Panorama Consulting Solutions, an independent consulting firm specializing in the ERP market for mid- to large-sized organizations, helps firms evaluate and select ERP software, manage the implementation of the software, and facilitates all related organizational changes to assure that each client realizes the full business benefits of their ERP implementation.
Eric Kimberling, the founder and managing partner of Panorama, is one of the most recognized independent ERP systems experts in the world, giving unbiased advice to clients for more than 20 years. Today, I had the privilege of sitting down with Eric to talk about all things ERP and get an idea of where the ERP industry is headed.
Martin:
Eric, you and I have been in independent ERP consulting for many years. You primarily support clients in the United States while our clients are in Switzerland. Even being on such different areas of the globe, our service offerings and approaches are quite similar. Every year you make predictions for the ERP industry for the following year. We have attached your 10 top 2015 predictions and would like to chat with you about some of these.
Mobile and business intelligence solutions help organizations get more out of their existing solutions. We see that mobile solutions, especially in the sales and service areas, are really taking off. Do you see additional areas of potential?
Eric:
I think the executive level also has a lot of potential for mobile. You have executives who are accessing mobile data to obtain visibility into how their operation is running and the real-time status of their business. So I believe that sales, field service, general services and the executive level all have potential for adopting mobile solutions.
Martin:
Do you have any thoughts about best-of-breed vs. integrated ERP solutions in the mobile environment?
Eric:
We have two groups of clients: traditional ERP vendors and end-user companies. The vendors are building the mobile and business intelligence functionality into their core solutions, but there are plenty of best-in-breed, stand-alone, mobile or business intelligence solutions as well. Our end-user clients are usually looking for a single system that they can pull off together.
Martin:
Mobile business is not just about bringing the ERP solution to the device. Best-in-class companies adapt their processes to their customers' needs using mobile technologies. Predictions on this issue?
Eric:
As far as having the companies adopt their processes to their customers' needs, we do have predictions. It's not just about automating what's already in the ERP-software. It's about providing additional functionality in new types of processes that weren't possible without the mobile devices. In many cases, you have customers that have these remote needs. If you go meet a sales or service type of client, more often than not they will be using mobile technology to automate processes and create new opportunities for additional business processes they didn't have prior to the software. With that said, I agree that you do not want to simply automate what's already been done. You want to create an opportunity to change the process to a customer's mobile needs as well.
Martin:
The concept around the Internet of Things (IoT) has been around for some time now. In 2012, the German Government started an initiative called Industry 4.0 with the goal of revolutionizing the shop floor using IoT and other technologies. Currently, we see numerous projects throughout Europe using these concepts and technologies.
We also see that the existing ERP solutions are being connected and are helping implement smart factories and better processes. We believe that modern ERP solutions focusing on the manufacturing industry must be able to support these new concepts. What do you think about IoT?
Eric:
I think it's a very interesting prediction and I agree with you that it is probably something that will change the future. We don't see a lot of manufacturing companies in the U.S. that are thinking that far ahead at this point.
Most are still trying to figure out how we make sense of basic ERP along with mobile and business intelligence. I think that the next step in the evolution in ERP software will be internet accessibility into manufacturing operations or real-time shop floor operations. IoT is possibly the step after that.
Martin:
The wages on the European shop floors are quite high. This drives the need to automate and reduce costs.
Eric:
That could be true. However, Europe seems to be more focused on efficiency gains and reducing costs. I think that the pressure on manufacturing companies globally will lead to what you are saying (Industry 4.0). It's just a matter of when and how soon they all get there.
Martin:
This might be something that could be in your prediction for 2016 - maybe it's a bit too early. But I truly believe that it will become more important in the future.
Martin:
More and more we see client organizations going for interesting best-of-breed solutions. We have set-up a hypothesis: the better the overall business environment (like today), the more IT risks (such as best-of-breed), companies are willing to take. Eric, what do you think about this hypothesis?
Eric:
I think it's a very interesting point and never thought of that connection before. I think it's probably true in some cases. When the economy improves, companies will be willing to take more risks as you mention, but I think it's also because companies have more internal IT support when the economy is doing well so they are able to combine or support best-of-breed solutions.
That being said, I do think there is merit to your hypothesis. What is the other side of the equation? You can argue that a weak economy can lead to best-of-breed because instead of buying a full blown single ERP system to automate the entire company, you might not want that risk. You instead may go after specific functionality (e.g. CRM, HCM). So I agree with what you are saying about a healthy economy leading to best-ofbreed because of the risk the companies are willing to take on. However, a poor economy can lead to best-inbreed as well.
Martin:
We partially agree with your prediction concerning Infor. A lot of effort has been invested in the solution portfolio and in combining the solutions. The glue holding the applications together is Infor ION, a middleware solution, and Infor Ming.le, a user interface for social collaboration, business process improvement and contextual analytics In contrast to the Infor software portfolio, we see deficits in the consulting market for Infor solutions. The consultant (and experience) drain during the last 10 years has not yet been compensated. What are your experiences with Infor consultants?
Eric:
You bring up a good point. That is something we encounter as well with our international clients. We have seen a large demand for our services in Asia Pacific and have made some recommendations for Infor products. It has been difficult finding functional and technical consultants that know the Infor products. I think Infor has done a great job focusing on their software, acquisitions, product suite, Ming.le and all of the enhancements they have made with the software. But it seems as if Infor is a bit ahead of the consultants. There is a gap or risk that you must consider if you have a client who is looking at an Infor product.
Martin:
I like your comment regarding the failures. It's not the ERP implementation that fails, but the ERP consultants that do. We currently see a growing ERP market. The good implementation companies and consultants are busy. The economy is doing well and organizations investing in ERP have to carefully plan their internal resources. Each internal day invested in ERP is lost turnover. Very often this leads to companies taking shortcuts in change management. This shortcut can be dangerous - and in combination with poor consultants - can be a lethal regarding the success of the ERP implementation. Eric, what are your thoughts on this?
Eric:
I agree that it's a common problem. I have been this industry for a long time and it's a constant risk. Unfortunately, it's something that doesn't seem to change. Despite all the failure and the challenges, people like you and I are telling organizations that it's a risk and something that must be addressed. But it's something that doesn't seem to be changing significantly in the market place. It's a frustrating part of our profession. New Prediction: No change on missing C-Level awareness concerning ERP project risks and benefits
Martin:
For years you have been commenting on missing C-level awareness when beginning ERP implementations. The ERP projects are often looked at as technical upgrades, something that the IT/IS department is responsible for. Even though many ERP project failures have been published, the lessons learned (e.g. more OCM) are not in the genes of management. Do you see some improvements on this issue?
Eric:
Consultants such as ourselves have gone through many evaluations and implementations. For a business executive, it is usually the first time. A few of our clients have executives who have been through two or three implementations in their past. These are the clients we really like because we know that they understand at least some of the failure points and success factors. But even then, having done two or three implementations is a lot different than having done a hundred or two hundred. And I think that's part of the challenge.
Martin:
What is your greatest wish to management entering into an ERP evaluation and implementation?
Eric:
Executives should take time to truly validate and rationalize offers they get from software vendors. Many times, we see vendors commit to a 18-month duration and a budget of ten million Euros. Organizations often take the estimates for granted, inform the board and arrange a kick-off. I think that the executives should say, "Let's take a look at the assumptions, make sure we've got a realistic understanding of what we want, possibly change some of the assumptions and adjust both our plan and budget accordingly." In a nutshell: - executives should ask a lot of questions and clearly understand what the assumptions are based on.
Martin:
Eric, thanks a lot for this interview and your insights into the ERP industry.
Eric Kimberling, the founder and managing partner of Panorama, is one of the most recognized independent ERP systems experts in the world, giving unbiased advice to clients for more than 20 years. Today, I had the privilege of sitting down with Eric to talk about all things ERP and get an idea of where the ERP industry is headed.
Martin:
Eric, you and I have been in independent ERP consulting for many years. You primarily support clients in the United States while our clients are in Switzerland. Even being on such different areas of the globe, our service offerings and approaches are quite similar. Every year you make predictions for the ERP industry for the following year. We have attached your 10 top 2015 predictions and would like to chat with you about some of these.
Prediction 2: Continued adoption of mobile and business intelligence solutions
Martin:Mobile and business intelligence solutions help organizations get more out of their existing solutions. We see that mobile solutions, especially in the sales and service areas, are really taking off. Do you see additional areas of potential?
Eric:
I think the executive level also has a lot of potential for mobile. You have executives who are accessing mobile data to obtain visibility into how their operation is running and the real-time status of their business. So I believe that sales, field service, general services and the executive level all have potential for adopting mobile solutions.
Martin:
Do you have any thoughts about best-of-breed vs. integrated ERP solutions in the mobile environment?
Eric:
We have two groups of clients: traditional ERP vendors and end-user companies. The vendors are building the mobile and business intelligence functionality into their core solutions, but there are plenty of best-in-breed, stand-alone, mobile or business intelligence solutions as well. Our end-user clients are usually looking for a single system that they can pull off together.
Martin:
Mobile business is not just about bringing the ERP solution to the device. Best-in-class companies adapt their processes to their customers' needs using mobile technologies. Predictions on this issue?
Eric:
As far as having the companies adopt their processes to their customers' needs, we do have predictions. It's not just about automating what's already in the ERP-software. It's about providing additional functionality in new types of processes that weren't possible without the mobile devices. In many cases, you have customers that have these remote needs. If you go meet a sales or service type of client, more often than not they will be using mobile technology to automate processes and create new opportunities for additional business processes they didn't have prior to the software. With that said, I agree that you do not want to simply automate what's already been done. You want to create an opportunity to change the process to a customer's mobile needs as well.
New Prediction: Industry 4.0 or Internet of Things
Martin:
The concept around the Internet of Things (IoT) has been around for some time now. In 2012, the German Government started an initiative called Industry 4.0 with the goal of revolutionizing the shop floor using IoT and other technologies. Currently, we see numerous projects throughout Europe using these concepts and technologies.
We also see that the existing ERP solutions are being connected and are helping implement smart factories and better processes. We believe that modern ERP solutions focusing on the manufacturing industry must be able to support these new concepts. What do you think about IoT?
Eric:
I think it's a very interesting prediction and I agree with you that it is probably something that will change the future. We don't see a lot of manufacturing companies in the U.S. that are thinking that far ahead at this point.
Most are still trying to figure out how we make sense of basic ERP along with mobile and business intelligence. I think that the next step in the evolution in ERP software will be internet accessibility into manufacturing operations or real-time shop floor operations. IoT is possibly the step after that.
Martin:
The wages on the European shop floors are quite high. This drives the need to automate and reduce costs.
Eric:
That could be true. However, Europe seems to be more focused on efficiency gains and reducing costs. I think that the pressure on manufacturing companies globally will lead to what you are saying (Industry 4.0). It's just a matter of when and how soon they all get there.
Martin:
This might be something that could be in your prediction for 2016 - maybe it's a bit too early. But I truly believe that it will become more important in the future.
Prediction 4: Best-in-breed
Martin:
More and more we see client organizations going for interesting best-of-breed solutions. We have set-up a hypothesis: the better the overall business environment (like today), the more IT risks (such as best-of-breed), companies are willing to take. Eric, what do you think about this hypothesis?
Eric:
I think it's a very interesting point and never thought of that connection before. I think it's probably true in some cases. When the economy improves, companies will be willing to take more risks as you mention, but I think it's also because companies have more internal IT support when the economy is doing well so they are able to combine or support best-of-breed solutions.
That being said, I do think there is merit to your hypothesis. What is the other side of the equation? You can argue that a weak economy can lead to best-of-breed because instead of buying a full blown single ERP system to automate the entire company, you might not want that risk. You instead may go after specific functionality (e.g. CRM, HCM). So I agree with what you are saying about a healthy economy leading to best-ofbreed because of the risk the companies are willing to take on. However, a poor economy can lead to best-inbreed as well.
Prediction 6: Infor
Martin:
We partially agree with your prediction concerning Infor. A lot of effort has been invested in the solution portfolio and in combining the solutions. The glue holding the applications together is Infor ION, a middleware solution, and Infor Ming.le, a user interface for social collaboration, business process improvement and contextual analytics In contrast to the Infor software portfolio, we see deficits in the consulting market for Infor solutions. The consultant (and experience) drain during the last 10 years has not yet been compensated. What are your experiences with Infor consultants?
Eric:
You bring up a good point. That is something we encounter as well with our international clients. We have seen a large demand for our services in Asia Pacific and have made some recommendations for Infor products. It has been difficult finding functional and technical consultants that know the Infor products. I think Infor has done a great job focusing on their software, acquisitions, product suite, Ming.le and all of the enhancements they have made with the software. But it seems as if Infor is a bit ahead of the consultants. There is a gap or risk that you must consider if you have a client who is looking at an Infor product.
Prediction 9: Higher failure rate of consultants
Martin:
I like your comment regarding the failures. It's not the ERP implementation that fails, but the ERP consultants that do. We currently see a growing ERP market. The good implementation companies and consultants are busy. The economy is doing well and organizations investing in ERP have to carefully plan their internal resources. Each internal day invested in ERP is lost turnover. Very often this leads to companies taking shortcuts in change management. This shortcut can be dangerous - and in combination with poor consultants - can be a lethal regarding the success of the ERP implementation. Eric, what are your thoughts on this?
Eric:
I agree that it's a common problem. I have been this industry for a long time and it's a constant risk. Unfortunately, it's something that doesn't seem to change. Despite all the failure and the challenges, people like you and I are telling organizations that it's a risk and something that must be addressed. But it's something that doesn't seem to be changing significantly in the market place. It's a frustrating part of our profession. New Prediction: No change on missing C-Level awareness concerning ERP project risks and benefits
Martin:
For years you have been commenting on missing C-level awareness when beginning ERP implementations. The ERP projects are often looked at as technical upgrades, something that the IT/IS department is responsible for. Even though many ERP project failures have been published, the lessons learned (e.g. more OCM) are not in the genes of management. Do you see some improvements on this issue?
Eric:
Consultants such as ourselves have gone through many evaluations and implementations. For a business executive, it is usually the first time. A few of our clients have executives who have been through two or three implementations in their past. These are the clients we really like because we know that they understand at least some of the failure points and success factors. But even then, having done two or three implementations is a lot different than having done a hundred or two hundred. And I think that's part of the challenge.
Martin:
What is your greatest wish to management entering into an ERP evaluation and implementation?
Eric:
Executives should take time to truly validate and rationalize offers they get from software vendors. Many times, we see vendors commit to a 18-month duration and a budget of ten million Euros. Organizations often take the estimates for granted, inform the board and arrange a kick-off. I think that the executives should say, "Let's take a look at the assumptions, make sure we've got a realistic understanding of what we want, possibly change some of the assumptions and adjust both our plan and budget accordingly." In a nutshell: - executives should ask a lot of questions and clearly understand what the assumptions are based on.
Martin:
Eric, thanks a lot for this interview and your insights into the ERP industry.
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