge for an implementation customer.

Fig. 3 - The ERP Knowledge Gap

 

The ERP knowledge gap involves both parties, and has a significant role to play as a key project risk. Your implementation partner knows about the software and the best practices for configuring and using it. You know about your business processes and operational roles and responsibilities. Clearly, this is a gap that exists and needs to be crossed in every implementation. But at the same time, both parties are subject to what they mutually don’t know.

Implementation partners may have never configured the package to suit a specific business process or may uncover hidden software bugs in doing so. You may have never thought about managing a business process in the way that the system enforces or about adapting roles and responsibilities to suit new ways of doing things. So what neither of you know is an ever-present wild-card that can widen the knowledge gap, and in reality there’s no quick fix to this gap.

The Alignment Gap
Bungay defines the Alignment gap as, ‘the difference between what we want people to do and what they actually do’ and a situation that is indicated by ‘top-level frustration and lower-level confusion’. The Alignment gap also frustrates the ability of organizations to execute an on-time, on-budget and on-benefit ERP implementation.

In an ERP implementation, the alignment gap is all about methodology and expectations. If the implementation partner’s implementation methodology is not clearly communicated to and understood by the customer, alignment will suffer. Equally, if the customer’s implementation constraints are not clearly communicated and understood by the partner, alignment is impacted.

As Figure 4 shows, the ERP alignment gap is another key project risk that is created by misguided expectations created by poor communication and understanding between the two parties. Vendor methodologies must be adaptable to suit the organization size, operational style (e.g. methodical vs. agile) and team-resources of the customer. Otherwise an alignment gap will exist from the start and is likely to grow over time. And like the knowledge gap, there is a further ‘gotcha’ that may come into play in the form of unexpected events triggering timeline/people constraints (among others) that inevitably occur in implementation projects that can take many months or even years.

Fig. 4 – The ERP Alignment Gap

The Effects Gap
Bungay defines the Effects gap as, ‘the difference between what we expect our actions to achieve and what they actually achieve’ and a situation that is responded to by ‘an increase in control’ typically via the collection of more metrics. Here, the Effects gap frustrates the ability of organizations to fully realize the benefits from their ERP investment.

The total cost of ownership (TCO) of ERP solutions can easily run into millions of dollars of licensing and implementation fees, plus on-going maintenance and upgrade costs. So naturally the company boards or investors that authorize this level of expenditure expect significant benefit realization from their investment. Realization of these benefits depends on is a clear understanding of exactly what benefits are expected, communication of those expectations internally, and regular check-pointing of progress towards those benefits.

Implementation project managers are rightly focused on delivering projects on-time and on-budget. But the third deliverable, on-benefit, is often neglected or forgotten entirely. The reason is usually that benefits were never clearly defined and communicated in the first place and even if they are, it’s all too easy to forget the destination whilst dealing with the hazards of the journey.

As Figure 5 shows, unlike the previous gaps, the effects gaps is less about distance between the implementation partner and the customer and more about distance between an organization’s internal executive and operational management and the impact of ‘change strain’ on the ability of the organization to realize the expected benefits.

Fig. 5 – The Effects Gap

Closing the Gaps
Bungay claims (p.47) that the usual reactions to these three gaps are:

  • Knowledge: more detailed information
  • Alignment: more detailed instructions
  • Effects: more detailed controls

In other words, many project managers' dream: More complexity.

In terms of ERP selection and implementation, I believe one way of tackling the gaps that threaten to derail implementation projects specifically is to do more due diligence at the selection stage: that is to do more and take more time about doing it.

Many selections are hasty, with companies rushing headlong into implementation like a train that is already in danger of running off the tracks. The selection is considered a necessary evil and an unwanted cost. But money spent here will almost always lead to money being saved during the implementation process, where mistakes can be so much more costly. So here are some recommendations:

  • Start the selection with a clear definition and communication to the project team of executive management's expected benefits so that these can be revisited and adjusted regularly during selection, pre go-live implementation and post go-live operations. Formally build-in the checkpoint and review meetings, especially in the first year after go-live.
  • Consider sending your key functional ‘leads' (e.g. finance, supply chain and manufacturing) on a training course in your preferred ERP system BEFORE you decide to buy, rather than leave this until after the pilot phase of the implementation. These people should be smart enough to figure out if the package is likely to be a good fit from this ‘early-visibility' training and act as an early warning system for potential issues and problems to come.
  • Pay attention to both the functional and technical complexity of the solution you propose to buy. Businesses with limited resources or who have outsourced key IT infrastructure and lack available internal IT resources will inevitably struggle with ERP solutions that have complex technical requirements to setup and maintain. And unless you are buying a solution specifically designed to operate in a hosted environment, implementing ERP as a hosted application may introduce it's own challenges as many leading ERP solutions were simply not designed to be run in a hosted environment and in practice, many hosting companies have limited experience running ERP in software-as-a-service (SaaS) mode.
  • Make sure that you fully understand your implementation partner's methodology before you choose them. These methodologies can be complex - whole books have been written about Microsoft's Sure Step methodology for example - so spend the time to understand how the methodology works or put your team on a methodology training course well before any implementation process is started.
  • Try to achieve a close-fit alignment between you and your needs and your implementation partner's capabilities and resource constraints early on otherwise this will come back to haunt you time and again later in the implementation process.
  • Front-load the project with analysis activities that aim to close the knowledge gap well before any design/delivery/deploy activities (to use Microsoft Sure Step terms) take place. You simply can't paper over knowledge gaps. Lack of knowledge will always cause issues later - especially with today's ERP systems that depend on significant configuration effort that is costly to ‘roll- back' if you get it wrong due to inadequate knowledge of your business processes.
  • Focus your implementation project on meaningful rather than more data. So that as well as regular management of implementation tasks/actions, change requests and risks, make sure you also log and monitor business process and product configuration decisions made, and questions/issues/suggestions raised, as these are useful to refer back to when someone asks the inevitable question: ‘so why did we do it that way?'

Achieving outcomes effectively is always as much an art as a science. And it's impossible to expect that you can fully close these gaps and remove all uncertainty and friction from a project such as an ERP implementation. But there are ways to narrow the gaps and mitigate the risks they pose to give your plans and actions the best chance to deliver the outcomes you want to achieve.

More Stories By Stewart McKie

Stewart McKie has 25 years of IT industry experience. His education includes a MSc in Organization Consulting and a MA in Screenwriting. I was the Technology Editor of Business Finance magazine during 1995-2000 and also wrote regular features for Intelligent Enterprise magazine. I am the author of six books on accounting software and over 50 technology white papers. My current focus is my screenwriting 2.0 app called Scenepad and my supply-chain auditing app. I have managed many ERP selections and implementations of SunSystems all over the world. Currently I am engaged as the Implementation Oversight consultant for a global AX2009 rollout for a manufacturing client and as the selection consultant for pan-European ERP solution.

@MicroservicesExpo Stories
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm. In his Day 3 Keynote at 20th Cloud Expo, Chris Brown, a Solutions Marketing Manager at Nutanix, will explore t...
The IT industry is undergoing a significant evolution to keep up with cloud application demand. We see this happening as a mindset shift, from traditional IT teams to more well-rounded, cloud-focused job roles. The IT industry has become so cloud-minded that Gartner predicts that by 2020, this cloud shift will impact more than $1 trillion of global IT spending. This shift, however, has left some IT professionals feeling a little anxious about what lies ahead. The good news is that cloud computin...
As Enterprise business moves from Monoliths to Microservices, adoption and successful implementations of Microservices become more evident. The goal of Microservices is to improve software delivery speed and increase system safety as scale increases. Documenting hurdles and problems for the use of Microservices will help consultants, architects and specialists to avoid repeating the same mistakes and learn how and when to use (or not use) Microservices at the enterprise level. The circumstance w...
SYS-CON Events announced today that Auditwerx will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Auditwerx specializes in SOC 1, SOC 2, and SOC 3 attestation services throughout the U.S. and Canada. As a division of Carr, Riggs & Ingram (CRI), one of the top 20 largest CPA firms nationally, you can expect the resources, skills, and experience of a much larger firm combined with the accessibility and attent...
SYS-CON Events announced today that HTBase will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. HTBase (Gartner 2016 Cool Vendor) delivers a Composable IT infrastructure solution architected for agility and increased efficiency. It turns compute, storage, and fabric into fluid pools of resources that are easily composed and re-composed to meet each application’s needs. With HTBase, companies can quickly prov...
Everyone wants to use containers, but monitoring containers is hard. New ephemeral architecture introduces new challenges in how monitoring tools need to monitor and visualize containers, so your team can make sense of everything. In his session at @DevOpsSummit, David Gildeh, co-founder and CEO of Outlyer, will go through the challenges and show there is light at the end of the tunnel if you use the right tools and understand what you need to be monitoring to successfully use containers in your...
What if you could build a web application that could support true web-scale traffic without having to ever provision or manage a single server? Sounds magical, and it is! In his session at 20th Cloud Expo, Chris Munns, Senior Developer Advocate for Serverless Applications at Amazon Web Services, will show how to build a serverless website that scales automatically using services like AWS Lambda, Amazon API Gateway, and Amazon S3. We will review several frameworks that can help you build serverle...
Buzzword alert: Microservices and IoT at a DevOps conference? What could possibly go wrong? In this Power Panel at DevOps Summit, moderated by Jason Bloomberg, the leading expert on architecting agility for the enterprise and president of Intellyx, panelists peeled away the buzz and discuss the important architectural principles behind implementing IoT solutions for the enterprise. As remote IoT devices and sensors become increasingly intelligent, they become part of our distributed cloud enviro...
@DevOpsSummit has been named the ‘Top DevOps Influencer' by iTrend. iTrend processes millions of conversations, tweets, interactions, news articles, press releases, blog posts - and extract meaning form them and analyzes mobile and desktop software platforms used to communicate, various metadata (such as geo location), and automation tools. In overall placement, @DevOpsSummit ranked as the number one ‘DevOps Influencer' followed by @CloudExpo at third, and @MicroservicesE at 24th.
By now, every company in the world is on the lookout for the digital disruption that will threaten their existence. In study after study, executives believe that technology has either already disrupted their industry, is in the process of disrupting it or will disrupt it in the near future. As a result, every organization is taking steps to prepare for or mitigate unforeseen disruptions. Yet in almost every industry, the disruption trend continues unabated.
In his General Session at 16th Cloud Expo, David Shacochis, host of The Hybrid IT Files podcast and Vice President at CenturyLink, investigated three key trends of the “gigabit economy" though the story of a Fortune 500 communications company in transformation. Narrating how multi-modal hybrid IT, service automation, and agile delivery all intersect, he will cover the role of storytelling and empathy in achieving strategic alignment between the enterprise and its information technology.
While DevOps most critically and famously fosters collaboration, communication, and integration through cultural change, culture is more of an output than an input. In order to actively drive cultural evolution, organizations must make substantial organizational and process changes, and adopt new technologies, to encourage a DevOps culture. Moderated by Andi Mann, panelists discussed how to balance these three pillars of DevOps, where to focus attention (and resources), where organizations might...
Microservices are a very exciting architectural approach that many organizations are looking to as a way to accelerate innovation. Microservices promise to allow teams to move away from monolithic "ball of mud" systems, but the reality is that, in the vast majority of organizations, different projects and technologies will continue to be developed at different speeds. How to handle the dependencies between these disparate systems with different iteration cycles? Consider the "canoncial problem" ...
In his session at 20th Cloud Expo, Scott Davis, CTO of Embotics, will discuss how automation can provide the dynamic management required to cost-effectively deliver microservices and container solutions at scale. He will discuss how flexible automation is the key to effectively bridging and seamlessly coordinating both IT and developer needs for component orchestration across disparate clouds – an increasingly important requirement at today’s multi-cloud enterprise.
The essence of cloud computing is that all consumable IT resources are delivered as services. In his session at 15th Cloud Expo, Yung Chou, Technology Evangelist at Microsoft, demonstrated the concepts and implementations of two important cloud computing deliveries: Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). He discussed from business and technical viewpoints what exactly they are, why we care, how they are different and in what ways, and the strategies for IT to transi...
Thanks to Docker and the DevOps revolution, microservices have emerged as the new way to build and deploy applications — and there are plenty of great reasons to embrace the microservices trend. If you are going to adopt microservices, you also have to understand that microservice architectures have many moving parts. When it comes to incident management, this presents an important difference between microservices and monolithic architectures. More moving parts mean more complexity to monitor an...
All organizations that did not originate this moment have a pre-existing culture as well as legacy technology and processes that can be more or less amenable to DevOps implementation. That organizational culture is influenced by the personalities and management styles of Executive Management, the wider culture in which the organization is situated, and the personalities of key team members at all levels of the organization. This culture and entrenched interests usually throw a wrench in the work...
The Internet of Things is clearly many things: data collection and analytics, wearables, Smart Grids and Smart Cities, the Industrial Internet, and more. Cool platforms like Arduino, Raspberry Pi, Intel's Galileo and Edison, and a diverse world of sensors are making the IoT a great toy box for developers in all these areas. In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists discussed what things are the most important, which will have the most profound e...
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm.
For organizations that have amassed large sums of software complexity, taking a microservices approach is the first step toward DevOps and continuous improvement / development. Integrating system-level analysis with microservices makes it easier to change and add functionality to applications at any time without the increase of risk. Before you start big transformation projects or a cloud migration, make sure these changes won’t take down your entire organization.