Boeing and ERP in the Clouds

I was reading an article the other day by a friend and associate of mine Linda Popky. She is a US based consultant who specialises in marketing. She made an interesting observation. “While it’s too soon to know the definitive cause of this latest disaster, it’s highly unusual for two brand new airplanes, flown by experienced pilots of airlines known to be safety conscious, to fall out of the sky like this. The odds of two brand new aircraft of the same make and model randomly crashing within five months of each other are something like 1 in 10 billion.”

While Boeing originally maintained the aircraft were safe, they have now grounded them after a plethora of countries, Australia included, grounded them. I, for one, would not have my backside sitting in one of those planes at the moment. However, what is known at this point of time is:

• There was an experienced and well thought of pilot at the controls of the Ethiopian fight – he had in excess of 8,000 hrs flight time.
• The airframe of the 737-Max is the same as the 737-100, but this is where the similarity between the two aircraft ends - they are similar in shape only.
• 737-Max requires sophisticated software and system controls to maintain the same flight characteristics as the other 737 airframes. One reason for this additional requirement is; the position of the engines has been moved further forward on the wing of the Max and this has changed the flight characteristics. Particularly at lower altitudes. Boeing fixed that issue through the use of software.
• Many 737 pilots are saying training materials for the new aircraft are very sparse compared to old manuals, due to the automation brought about by the software.
• Pilots can get a rating on 737’s without making a distinction on the model. It makes sense that the differences and failure modes (the software) of each model are going to digress at some point. Potentially resulting in pilots not knowing the full extent of the aircraft’s likely behaviour under differing circumstances.
• While there is no proof yet this is the cause of the two recent crashes, this supposed failure mode has to do with a sensor telling the system that the plane is about to stall. When in fact it is not. However, the software pitches the airplane down anyway, due to the software that compensates for the engine mass being further forward of other 737s.
• Boeing has been trying to get a major software fix out to the fleet for several months that may or may not fix this issue.

So, you may be asking what is the relevance of this to ERP flying in the cloud? The key points I see from these recent incidents are:

• As technology embeds itself in our daily lives more and more, we run the risk in assuming that every technology release is better than the last. When in fact this is not always the case. Technology for technology's sake is not necessarily a good thing. There have been many early adopters of cloud ERP with the promise of lowering costs, ever improving and seamless updates. I am not yet fully convinced this will always be in the customer’s interests.
• When you make a change, there is always an unexpected consequence. This is becoming more evident in Boeing’s case with the positional shift of the engines. It also seems to indicate Boeing is finding it difficult to test the software for every different possible scenario. So, when the software companies regularly release software updates with new functionality in their new cloud offerings, you need to fully understand what the impacts to your business will be. In my opinion companies will have to develop a completely new set of behaviours to effectively manage the regularity of the functional releases. I am not confident these new behaviours will be widely adopted, because there will be additional costs associated to these behaviours. These additional costs will be hard to justify when the shift to the cloud was sold on the basis it would provide a reduction in costs. The new behaviours I specifically refer to are:
  • Having a detailed understanding of your instance of the software. In the past, a company could engage a system integrator to implement the system into the business. That is essentially, “do it for us and teach us how to use it”. A common result of this approach is the people in the business do not understand the core configuration settings or the rationale of why a system behaves or performs in a particular manner. In my mind, this has been a core reason why ERP system implementation projects have such a high failure rate. If this understanding and capability is not built in your team from the beginning as you implemented the new cloud version of the system, then there will be a massive catch up when the update releases arrive – of such proportions some companies may not be able to actually catch up.
  • Having a new regime of regression testing all new software updates to ensure you fully understand what the potential impact will be on the business. The frequency of modern cloud based software updates may actually introduce a cost to the business that never existed before – that of a dedicated regression testing person/team. Otherwise, the impacts may not be fully known or understood – not dissimilar to those of the airlines and Boeings software releases.
  • Boeing is, reportedly, having difficulties pushing the software updates out to the various airlines, as the airlines are all handling these releases in a different fashion. The level of regression testing at Boeing and the two airlines that have experienced the crashes does not appear to have been complete. If they had, there is a high chance the issue would have been identified and preventive actions put in place before a plane crashed. The large software vendors will have similar issues I suspect. While there are a number of applications where this is working well, there are also some where it is not.
  • The consequences of not understanding your system and the impact updates are going to have – could be large. Software companies are promising that no existing code will be impacted and the future releases are enhancements and not changes to previously core code. Unfortunately I have been around software for a long time now and while this is a worthy goal, I will believe it when I see it. IN the meantime until this has been demonstrated though consistent practice, I will be advising clients to take precautionary steps and test to be certain. Hopefully impacts will not catastrophic as we saw with Boeing but ERP does have a reputation of having large impacts on a business. Both positive when done well and negatively when not.
  • Boeing’s reputation is at sever risk here and the financial impact has been substantial. At the time of writing this $28 Billion of the value of their stock has been lost. This could likewise be a window into the future for some of the software companies offering cloud offerings.

Don’t get me wrong, the new cloud era is not all doom and gloom. Many of the new cloud offerings have the potential to provide massive improvements in business performance when handled correctly. 

It is just the landscape has changed and a company’s approach needs to change as well. The ERP landscape has been full of unlearned lessons. The industry seems to keep making the same mistakes over and over again. I believe this is due to the fact that executives rarely undertake these projects and when they do, they don’t or won’t look back and review lessons learnt. Case in point, I am frequently having the same conversation about budget and the components needed to successfully implement, over and over again with new prospects. There is constant pressure to do it more cheaply rather than constant pressure to do it right. Counterintuitively doing it the right way is the cheapest!

Experienced and independent advice can help you set your ERP strategy up for success and assist you to keep it on track. If you are thinking of a shift to the cloud, if your current software vendor has indicated you are no longer supported and need to move – then give me a call for a confidential chat

Until next month ...

Sincerely,

David.

P.S. After writing this, the news has come through that the initial examinations of the black boxes are showing similarities in the behaviours of the Lion Air & Ethiopian aircraft.

© David Ogilvie