tag:blogger.com,1999:blog-67619892449302745072024-03-14T13:12:30.905+10:00The Pursuit of ProfitDavid Ogilvie discusses various topics of interest, specific tools and techniques to massively improve business performance and how to leverage your ERP system to achieve a more efficient and profitable companyAnonymoushttp://www.blogger.com/profile/08143452274423855566noreply@blogger.comBlogger23125tag:blogger.com,1999:blog-6761989244930274507.post-19683411848031560752019-08-07T09:00:00.000+10:002019-08-12T07:15:53.971+10:00ERP & Inventory Catch 22<div style="color: #222222; line-height: 15px; margin-bottom: 10px; margin-top: 10px; padding: 0px;">
<span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">About 12 months ago I wrote about the need for tighter inventory and capital control. I'd like to revisit this topic in light of recent economic changes. Specifically: </span></span></div>
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<li><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">The RBA has dropped rates and is tipped to do so again.</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">Bond yields, which reflect future growth and inflation expectations, are hitting all time lows. </span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">There has been an actual inversion of the US Treasury yield curve. (An inverted yield curve is normally a reliable predictor of a recession, having predicted the last three in the US).</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">The current trade war tensions between China and the US.</span></span></li>
</ul>
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<span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">All this puts business owners in a quandary. There is substantial negativity around in the press recently and, locally, this is evidenced by the number of For Lease signs in retail shops and offices. Almost all of this bad press is focused on matters that an individual business owner has absolutely no control.<br /><br />My dear departed Dad taught me many years ago, when I was working in our family business, that we should worry about and take action on the things we can control. If it was out of our control then we should stop worrying about it and do the best we could with what we had and knew. So what is it we know?</span></span></div>
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<li><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">Lower rates on the surface make holding inventory more attractive because it notionally appears to be cheaper and subsequently no issue if you are holding too much inventory.</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">Lower rates are deployed as a policy measure to stimulate the economy, as such we are operating in an economy that could be doing better.</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">Higher inventory levels in a slowing economy is not a good thing. Like blood in the human body, inventory best serves the business when it moves. A slower economy means it is moving at a slower pace with a greater percentage of the overall holding potentially not moving at all. </span></span></li>
</ul>
<span style="font-family: "verdana" , sans-serif;"><span style="color: #222222; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">So what do companies have control over? Executives can control:</span></span><span style="background-color: white; color: #222222;"></span></span><br />
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<li><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">How much capital they have deployed in their business.</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">How efficiently their business is operating.</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">Efforts that identify and eliminate waste in their business processes.</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">How effectively they use their investments in technology, particularly how they use their ERP system.</span></span></li>
</ul>
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<span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">I was speaking to a US colleague of mine last night and she was telling me her clients are </span></span></div>
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<a href="https://1.bp.blogspot.com/-qo3-VonhwkE/XUDpcUDEYII/AAAAAAAAA3c/iQHtaRl-x5UH7f_8AtIYWc7CRhV5YvfeACLcBGAs/s1600/ERP%2BInventory%2BCatch%2B22.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><span style="font-family: "verdana" , sans-serif;"><img border="0" data-original-height="1080" data-original-width="1080" height="320" src="https://1.bp.blogspot.com/-qo3-VonhwkE/XUDpcUDEYII/AAAAAAAAA3c/iQHtaRl-x5UH7f_8AtIYWc7CRhV5YvfeACLcBGAs/s320/ERP%2BInventory%2BCatch%2B22.png" width="320" /></span></a></div>
<span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">all focusing on cash flow initiatives. Everyone is looking for where they can find cash. This reinforces my view of what tactics executives should be employing to best position themselves for the near and medium term challenges ahead.</span><br />
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<span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">So, what to do about all of this? As I mentioned twelve months ago I was advising companies to undertake inventory reduction projects in preparation for the inevitable downturn. I suspect many have not. This remains my view. By focusing on how capital is deployed in your business you will be ensuring the blood pumping through your company will be fresh and moving fast and often, a key tactic for dealing with both downturns and periods of growth. How you use your ERP system is a central tool to successfully employing this tactic.</span><br />
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<span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">For those companies thinking of following this advice and improve the use of their systems I believe you should undertake the following tasks first:</span><br />
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<ul style="color: #222222;"><span style="font-size: 14px;"><span style="font-size: 14px;"><span style="font-size: 14px;">
<li><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">Undertake a strategic review of your digital positioning including the role ERP plays in managing capital and cash.</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">Have a robust discussion around how ERP supports the broader company strategy.</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">How used functionality in your system may provide that next level of competitive advantage.</span></span></li>
</span></span></span></ul>
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<span style="font-size: 14px;"><span style="font-size: 14px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">True independent advice can assist here by providing:</span></span></span></span></div>
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<ul style="color: #222222;">
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">An honest and independent point of view, free of corporate political pressure.</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">Proven capability of facilitating the conversations needed to achieve the right result.</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">A proven methodology for success with ERP.</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">Support to executives so their risk is minimised.</span></span></li>
</ul>
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<span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">The biggest challenge I have working as that independent advisor is getting involved in the conversation early enough. My experience is many of the biggest and most impactful mistakes are actually made in this early phase. As such, remediating these situations and resetting expectations amongst the key executive team is more painful than it needs to be. The earlier the right conversations are held, the better.<br /><br />This is something I can help with, so if you or anyone you know is looking:</span></span></div>
<ul style="color: #222222;">
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">To improve the way their business operates and make better use of their capital;</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">To improve the way they leverage their current system;</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">To replace their current system;</span></span></li>
</ul>
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<span style="font-size: 14px;"><span style="font-family: "verdana" , sans-serif;">give me a call for a confidential discussion on the best way to achieve this.<br /><br />Until next month ...<br /><br />Sincerely,<br /><br />David.</span></span></div>
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<span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px;">©</span> <a href="http://www.davidogilvie.com.au/">David Ogilvie</a></div>
</span></span>execstresshttp://www.blogger.com/profile/05783530008938181952noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-11885146656162802412019-07-03T08:30:00.000+10:002019-07-03T08:30:02.623+10:00Who has heard of ERP Strategy?<div class="separator" style="clear: both; text-align: center;">
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<span style="font-family: tahoma, verdana, segoe, sans-serif;"><span style="font-size: 14px;">In my work as a consultant I am often asked to help devise strategy for businesses. Particularly the development of an ERP strategy to support the overall, business strategy. As regular readers of my newsletter will know, I believe one of the key reasons for ERP failure is the lack of alignment of the implementation project to the corporate strategy. </span></span><br /><br /><span style="font-family: tahoma, verdana, segoe, sans-serif;"><span style="font-size: 14px;">Companies often undertake these projects with the wrong WHY. A common mistake I find is that many executives don't see these projects through a strategic lens, they see them as simply an IT project. This mindset results in insufficient effort being undertaken up front to clarify the business case for the project often resulting in the fact the underlying principles required to ensure a successful project are not considered or put in place. In many cases, projects are undertaken because the current version of the software is no longer supported. This is particularly relevant now with the advent of cloud platforms and software vendors pushing customers onto their new subscription based platforms and business models.</span></span></div>
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<span style="font-family: tahoma, verdana, segoe, sans-serif;"><span style="font-size: 14px;">A key challenge when running strategy development sessions is keeping executives focused on the distinction between strategy and tactics. All too often discussions in strategy development sessions runs off on tangents and generally these tangents are a deep dive into tactics. </span><br /><br /><span style="font-size: 14px;">For example: the strategy might be to broaden the market in which the company will compete only for the discussion to turn into one of whether the company can deliver to those markets, whether a new manufacturing plant will be needed etc. I often find myself reminding the group of the distinction between strategy and tactics. In simple terms strategy looks at “Where” the company will be in 5 - 10 years (or whatever strategic horizon you work with). Tactics look at “How” we get there. The transportation network or manufacturing plant required discussions are tactics not strategy.<br /><br />As a result, ERP is often dropped into the tactics bucket because a new system will help the company </span></span></div>
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<span style="font-family: tahoma, verdana, segoe, sans-serif;">develop the efficiencies required to service the new target markets, help produce the new products to be released or support the new competitive advantage the company is taking to market.</span><br /><br /><span style="font-family: tahoma, verdana, segoe, sans-serif;"><span style="font-size: 14px;">But within that, there is a strategic view or lens one can apply to ERP as well. This strategic view is often tagged with the new buzzword, digital transformation, and can encompass the use of AI, and other new technologies. This new technology certainly opens up new conversations around where the company wants to be in relation to customer service and operations. It opens up new opportunities for strategic thinking.</span><br /><br /><span style="font-size: 14px;">For those companies thinking of updating, upgrading or replacing their systems I believe a slight pause is called for, before you reach out to any software providers including your current provider, in order for you to undertake the following tasks first:</span></span><br />
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Undertake a strategic review of your digital positioning including the role ERP plays.</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Have a robust discussion around how ERP supports the broader company strategy.</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Undertake a detailed and disciplined business case review and clearly articulate why the company needs to change systems.</span></span></li>
</ul>
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<span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">True independent advice can assist here by providing:</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">An honest and independent point of view, free of corporate political pressure.</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Proven capability of facilitating the conversations needed to achieve the right result.</span></span></li>
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">A proven methodology for success with ERP.</span></span></li>
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">Support to executives so their risk is minimised.</span></span></li>
</ul>
<div style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">The biggest challenge I have working as that independent advisor is getting involved in the conversation early enough. My experience is many of the biggest and most impactful mistakes are actually made in this early phase. As such, remediating these situations and resetting expectations amongst the key executive team is more painful than it needs to be. The earlier the right conversations are held, the better. I strongly urge you if you are being told by your software vendor you need to migrate to the cloud version, then you need to start these conversations now - before you engage with software vendors.</span></span><br /><br /><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">This is something I can help with, so if you or anyone you know is looking;</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">To improve the way their business operates;</span></span></li>
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">To improve the way they leverage their current system;</span></span></li>
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">To replace their current system;</span></span></li>
</ul>
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<span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">give me a call for a confidential discussion on the best way to achieve this.<br /><br />Until next month ...<br /><br />Sincerely,<br /><br />David</span></span></div>
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<span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;"><br /></span></span><span style="font-family: Verdana, Geneva, sans-serif; font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">P.S. A big thank you for those readers who reached out to me this month to check in with me on the passing of my wonderful mum. Your efforts and thoughts were much appreciated.</span></span></div>
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<span style="background-color: white; font-family: verdana, geneva, sans-serif; font-size: 14px;">© </span><a href="http://www.davidogilvie.com.au/" style="color: #8a8a8a; font-family: verdana, geneva, sans-serif; font-size: 14px; text-decoration: none;" target="_blank">David Ogilvie</a></div>
execstresshttp://www.blogger.com/profile/05783530008938181952noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-91065291689695913222019-04-24T09:00:00.000+10:002019-04-24T09:00:06.965+10:00Selecting The Right Software Vendor/Partner<div style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px; line-height: 15px; margin-bottom: 10px; margin-top: 10px; padding: 0px;">
<span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">MAFS = Marriage at first sight or a marriage from hell!</span></span></div>
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<span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">Australian readers will be familiar with the recent, so called, reality TV series on Channel 9 called MAFS. While I didn’t watch the show, the advertisements for it made it very clear the show was full of drama, lies and unfaithfulness. Traits that one would wish to avoid in all relationships, especially in the relationship with your ERP vendor. Likewise in business your selection of ERP vendor/partner can be similarly risky.</span></span></div>
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<span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">After all the ERP space has a high failure rate. However, when it is done well, can provide the infrastructure to catapult your business up into the next level. Before you get married to your partner you want to know more about them than the participants of MAFS did with their partners.</span></span></div>
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<span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">As my regular readers will know, it is my view that having a software vendor that is culturally aligned with your own, is an important ingredient for a successful ERP project. The seeds of this success are planted during your selection process. Gaining an understanding of the different motivations that drive the different software vendors, is key to understanding their likely behaviour both during and after the sale process.</span></span></div>
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<span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">No two software vendors are alike. Understanding which delivery model they use can be insightful and help you predict the way in which they will work and interact with you. Each model has their own set of drivers, particularly financial drivers. Uncovering and understanding these drivers is, at times, not easy. However, with carefully crafted questions you can often uncover key information that will be useful to your decision making. Making no effort at all to understand these drivers usually equates to a poor relationship and poor implementation results.</span></span></div>
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<span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">Areas I feel you should question in detail are:</span></span><br />
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<span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><a href="https://3.bp.blogspot.com/-G2s75dTndrY/XL58Pa1A_kI/AAAAAAAAAzo/rlUYVNbt6MMMYqpjcoexWloABYp7UbbcACLcBGAs/s1600/SoftwareVendor.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="1080" data-original-width="1080" height="320" src="https://3.bp.blogspot.com/-G2s75dTndrY/XL58Pa1A_kI/AAAAAAAAAzo/rlUYVNbt6MMMYqpjcoexWloABYp7UbbcACLcBGAs/s320/SoftwareVendor.png" width="320" /></a></span></span></div>
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<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">Ask deeply probing questions of the sales person around their remuneration and most importantly what are their incentives based on? (You don’t need to know their exact salary but the percentage break up of salary vs commission is important.) You could also ask if the incentives are based on monthly, quarterly or yearly numbers. Knowing this can be useful in your discussions around timing.</span></span></li>
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">Ask how they, both themselves personally and the company, are tracking? Be prepared for them to be evasive or provide a standard positive response. I have found over the years those companies whose salespeople are open and up front about these things, are most often the best to deal with. </span></span></li>
</ul>
<span style="color: #222222; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">If representatives of the company are cagey about this topic – they tend to be cagey about other things in the delivery as well. What you need is an open and honest relationship and this can be a leading indicator of the likelihood of a sound relationship being developed.</span></span><span style="background-color: white; color: #222222; font-family: "verdana" , "geneva" , sans-serif; font-size: 10px;"></span><br />
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<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">Ask the executives of the different software vendors you are talking to about the incentive plans they are on from the head office. These vary depending on the delivery model used. If they are a reseller or partner model, ask about the percentage breakup of revenue by license and service fees. </span></span></li>
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<span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">With the advent of cloud and subscription offerings, many resellers are now faced with traditional revenue streams being curtailed resulting in them having to find new revenue streams. Many are turning to an increase in consultancy or project management fees. This change is having a large impact on the behaviour of these organisations. Where once they may have freely provided information about the software and underlying technologies during a project they now may no longer do so and in fact now charge for such information.</span></span></div>
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<li style="margin-left: 15px;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">Ask about the strategic direction of their business, particularly around cloud adoption vs on-premises and the adoption of other technologies. How do they plan to leverage developing technologies such as AI, Industry 4.0, native language BI and IoT. Make sure you are both heading in the same direction and they have the capability to progress at the same rate you wish to.</span></span></li>
<li style="margin-left: 15px;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">Ask about their view on who controls the project? If this is not clear you run a serious risk of two project managers clashing for supremacy. Regular readers of mine will know it is my view that the client must “own” the project. It is part of the secret sauce of success. Therefore, the role of the project manager from the vendor side can be reduced to one of being a project administrator. Thereby reducing the cost of this component of the project. This obviously assumes you, as the client, have an experienced and independent project manager working for you to achieve this.</span></span></li>
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<span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">Remember many executives have not done this before, or if you have the industry has changed. Having an experienced independent advisor helps you because:</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">We have been through the dry gullies and have learnt the lessons. We can provide you a road map of how to avoid the pitfalls.</span></span></li>
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">We bring experience from a variety of industries to your specific challenges.</span></span></li>
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">We have no hidden agendas and are able to provide full and frank advice - </span></span><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">You get an honest point of view.</span></span></li>
<li style="margin-left: 15px; text-align: left;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">We bring a proven set of tools to your circumstance.</span></span></li>
<li style="margin-left: 15px; text-align: left;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">Of what questions we ask and our ability to put the vendor under pressure to prove their statements of capability.</span></span></li>
<li style="margin-left: 15px; text-align: left;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">Of our support to executives so their risk is minimised.</span></span></li>
</ul>
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<span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">If you or anyone you know is looking;</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="margin-left: 15px; text-align: left;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">To improve the way their business operates </span></span></li>
<li style="margin-left: 15px; text-align: left;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">To improve the way they leverage their current software systems</span></span></li>
<li style="margin-left: 15px; text-align: left;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">To replace their current system</span></span></li>
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<span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">Give me a call for a confidential discussion on the best way to achieve this.<br /><br />Until next month ... I wish you and your family the very best for a safe and enjoyable Easter break.<br /><br />Sincerely,<br /><br />David.</span></span></div>
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<span style="color: #222222; font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">© <a href="http://www.davidogilvie.com.au/" target="_blank">David Ogilvie</a></span></span></div>
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execstresshttp://www.blogger.com/profile/05783530008938181952noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-72912429311182845472019-03-21T09:07:00.000+10:002019-03-21T09:07:23.526+10:00Boeing and ERP in the Clouds<div style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px; line-height: 15px; margin-bottom: 10px; margin-top: 10px; padding: 0px;">
<span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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.”</span></span></div>
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<span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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:</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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.</span></span></li>
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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.</span></span></li>
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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.</span></span></li>
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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.</span></span></li>
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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.</span></span></li>
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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.</span></span></li>
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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.</span></span></li>
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<span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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:</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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.</span></span></li>
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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:</span></span><ul>
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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.</span></span></li>
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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.</span></span></li>
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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.</span></span></li>
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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.</span></span></li>
<li style="margin-left: 15px;"><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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.</span></span></li>
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<span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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. </span></span></div>
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<span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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!</span></span></div>
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<span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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</span></span><br />
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<span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">Until next month ...<br /><br />Sincerely,<br /><br />David.</span></span></div>
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<span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;"><br /></span></span><span style="font-family: "verdana" , "geneva" , sans-serif; font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">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.</span></span></div>
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<span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px;">© </span><a href="http://www.davidogilvie.com.au/" style="color: #8a8a8a; font-family: verdana, geneva, sans-serif; font-size: 14px; text-decoration: none;" target="_blank">David Ogilvie</a></div>
execstresshttp://www.blogger.com/profile/05783530008938181952noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-27123247727784488262019-02-27T17:57:00.000+10:002019-02-27T17:57:03.108+10:00Hayne Royal Commission<div style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px; line-height: 15px; margin-bottom: 10px; margin-top: 10px; padding: 0px;">
<span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">I was reading Dean Robinson's newsletter recently. Dean has been a friend and associate of mine for quite a number of years now. In his regular newsletter he was commenting on how the royal commission will be impacting his market, that of small and medium family business, seeing he is </span></span><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">The Family Business Transformer</span></span><span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">. (<a href="https://deanrobinson.com.au/" target="_blank">You can sign up for Dean's Newsletter here</a>)</span></span><br />
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<span style="font-size: 14px;"><span style="font-family: "verdana" , "geneva" , sans-serif;">So each of his points got me thinking ...</span></span><br />
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<span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">He mentioned that borrowing will be more difficult to the point of a possible credit crunch. Banks will be making companies jump through previously unheard of hoops to get access to money. Well, for some businesses, that may not actually matter.<br /><br />Because interest rates have been so low for so long, combined with the fact we have a number of generations of managers who have never been through a recession, many businesses are carrying way more inventory than they should or could. I heard a story the other day of a $12 mil revenue business carrying $4 mil of inventory. <strong>Right there, is a truck load of cash that would not have to be borrowed, if it could be released back into the business.</strong></span></span><br />
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<span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">Strangely enough a well implemented ERP system, operating in a disciplined business can help you release that cash back into your business. It is an old school concept, and one that I feel will make a strong comeback soon, that inventory has a cost. Many executives, particularly those who have not managed in hard times, do not believe that inventory has a cost. This belief is often based purely on the fact there is no line item on their P&L called inventory carrying cost. During my 20 plus years of consulting, I have heard many business owners say, "inventory is cheap".</span><br /><br /><span style="font-size: 14px;">Well that is simply not right. The cost in reality can be between 12 and 20 percent of the value of the inventory being held. While there is no P&L line item, the cost is no less real, as it hides in each and every other line item on that P&L. At the very least the opportunity cost of the money and how else it could be deployed is an expense that is not being considered. So if you are finding it more difficult to get access to borrowings from your lender of choice - perhaps an investment in a inventory reduction and maintenance project and a redeployment of those bank fees you will be charged could be extremely beneficial.</span><br /><br /><span style="font-size: 14px;">Another two key points he made were; 1) underperforming loans will be pulled and poor financial performance will be penalised and 2) Owners need to know their operational numbers - daily.<br /><br />Again a well implemented ERP can help here. A well crafted dashboard will be able to provide you will real time access to your key operational numbers, thereby allowing you to make better and more timely decisions. By making these correct decisions on a daily basis helps build your resiliency and thereby avoid being classified as poor performing.</span></span><br />
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<span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">The one thing I have learnt over my many years of consulting is, there is never a perfect time to undertake these projects. If this is your year for growth and/or your system and associated labyrinth of spreadsheets that you rely on to make your decisions is holding you back? There is no better time than now to set yourself up for future growth.</span></span><br />
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<span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">True independent advice can provide:</span></span></div>
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<li style="margin-left: 15px; text-align: left;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">An honest point of view</span></span></li>
<li style="margin-left: 15px; text-align: left;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">A proven methodology</span></span></li>
<li style="margin-left: 15px; text-align: left;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">Knowledge of what questions to ask and an ability to put the vendor under pressure to prove their statements of capability</span></span></li>
<li style="margin-left: 15px; text-align: left;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">Support to executives so their risk is minimised</span></span></li>
</ul>
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<span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">If you or anyone you know is looking:</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="margin-left: 15px; text-align: left;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">To improve the way their business operates </span></span></li>
<li style="margin-left: 15px; text-align: left;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">To improve the way they leverage their current system</span></span></li>
<li style="margin-left: 15px; text-align: left;"><span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">To replace their current system</span></span></li>
</ul>
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<span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;">give me a call for a confidential discussion on the best way to achieve this, because many of the most expensive mistakes are made early in the process.<br /><br />Until next month ...<br /><br />Sincerely,<br /><br />David.</span></span><br />
<span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;"><br /></span></span>
<span style="font-family: "verdana" , "geneva" , sans-serif;"><span style="font-size: 14px;"><span style="background-color: white;">© </span><a href="http://www.davidogilvie.com.au/" style="color: #8a8a8a; text-decoration: none;" target="_blank">David Ogilvie</a></span></span></div>
execstresshttp://www.blogger.com/profile/05783530008938181952noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-74289462309094508932019-01-23T10:07:00.000+10:002019-01-23T10:07:04.367+10:00ERP Software Contracts<div style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px; line-height: 15px; margin-bottom: 10px; margin-top: 10px; padding: 0px;">
<span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">I have made the prediction that there is to be a significant increase in the the number of organisations changing their business systems over the next few years. Combined with this and the fact most will be considering cloud options for the very first time, now is a time when frank, independent advice will be needed more then ever.<br /><br />The process of selecting the right ERP system for your business can be an exhausting one. I have seen selection processes take as much as 18 months to complete. Something that should never happen and when they take this long, it is a signal something is very, very wrong. It could be:</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">You need an advisor to lead you through the process.</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">You have the wrong advisor leading you through the process. It is often the case auditing or accounting firms believe they have the expertise to do this when they in fact they don't.</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">You have an advisor that is wedded to their methodology and is creating a mountain out of a molehill. </span></span></li>
</ul>
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<a href="https://3.bp.blogspot.com/-RoBs-A1_jok/XEevukJn2cI/AAAAAAAAAvw/n9qCDLF5e3k941s-F3ERbrntCEfpqDMNgCLcBGAs/s1600/Prediction.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="1080" data-original-width="1080" height="320" src="https://3.bp.blogspot.com/-RoBs-A1_jok/XEevukJn2cI/AAAAAAAAAvw/n9qCDLF5e3k941s-F3ERbrntCEfpqDMNgCLcBGAs/s320/Prediction.png" width="320" /></a></div>
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<span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">This process should not take any more than three to four months - tops. However when you do finally get to the point of being comfortable with the vendor of choice, there is one more critical step to take. A step that is often rushed and/or over looked completely because everyone wants to get started. That step is: Negotiating the clauses of your agreements.<br /><br />The number and type of agreements vary from vendor to vendor. In essence you will be required to read, agree to and sign one or more of the following:</span></span></div>
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<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Software license/subscription agreement</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Software service agreements</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Master services agreement</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Statement/s of Work</span></span></li>
</ul>
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<span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">I advise my clients to get sound legal counsel on these agreements and I have one in particular I recommend. He has worked for software companies and has now starting working for himself. He understands the landscape. If you are interested you can listen to a podcast he and I recorded sometime ago before he started his own practice <a href="https://davidogilvie.us9.list-manage.com/track/click?u=94267206db492a079c2ba3167&id=727dae066c&e=545afd6e9e" style="color: #00add8;" target="_blank">here</a>.<br /><br />Let me say at the outset I am not a legal expert but my comments below are a summary of the various conversations I have had with legal experts and what I have observed in my 20 plus years of doing this. (So as the adverts that want to limit their liability say, "Please do not take this as legal advice - seek a professional")<br /><br />My thoughts and comments on this are:</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">You want to negotiate with your software vendor in a reasonable manner ensuring you keep a productive tone to all your negotiations. We want a win-win for both sides of the transaction and agreement on obligations required by both parties during the course of the relationship. Of course you also want protection in case the worst happens.</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">You want to build into your agreements incentives for the vendor to perform their obligations as agreed. If there is no incentive and you are on a times and materials contract, there is no incentive for the vendor to deliver quickly. In fact the opposite is true.</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">One of the biggest mistakes I see is clients negotiating hard on the vendor's consultant charge out rates and on the cost of licensing/subscription. Remember they are in business to make a profit and you want them in business in future so they are able to support you. If push comes to shove and they have to make a determination between helping you or another client, I can assure you the client with the best margin will get the attention first. Your focus should be on ensuring they are capable of delivering high quality deliverables on time rather than on specific rate discounts. You will save significantly more by ensuring you are on time than you ever will by negotiating lower rates.</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Remember the documents your vendor will want you to sign will limit their risk and exposure. Signing their standard document is never in your best interests. You need to negotiate delivery obligations, terms, performance, conditions and consequences when these are not delivered as expected - not rates. The most aggressive document I have seen was one where the vendor agreed to all care and no responsibility and no negotiation whatsoever. Take it or leave it. Not the type of business relationship I would want to enter into and I certainly do not advise my clients to accept such an arrangement either.</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">You need to be sure you fully understand what every term means. It is often not what is said that can become an issue, it is what is unsaid or inferred. Terms do not necessarily mean what you think they mean. Check them again and again.</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">How the vendor approaches being challenged on their agreements will give you an insight to how they will perform in the implementation. There is always tension in an implementation - always. And understanding how they will behave under this stress gives insight to how they will perform for you.</span></span></li>
</ul>
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<span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Being a truly independent advisor I can provide:</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">An honest point of view</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">A track record of success</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">A kit bag of tools to draw from </span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Knowledge of what questions to ask and an ability to put the vendor under pressure to prove their statements of capability</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Support to executives so their risk is minimised</span></span></li>
</ul>
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<span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Please feel free to reach out to me even if you would like a sounding board for a decision or issue you are currently facing, if you or anyone you know is looking -</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">To improve the way their business operates </span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">To improve the way they leverage their current system</span></span></li>
<li style="text-align: left;"><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">To replace their current system</span></span></li>
</ul>
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<span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Give me a call for a confidential discussion on the best way to achieve this.<br /><br />Until next month ...<br /><br />Sincerely,<br /><br />David</span></span></div>
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<span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;"><br /></span></span></div>
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<span style="color: #222222; font-family: verdana, geneva, sans-serif;"><span style="caret-color: rgb(34, 34, 34); font-size: 14px;">© <a href="http://www.davidogilvie.com.au/" target="_blank">David Ogilvie</a></span></span></div>
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execstresshttp://www.blogger.com/profile/05783530008938181952noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-72940359739787236612018-12-13T12:43:00.000+10:002018-12-13T12:43:15.555+10:00Merry Christmas - 2018<div style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px; line-height: 15px; margin-bottom: 10px; margin-top: 10px; padding: 0px;">
<span style="font-family: verdana, geneva, sans-serif; font-size: 14px;"><strong>Merry Christmas</strong></span></div>
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<span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;"><b><br /></b></span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://3.bp.blogspot.com/-kbizEC1hApY/XBHD5rsZ2RI/AAAAAAAAAus/ulKeSNgo2Z0aShMW_a3y0rEemOFY7dkhwCLcBGAs/s1600/christmas-bauble-golden-bow-sand.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="531" data-original-width="800" height="212" src="https://3.bp.blogspot.com/-kbizEC1hApY/XBHD5rsZ2RI/AAAAAAAAAus/ulKeSNgo2Z0aShMW_a3y0rEemOFY7dkhwCLcBGAs/s320/christmas-bauble-golden-bow-sand.jpg" width="320" /></a></div>
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<span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;"><b><br /></b></span></span><br /><span style="font-family: verdana, geneva, sans-serif; font-size: 10px;"><span style="font-size: 14px;">As the Christmas season quickly comes upon us, I would like to wish all my readers and contacts the very best for the season. I do hope you and your family have a happy and safe break. I look forward to seeing you all again next year.<br /><br />Over the Christmas break I often reflect on the year that has been and the year to come. Below, please find a small selection of my predictions for 2019:</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">The momentum to cloud offerings from software vendors will increase.</span></span></li>
<li><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">The number of companies that consider changing their systems will increase, because so many companies are still on old systems.</span></span></li>
<li><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">The number of ERP failures will increase over the next few years as; 1) the number of unseasoned executives make old mistakes around ERP selection and implementation; and 2) the number of new challenges being presented by the new cloud offerings are dealt with. There will never be a more important time to get experienced independent advice.</span></span></li>
<li><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">The ability of a company's IT team to access the back end databases will come to an end as the large software vendors lock down data in their cloud offerings. Some because of the multi-tenant arrangements and some because of revenue generating opportunities.</span></span></li>
<li><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">The level of service being delivered from cloud software vendors will diminish over time as the volume of service requests they have to deal with increase.</span></span></li>
<li><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">The movement to the cloud has placed the revenue model software partners relied on for so long, at risk. The subscription model has removed a significant layer of revenue from partners and shifted it back to the original vendor. The impact is partners will be seeking new avenues of revenue. How they respond to this challenge will be highly dependent on the individual company's culture. Some will resort to telling more lies than normal or at least saying less than usual, thereby increasing the risk of failure. (It is my contention it is more important to understand what a software salesperson is NOT saying, than what they say.)</span></span></li>
</ul>
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<span style="font-family: verdana, geneva, sans-serif; font-size: 14px;">Once again, best wishes for the Christmas/New Year season. I look forward to seeing you next year.<br /><br />A small reminder, if you or anyone you know is looking:</span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">To improve the way their business operates </span></span></li>
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">To improve the way they leverage their current ERP system or</span></span></li>
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">Are thinking about replacing their current ERP system</span></span></li>
</ul>
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<span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">Give me a call for a confidential discussion on the best way to achieve this.<br /><br />Until next year ...</span></span></div>
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<span style="background-color: white; caret-color: rgb(56, 56, 56); color: #383838; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.199999809265137px;">© </span><a href="http://www.davidogilvie.com.au/" style="background-color: white; caret-color: rgb(56, 56, 56); color: #8a8a8a; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.199999809265137px; text-decoration: none;" target="_blank">David Ogilvie</a></div>
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execstresshttp://www.blogger.com/profile/05783530008938181952noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-68436799602029931022018-11-14T16:18:00.003+10:002018-11-14T16:18:33.837+10:00Recent Life Lessons<div style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px; line-height: 15px; margin-bottom: 10px; margin-top: 10px; padding: 0px;">
<span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">This year has been full of project starts for me. Both on a personal and business level. Personally my mum moved into aged care this year and I was thrust into the world of pain and bureaucracy that comes with that industry. I was lucky because one of the staff of my client had just been through the same process and we were discussing the difficulties we experienced in the lunch room one day. She mentioned she had an aged care broker help her. I instantly found myself walking in the shoes of my customers. Here I was trying to wade my way through an industry I did not know, one that contains a million minefields, any one of which could have caused us significant pain. Short story is, the broker provided outstanding service and helped us enormously. </span><br /><br /><span style="font-size: 14px;">I immediately appreciated the position executives about to embark on an ERP replacement project feel. It is clear executives get too close to their business sometimes and don't see the forest for the trees. I clearly had fallen into this trap myself. The ERP industry is no different to the aged care industry in that it embraces a product one generally has little deep knowledge about and one that you generally do not work with until you need a change. The value of reliable, independent and experienced help became extraordinarily personal and clear to me.</span></span><br /><br /><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">On a business level I have embarked on a growth path moving from the one man band I have been for 20 plus years to a small niche consultancy with broader capabilities. As a result of this growth, we have started a number of ERP projects this calendar year. By comparing the kick off process for these projects has once again reminded me of some key topics that contribute to the success or otherwise of your projects. My reminders were:</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">How important getting good advice is. </span></span><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">As I have mentioned in previous newsletters <div class="separator" style="clear: both; text-align: center;">
<a href="https://3.bp.blogspot.com/-XKze0RtGasQ/W-u-Eaqle8I/AAAAAAAAAuA/9JFczqRXZ6Ew8_kaA_iNdBhnGe29HLgewCLcBGAs/s1600/Life%2Blessons.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="1080" data-original-width="1080" height="200" src="https://3.bp.blogspot.com/-XKze0RtGasQ/W-u-Eaqle8I/AAAAAAAAAuA/9JFczqRXZ6Ew8_kaA_iNdBhnGe29HLgewCLcBGAs/s200/Life%2Blessons.png" width="200" /></a></div>
and in a number of my published articles buying a new ERP is like sending your 16 year old daughter, who has no idea about cars, to a second hand car dealer to buy her first car with no advice or guidance. Fraught with danger. Get an experienced guide. The cost of this will be around 1% or 2% of your overall ERP budget. Cheap insurance and insignificant in the overall long-term view of things.</span></span></li>
<li><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">How important the selection of your vendor is. Not all vendors are the same. Some perform extraordinarily well while some ... well not so much. </span><span style="font-size: 14px;">I have lost count of the number of times the good fellow well met attitude shown by a software vendor to a prospective buyer in the sales process, can very quickly turn to one of sudden arrogance once the contract is signed. The speed at which this change of attitude can happen is staggering in some cases. </span></span><ul></ul>
</li>
<li><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">How important an understanding of the language that is used in both the sales presentation and sales proposals is. An understanding of not only the linguistics but, more importantly, what the practical meaning of these words or terms are to your project. That is, an understanding of what those words will mean once you sign the contract. For example; I recall on more than one past project, the sales proposals from the vendor clearly stated data migration was the client's responsibility. In my opinion this is as it should be. However what each of these separate vendors did not say in their proposal was:</span></span><ul>
<li><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">The newly released version of the software </span><span style="font-size: 14px;">had no tool at all available to import data. Of course a tool would have to be developed, at the client's expense. </span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">That the only viable method to get clean, validated data into the system was to use a tool they had developed. This expense was of course omitted from the sales proposal and was an additional cost to the client. Something they had not budgeted for.</span></span></li>
</ul>
</li>
</ul>
<span style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">In both these experiences, it wasn't what the sales people said that caused the problem, it was what they omitted to say that was key.</span></span><br style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;" /><br style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;" /><span style="caret-color: rgb(34, 34, 34); color: #222222; font-family: verdana, geneva, sans-serif; font-size: 10px;"><span style="font-size: 14px;">The issues highlighted in these examples can easily be avoided. In one example I was called in to manage the project after someone else had helped the client select the product and the vendor. The other the company did not feel there was value in having someone like me help them select as the vendor seemed to be helping and they felt they had the selection under control. However the additional cost of those traps could have easily been avoided. In these cases the additional cost would have more than covered my costs. While the additional cost </span><span style="font-size: 14px;">of souring the relationship and the mistrust it developed</span><span style="font-size: 14px;"> is not directly quantifiable, it is no less real and the implementation suffered because of it. <br /><br />Steps I feel you need to take to help avoid these situations are:</span></span><span style="background-color: white; caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;"></span><br />
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">Put the relationship with the vendor to the test, before you sign the contact. It is critical you use some form of relationship measurement in your selection criteria and not just your system functional scores. You should have a good feel for how the relationship is going but a key test comes when you negotiate over contract clauses and the provisions aimed at ensuring they are held accountable for the quality of their delivery. This process will provide some insight into how amenable they will be to suggestions that are outside the norm for them. Remember there is an 85% plus failure rate in this industry and doing what has been done before and expecting a different result is ... (Einstein's definition of insanity).</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Avoid the situation of a delivery team and an implementation team completely. I normally do this by outlining early in the selection process that there is an expectation that the people who demonstrate the system to you will be the same people who help you implement the system. Vendor's don't like this for a number of reasons and I fully understand them. However my view is they need to comply otherwise they may be trying to hide something.</span></span></li>
<li><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">Identify the unspoken meaning behind the language in the sales process before you sign the contract. Remember it is in what the vendors don't say, rather than in what they do say to a prospect that matters. Be specific in what you understand the situation to be and don't be frightened to recheck if you don't feel you have it right. Don't get me wrong, there are a lot of good vendors and wonderful people working in the software vendor community, but there are as many that are not as well.</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Get an experienced advisor to help.</span></span></li>
</ul>
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<span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">If you or anyone you know is looking;</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">To improve the way their business operates </span></span></li>
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">To improve the way they leverage their current system</span></span></li>
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">To replace their current system</span></span></li>
</ul>
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<span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">give me a call for a confidential discussion on the best way to achieve this.<br /></span></span><br /><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">P.S. Did you know, a growing number of clients are asking me to be on retainer so they can access me on call.</span></span></div>
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<span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;"><br /></span></span></div>
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<span style="background-color: white; caret-color: rgb(56, 56, 56); color: #383838; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.199999809265137px;">© </span><a href="http://www.davidogilvie.com.au/" style="background-color: white; caret-color: rgb(56, 56, 56); color: #8a8a8a; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.199999809265137px; text-decoration: none;" target="_blank">David Ogilvie</a></div>
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execstresshttp://www.blogger.com/profile/05783530008938181952noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-45922564607240804142018-10-18T18:23:00.000+10:002018-10-18T18:23:02.561+10:00Digital Transformation<div style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px; line-height: 15px; margin-bottom: 10px; margin-top: 10px; padding: 0px;">
<br /><br /><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">I was speaking at a function for business leaders recently when a question regarding what to expect when undertaking a digital transformation project came up. The premise of the question was this individual's company had recently undertaken a project to select and implement a new ERP system, which is often the backbone of a wider digital transformation effort, and this process opened the flood gates to all sorts of issues and problems for them. They were asking how they could have avoided such upheaval. </span><br /><br /><span style="font-size: 14px;">My response was essentially that they should have expected some level of upheaval because a successful transformation project should in fact do exactly that, transform the business. A transformation project does not occur in isolation or without change. The old adage of you cannot make scrambled eggs without cracking a few shells applies here. It should engage the whole company and as such will make someone uncomfortable. It will in fact, put many company wide sacred cows under the microscope and force them to be defended. This inspection, of course, is not always welcomed. There are corporate political power plays to protect and existing staff and executive ranks become uncomfortable when decisions they have previously made suddenly are being questioned. As Ray Dalio mentions in his book "Principles", when this level of accountability or investigation occurs:</span></span></div>
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<blockquote class="tr_bq">
<span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;"><b><i>"people tend to be more defensive than self-critical".</i></b></span></span></blockquote>
<span style="font-family: verdana, geneva, sans-serif;"><br /><span style="font-size: 14px;">And so it seems as if all manner of problems and issues suddenly appear. But has anything really changed? My premise is no, not much has changed at all. These issues were always <div class="separator" style="clear: both; text-align: center;">
<a href="https://2.bp.blogspot.com/-3mVfIyeq94g/W8hCFcJwjlI/AAAAAAAAAtc/Mo8ztC6_9v4nCIj-yjME7q2CrX2xGRh5wCEwYBhgL/s1600/Ogilvie%2B-%2BDigital%2BTransformation.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="1080" data-original-width="1080" height="200" src="https://2.bp.blogspot.com/-3mVfIyeq94g/W8hCFcJwjlI/AAAAAAAAAtc/Mo8ztC6_9v4nCIj-yjME7q2CrX2xGRh5wCEwYBhgL/s200/Ogilvie%2B-%2BDigital%2BTransformation.png" width="200" /></a></div>
there but they were being hidden by other things. Things like the company culture, corporate politics and the unspoken knowns. It is similar to when you undertake an inventory reduction project or adopt lean principles. When you start work on the improvement it seems like all manner of problems start to occur. This perceived increase in problems is one reason why many of these projects start but don't finish. Executives often say these principles don't work or are not worth the effort. </span><br /><br /><span style="font-size: 14px;">Just like the rocks in the river metaphor, when you lower the level of the water (i.e your inventory levels) you expose the rocks (issues and problems). But rather than addressing those issues and making the rocks smaller and turn them into pebbles (attempt to remove the problem) executives will often default to saying this isn't working. When in fact what they are really saying is, we didn't stick with it long enough to reap the real benefits that are possible.</span><br /><br /><span style="font-size: 14px;">Conflict can actually be one of the most healthy things to happen in your business. I wrote on <a href="https://davidogilvie.us9.list-manage.com/track/click?u=94267206db492a079c2ba3167&id=01b91c98a8&e=545afd6e9e" style="color: #00add8;" target="_blank">the power of conflict in this article</a>.</span><br /><br /><span style="font-size: 14px;">How do you make sure your effort or project isn't overloaded with problems and issues? The steps I feel you should take are:</span></span><br /><br />
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">Expect problems and plan for them</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Realise that good conflict is healthy, facilitate good conflict and remove bad conflict</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Realise that between the "bad now" and the "good in the future" is a period of "we need to work through this"</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Have an experienced guide by your side to help you anticipate the problems and provide guidance through the unknown</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Ask great questions of your digital solutions partner to make sure they are both technically capable and culturally aligned with your vision for the business </span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Make sure you backfill your best people and assign them to the project (<a href="https://davidogilvie.us9.list-manage.com/track/click?u=94267206db492a079c2ba3167&id=d38aa929e9&e=545afd6e9e" style="color: #00add8;" target="_blank">See my article on succession planning</a>)</span></span></li>
</ul>
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<br /><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">If you or anyone you know is looking;</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">To improve the way their business operates </span></span></li>
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">To improve the way they leverage their current system</span></span></li>
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">To replace their current system</span></span></li>
</ul>
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<span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">Give me a call for a confidential discussion on the best way to achieve this.</span></span></div>
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<span style="background-color: white; caret-color: rgb(56, 56, 56); color: #383838; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.199999809265137px;">© <a href="http://www.davidogilvie.com.au/" target="_blank">David Ogilvie</a></span></div>
execstresshttp://www.blogger.com/profile/05783530008938181952noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-88673764751540580032018-09-14T12:57:00.000+10:002018-09-14T12:57:54.172+10:00Is Your ERP an Asset?<div style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px; line-height: 20px; margin-bottom: 10px; margin-top: 10px; padding: 0px;">
<span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">I was having a discussion with a client recently. We were discussing the importance and value of getting a broad range of people, views and experiences involved in the software design sessions we were running at the time. He expressed some reservations about having so many people involved, and subsequently out of the business, at one time. I explained the reasoning and the benefits to him this way...<br /><br />I understand that when you see the number of people sitting in the boardroom discussing<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://3.bp.blogspot.com/-BUIR8jRsfjw/W5sh50KtueI/AAAAAAAAArw/TrOPPuy_Cs43DW4ea2-8bvaPpdhBVF7lACLcBGAs/s1600/IT_puzzle_piece.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" data-original-height="283" data-original-width="400" height="226" src="https://3.bp.blogspot.com/-BUIR8jRsfjw/W5sh50KtueI/AAAAAAAAArw/TrOPPuy_Cs43DW4ea2-8bvaPpdhBVF7lACLcBGAs/s320/IT_puzzle_piece.jpg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Image: Security-Net.com</td></tr>
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how the business currently operates and where improvements could be found, you do the quick calculation of their salaries multiplied by the number of people and by the number of hours we have them engaged in the discussion. I understand this can be a large number. I also understand that not everyone contributes to the discussion as deeply as some others. After doing the quick maths, you are wondering where is the value in incurring all this expense?<br /><br />So I suggested the following story. When he purchases a new piece of equipment and deploys it in his business, he can quickly see, touch and feel this shiny new asset he has bought. He can quickly see how this asset is contributing to his revenue because there is a tangible link between something he can feel and see and the revenue he sees on his P&L.<br /><br />However, unlike buying a new piece of equipment, when implementing a new software system appreciating the value is not quite so easy, particularly in the early stages of a software project. You certainly cannot touch and feel it as you can a piece of equipment. The ability of the people using the software system is not seen as such a benefit as seeing a driver sitting in the cabin of the machine when they are operating it. However, just because you cannot touch it, does not make the value of the asset you are building any less valuable to the business. In fact, done correctly, I would argue the asset can be more valuable than that piece of equipment.<br /><br />The process of building this asset (your new ERP system) can make it more valuable because:</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">the large range of people from different areas of the business all get to see and fully understand the other parts of the business. Something that is often missing from a business operation. When sitting in workshops there is often a realisation of: </span></span><ul>
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">what work others actually do.</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">how things actually connect. (You would think the staff of the business actually does know this – however, I am constantly surprised how little some areas of a business understand what other areas do.)</span></span></li>
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">the impact of a job half done in one area has one another down the chain.</span></span></li>
</ul>
</li>
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">People genuinely see the end-to-end of the business and better understand what role they play in the customer experience.</span></span></li>
<li><span style="font-family: verdana, geneva, sans-serif; font-size: 14px;">The software often determines the business process you follow and therefore its use has a direct impact on the customer experience.</span></li>
<li><span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">Your individual use of the system and the way in which you have it configured can provide you with a key element of your competitive advantage. Something that often stands the test of time, continues to bring benefits to the business in the long-term and does not depreciate like a piece of machinery does.</span></span></li>
</ul>
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<span style="font-size: 14px;"><span style="font-family: verdana, geneva, sans-serif;">The real value of this asset is in a competitive advantage it creates for you through the deep understanding and skill of utilising the asset. Just like a more skilful driver can extract more from the performance of a piece of machinery than another. Essentially it is the same asset but a different skillset using it. So by applying this higher skill level to your software creates the true improvement in the value of your business. As a result of your competitive advantage, you can then often justify higher margins than your competitors.</span></span><br /><br /><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">So the more time you take to allow your staff to learn the working of this new tool, the deeper will be their understanding of the tool and the greater the reward when it is finally deployed and is running your business. Yes it is an investment and yes it can be expensive but when invested wisely, just like any other investment it can generate substantial rewards for your company.<br /><br />In order to be able to ensure your investment is well placed, the addition of an experienced independent advisor is likewise a well-placed investment. As I noted in a LinkedIn post recently, my best clients are often those who have tried and failed to implement an ERP before or who have been involved in such a project. I have discovered that they fully appreciate the value I bring. Wouldn't it be nice if those doing it for the first time wouldn't make the same mistake first?<br /><br />If you or anyone you know is looking -</span></span></div>
<ul style="caret-color: rgb(34, 34, 34); color: #222222; font-family: Verdana, Geneva, sans-serif; font-size: 10px;">
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">to improve the way their business operates </span></span></li>
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">to improve the way they leverage their current ERP system</span></span></li>
<li style="text-align: left;"><span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">to replace their current ERP system</span></span></li>
</ul>
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<span style="font-family: verdana, geneva, sans-serif;"><span style="font-size: 14px;">then give me a call for a confidential discussion on the best way to achieve this.</span></span></div>
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<span style="background-color: white; caret-color: rgb(56, 56, 56); color: #383838; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.199999809265137px;">© <a href="http://www.davidogilvie.com.au/" target="_blank">David Ogilvie</a></span></div>
execstresshttp://www.blogger.com/profile/05783530008938181952noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-16398850707749342952018-08-08T10:14:00.000+10:002018-08-08T10:14:53.200+10:00What Waste Exists in Your Supply ChainThe UK luxury brand Burberry was reported to have burned up to $50 million of unsold products in FY 2017/18 and up to $150 million over the past five years. It is doing this to protect their premium brand status rather than selling the products at discounted prices.<br />
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They believe by doing so maintains their reputation as a high-end brand because it reduces the number of their products being sold at discounted prices.
Business Insider had an article the other day indicating that Under Armour beat second quarter expectations but, "is still sitting on a mountain of unsold inventory, which grew 11% to US$ 1.3 Billion in the most recent quarter". Yes, you read that right, with a B. Business Insider goes on to report that fashion houses, in general, have a troubling issue with unsold inventory naming companies such as; Gap, Ralph Lauren and of course they named Burberry. H&M reported it has UD$ 4.3 Billion worth of unsold inventory.<br />
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In responding to the criticism in the press recently, Burberry has responded by saying they have some great environmental initiatives within their supply chain. What I find of greater concern is if they have managed to instil environmental initiatives within the supply chain, why haven’t they inculcated better “Lean” initiatives?<br />
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It is clear that Burberry and these other fashion houses are manufacturing more goods than there is actual demand. Otherwise, they wouldn’t be in this position of having to destroy or sit on so many unsold products. In a press statement, a spokesperson for Burberry said the disposal was due to a one-off agreement with Coty for beauty products. However, the five-year write off numbers puts this statement in serious question.<br />
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Unfortunately, this practice of destroying products is common in the fashion industry. Cartier, for example, is quoted as having recently destroyed products worth €481 million.<br />
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<a href="https://3.bp.blogspot.com/-ji_l_2t4KO0/W2ozYIHmZDI/AAAAAAAAAqs/MlesKs1Xo70ynyKs6STI5Qs1aYgeZhOBACLcBGAs/s1600/376043-9fa5429728492d584d5fd75e653704d9.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="395" data-original-width="632" height="200" src="https://3.bp.blogspot.com/-ji_l_2t4KO0/W2ozYIHmZDI/AAAAAAAAAqs/MlesKs1Xo70ynyKs6STI5Qs1aYgeZhOBACLcBGAs/s320/376043-9fa5429728492d584d5fd75e653704d9.jpg" width="320" /></a></div>
So it surprises me that these companies do not have better systems in place. In this day and age when manufacturing systems and technologies are available to help overcome, or more importantly prevent, this exact problem of overproduction. Systems that will trigger manufacturing activities when a real demand signal is identified rather than generating overproduction as is clearly the case at the moment.<br />
<br />
I am also surprised that the boards and company executives have allowed this situation to exist. Perhaps because their margins are at the premium end there has been less pressure to adopt lean practices than in other businesses. More likely, however, is the fact that many companies consider inventory to be cheap. Rarely do you see an organisation report a cost for holding inventory in the P&L. It is not until they have to make a financial write-off, then the real cost of holding this inventory actually surfaces. In my day to day work as a trusted advisor, I am consistently surprised how often I am having the debate with executives over the benefits of instilling good inventory practices into their business.<br />
<br />
So many companies either rarely conduct stocktakes or when they do, it is because the auditor or end of year financials require one. The benefits of high inventory turns and accuracy in your inventory numbers is enormous. By simply using real-time data capture systems connected to your system of record, your ERP system, and performing well-structured cycle counting regimes you are 80% of the way to solving this issue.<br />
<br />
If I was a shareholder in these companies I would be extremely annoyed to see such waste of resources and capital. These organisations clearly do not have a continual improvement culture. (I have used continual rather than continuous deliberately. If you are not sure why I have done this, call me and I will explain).<br />
<br />
It is a common misconception, in my opinion, that lean principles and ERP do not work well together. I believe this to be false, they can work well together. In addition to benefiting from adopting lean manufacturing practices, organisations like these will reap significant benefits from leveraging the power of machine learning capabilities that are becoming available today to help improve their forecasting capabilities.<br />
<br />
So with all this in mind, what are the potential lessons in this for you? My thoughts are not groundbreaking, but it is clear they are not widely adopted. The actions I feel you should take are:
<br />
<br />
<br />
<ul>
<li>Don’t wait for market pressures to force you to review processes. By adopting a continual improvement culture in your company you are constantly looking for and adopting better ways. If this is not pervasive within your company, take steps to make it so. </li>
<li>Fully understand the difference between value adding and non-value adding activities and then apply this understanding to your business processes. </li>
<li>Take an honest review of your business and the process you have adopted and identify the non-value adding activities. Then take proactive action to remove them. </li>
<li>Take steps now, because as the US interest rates position shows, money seems to be getting more expensive every day and will most likely continue to do so. Therefore your inventory won't be as cheap as it has been. </li>
</ul>
<br />
<br />
© David Ogilvieexecstresshttp://www.blogger.com/profile/05783530008938181952noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-83697677955308635172017-04-01T10:49:00.002+10:002017-04-01T10:49:44.692+10:00Observations from recent trip to Sth East Asia<div class="MsoNormal">
<span lang="EN-US">At the beginning of March, a mate of mine and I headed off to Asia to look at the "<i>Destiny Rescue</i>" projects we had raised money for. I also took the opportunity to conduct some business and hold some key meetings in Singapore. Below are some of my observations:</span></div>
<div class="MsoNormal">
<span lang="EN-US"><br /></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2;">
</div>
<ul>
<li><a href="https://www.blogger.com/null" name="OLE_LINK1">Corruption is so widespread in Asia, we are lucky to live and work in the country and business environment we do. While our system is not perfect, it is substantially better than in some areas of the world.</a></li>
<li>The poverty in some areas was head spinning.</li>
<li>There are so many more important issues to deal with than those we see on our nightly news, TV screens and those that our politicians want to discuss. For example, I can't believe the Victorian government is wasting time, energy and money on gender equalling walk signs. Really!!!, is that the most important issue we have ATM?</li>
<li>The Hilton Singapore has THE best breakfast I have every experienced. I generally don’t like hotel breakfasts, they are cold despite the kerosene heated bain-mares.</li>
<li>The level of success and work competed by the team from Destiny Rescue in Cambodia blew me away. Robert Webber has done an outstanding job in his time as country manager. Also a big Thank You again to Jeremy Sargent who was the GM Breville Australia when he made the decision to donate a large range of kitchen appliances to Destiny Rescue.</li>
<li>I was very impressed by the enterprise of the people in Asia. While it is mostly driven by necessity, it is still very impressive. Every house I saw in the country Cambodia had a stall or shop of some sort selling something. There is no doubt the fact there is no social safety net available contributes to this. Australia could do with a little more enterprise spirit demonstrated by they <span lang="EN-US">Khmer.</span></li>
<li>There doesn’t appear to be any depression in these countries. No one goes to their shrink here. Perhaps people like Grant Hackett could do with a little of the Khmer spirit—maybe it would help him deal with his demons.</li>
<li>Decent coffee is hard to find. However, the Arabica bean isn’t the only bean with flavour.</li>
<li>How wonderful the weather in Asia can be. I was expecting a stifling hot, humid and rainy trip. But we had fantastic weather. Early March is a great time to visit.</li>
<li>I was reminded how unfair the world can be. Many people strive for equality in this country when the reality is we can strive for equality of opportunity but not status.</li>
<li>I was reminded how far behind the rest of the world the Australian Tax system is. I saw that I could purchase a bottle of Bundy rum substantially cheaper overseas than I could in my home city—and I don’t mean from a duty-free store. I mean in a retail supermarket. If the Government doesn’t do something about our tax system soon, there will be a massive exodus of talent from Aust. This would be disastrous for the country.</li>
<li>This notion of opportunities outside of Aust seems to go in waves, I recall my father considering this when I was young. An old idea’s time may be approaching again.</li>
<li><span style="font-family: Cambria; font-size: 12pt;">I learnt that you don’t have to be a Microsft Dynamics 365 user to leverage the Azure capabilities of machine learning. This opens the door for a number of other ERP systems to compete without having to build their own capability.</span></li>
</ul>
<div>
<span style="font-family: Cambria;">I sincerely hope you gain some insights from my observations.</span></div>
Anonymoushttp://www.blogger.com/profile/08143452274423855566noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-63632411658375356502017-02-27T12:15:00.001+10:002017-02-27T12:18:02.485+10:00Customer Service - anathema of modern day business I had some experiences recently that reminded me how important your corporate language is. On both occasions the companies involved overused the wording: "We apologise for any inconvenience caused", "Please hold as your call is important to us". Seriously if I hear these again, I think I will explode. They are so overused they have lost any meaning, except that of: "We don't care about you, you are nothing more than a number to us".<br />
<br />
Great service stands out. Companies that provide great service have empowered employees, that is they are able to make a decision that will impact their relationship with you. Not simply follow a process or worse still have some technology manage the process. (I had one company recently that their phone was NEVER off engaged. I am certain it was a policy to get everyone to use their website - disgraceful. I called at all hours of the day on all days of the week and EVERY TIME it was engaged, Thanks for nothing "Ticketmaster" www.ticketmaster.com.au )<br />
<br />
Things you can do to ensure you don't follow the masses into that ugly melting pot of disgraceful service are:<br />
<br />
<ul>
<li>Have a real human speak to the customer</li>
<li>Don't make the customer wait 20 min on hold</li>
<li>Actually have a phone number that works</li>
<li>Allow your customer service team to fix the problem. Don't constrain them with policy</li>
</ul>
<div>
The level of service in this country is diminishing rapidly. This gives your business a greater opportunity to stand out - make sure you take that opportunity by providing outstanding service. It's the best marketing campaign you can ever have. </div>
<div>
<br /></div>
<div>
P.S. If there are any budding technology start-ups out there; there is a great opportunity to provide a decent concert and sporting ticketing service out there. One that actually takes the word service seriously. The ones we have at the moment are appalling.</div>
<br />
<br />
<br />Anonymoushttp://www.blogger.com/profile/08143452274423855566noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-12140210257811002602017-01-23T08:59:00.000+10:002017-01-23T08:59:12.176+10:00CEO Education<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">ERP vendors have often described to me their prospects as being in a “raw state”—raw in the sense that they are new to the process, haven’t done this before and are expecting some guidance. While having a prospect eager for guidance is great for the vendor, they find themselves in a dichotomy. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">On the one hand, by wanting to provide great truthful advice, some vendors can, unfortunately, place their sale at risk when competing vendors tell a contradictory and simpler story. On the other hand, some clients, while needing the advice, view it with a high degree of skepticism, thinking the advice might be manipulated because, “After all, they are just trying to sell me something.”</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">There is no doubt in my mind that executives contemplating replacing their ERP system should obtain some education in this process before they embark on their journey. It is critical they understand what it takes to get the best from software vendors and to fully understand how they should behave in the relationship, thereby ensuring they have the right resources and budget to ensure success. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Until recently this education has been sadly lacking, leaving executives to their own devices. This is, in my view, a major contributing factor to the very high failure rate of ERP implementations. It is unacceptable that in excess of 85% of them fail in some form or another. What is also unacceptable is the high number of acrimonious relationships between client and vendor. This is a major reason why there is such a high churn rate between vendors. I know some successful Microsoft vendors, for example, who have based their whole growth strategy on picking up unhappy customers from other vendors. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">While this is great for them, my view is that these relationships should not get to the point of failure in the first place. <span style="mso-spacerun: yes;"> </span>This situation should not exist. There has been a significant level of pain and financial waste to get to that point. We should do something to stop it.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Some education on what is an acceptable expectation for both parties helps to set the stage for success. Unfortunately, this understanding is currently being forged in the heat of battle. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Should this type of education be available before executives commenced their ERP journey and entered into a relationship with a vendor, I firmly believe the number of executives whose careers are put at risk due to failed implementations would be dramatically reduced, and the success rate of implementations could be in the 80 percentile rather than the failure rate being at this level.</span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">For this reason, I have developed two workshops designed specifically to help executives select the right product in the first place and to show them how to successfully implement their ERP. </span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">For more information on my workshops, contact me on: <a href="mailto:david@davidogilvie.com.au">david@davidogilvie.com.au</a> and have “Workshop” in the subject line.</span></div>
Anonymoushttp://www.blogger.com/profile/08143452274423855566noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-39120187445955969862017-01-05T07:37:00.002+10:002017-01-05T07:37:45.190+10:00Microsoft Dynamics 365Firstly, Happy New Year to everyone. I sincerely hope the Christmas and New Year break was an enjoyable one for you.<br />
<br />
I was catching up on some emails & checking my Twitter account this morning when I noticed this posting from a company asking "should you (being your company) upgrade to Dynamics 365 or stay with your current version of AX".<br />
<br />
Some quick background for those not in the Microsoft eco-system. Microsoft has recently released their latest cloud ERP offering to the market and called it Dynamics 365. It is a combination of a number of their existing products such as CRM, NAV and AX. They have renamed the AX product as operations in the new version.<br />
<br />
Back to this morning... I followed this link and was presented with a questionnaire that was supposed to provide me with guidance on whether an upgrade to the new version was suitable for me or not. I completed this form and surprise surprise, it recommended I consider upgrading. This was in spite of one of my answers indicating I preferred an on-premise solution. So I answered the questionnaire again, this time with a different set of answers. Surprise surprise, it still recommended I consider upgrading. I did this with a third set and I think you know the result...<br />
<br />
Software vendors really don't do themselves any favors with blatant tactics like this. It is clearly not designed to provide the customer with any genuine information about what is in their best interests or not, but simply to generate a sales prospect. It is no wonder that over the years so many organisations have got themselves into trouble with ERP implementations. This poor attitude towards the client has to change. And while not all software vendors are in this category - unfortunately, a large portion of the industry is.<br />
<br />
Clients of ERP vendors and those considering changing their systems, really do need independent help to sift through this type of rubbish. Just as a buyer's broker can provide great assistance to those who don't buy cars or real estate regularly, an independent ERP consultant can be worth their weight in gold for those who don't buy or upgrade ERP systems often. (On another point, not only because I am heavier than my Doctor would like me to be, I provide great value to my clients, and so am worth a lot of gold ;-) )Anonymoushttp://www.blogger.com/profile/08143452274423855566noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-73218112561578951882016-12-13T07:43:00.000+10:002016-12-13T07:43:16.948+10:00My predictions for 2017<span style="color: rgba(0, 0, 0, 0.701961); font-family: 'Source Serif Pro', serif;">With the full understanding forecasting or predicting can be fraught with the danger of getting egg on your face, here are a couple of my thoughts on what might happen next year.</span><br />
<div class="MsoNormal">
</div>
<ul>
<li>This is the year business will start to pay
more for money. Interest rates will increase. Unless you’re fully cashed up,
start to review how you’re deploying your capital. Take steps to reduce debt.
It has been more than 25 years since we have had a recession, so many bad
habits will have crept into the business. I see so many businesses today that
have lost sight of the real cost of inventory. There is a belief that inventory
is cheap. This will come back to bite executives unless they address these
habits soon.</li>
</ul>
<br />
<ul>
<li>Technology is about to deliver the next big
breakthrough with machine learning or predictive analytics capabilities.
Effective use of these technologies is predicated on having clean underlying
data and stable business processes.
Trouble is, most organisations haven’t fully utilised the capabilities of
their system now, let alone been ready to effectively exploit these new
capabilities.</li>
</ul>
<br />
<br />
<ul>
<li><span style="font-family: Cambria;">ERP replacement will be a hot topic in 2017.
Many organisations last changed their system prior to the dreaded Y2K bug, which
means they are operating on systems around 18 years old. This technology
definitely cannot exploit the capabilities I just mentioned. As competition
starts to get better at understanding the customer through their data
analytics, the underlying business system will have to change.</span></li>
</ul>
<br />
<br />
<br />
<br />Anonymoushttp://www.blogger.com/profile/08143452274423855566noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-76509573547194184552015-12-22T13:34:00.000+10:002015-12-22T13:34:00.021+10:00VW Scandal - why the goal of being No 1 is bad for businessThe Australian Financial Review today published an article by Leah McGrath Goodman entitled, "<i>VW Emissions-rigging software a team effort</i>". The original article can be found here: http://www.newsweek.com/2015/12/25/why-volkswagen-cheated-404891.html<br />
<br />
I recently wrote a piece on this very subject and would like to reproduce it here ..... please feel free to comment.<br />
<br />
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<div align="center" class="MsoNormal" style="text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">Why striving for the number one position in your
industry is a bad goal<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">T</span>he recent scandal at VW had me thinking. It reminded me of all the
times I have seen well-intended goals and performance measures end up producing
terrible or unintended consequences. This experience has been the driving force
behind my belief that you should <b><i>NEVER</i></b> set a goal of being number 1
in your industry. I know the great Jack Welch had a philosophy that his
divisions at GE had to be either number one or two in their industry but the
overwhelming evidence leads to the conclusion that under normal circumstances
this isn’t a good idea. (Jack was an extraordinary leader and may possibly be
the one exception that proves the rule).</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As the ole saying goes – “What gets measured gets done”. The problem
is more often than not what gets done is not what the measure was set up for in
the first place. The business world is full of unhappy and unsatisfactory results
from poorly designed KPI’s and goals. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">While reaching number one is a laudable endeavour and achievement,
however the achievement of reaching number one in your industry should be the
result of a different set of goals than that of being number one. There have
been some recent high profile examples of why specifically targeting number one
is a bad idea. Take for example the following cases:<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoListParagraph" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l2 level1 lfo2;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;">Toyota
and their massive recall quality issues. <o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">In around 2002 Toyota set a goal of being the
largest vehicle manufacturer in the world. In doing so it targeted growth
primarily in the USA as its path. Having initiated its presence in the USA with
a joint venture with GM at the NUMMI plant in Kentucky it grew its USA
manufacturing base to seven plants in:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="mso-list: l2 level2 lfo2;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Mississippi<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l2 level2 lfo2;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Two separate plants in Kentucky<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l2 level2 lfo2;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Texas<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l2 level2 lfo2;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Indiana<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l2 level2 lfo2;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Alabama<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l2 level2 lfo2;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->West Virginia<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">They also have plants in Argentina,
Australia, Belgium, four in Brazil, two in Canada, two in Colombia, South
Africa, France, Indonesia, sixteen in their homeland of Japan, Mexico,
Philippines, Portugal, Russia, four in Thailand, Turkey and two in the UK. They
also have 18 other plants in joint ventures in other countries including China
and India.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">As Toyota grew rapidly it lost its ability to
inculcate the “Toyota Way” into its new employees and new plant processes.
Previous growth was a result of a patient approach to developing people in the
company with knowledge about the Toyota Way. A key component of the Toyota Way
is to work closely and in some cases within the businesses of their suppliers
to assist them to adapt to and adopt the new paradigm. This was not done well
in a rapidly growing environment.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">This resulted in quality issues sneaking into
the process and was exacerbated by the level of growth the company was
experiencing. My view is if the executives had a goal of ensuring the Toyota
Way was successfully inculcated into every new plant – this would have ended up
with a completely different result. They may not have become number one as
quickly – but I firmly believe they would not have had as dramatic a crisis to
deal with as they ended up having.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l2 level1 lfo2;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->VW and their devious deception of the emission
results on diesels. They too set a target of being number one. They too
identified that leadership in the USA was their path to this position. In February
2007 the new CEO <span lang="EN-US" style="mso-ansi-language: EN-US;">Martin
Winterkorn was appointed and from his first day in office, he is aware that the
group’s U.S. business is floundering. He believes that only diesel engines will
enable VW to gain significant market share in the United States and to fend off
Japanese rival Toyota and its hybrid drive.</span><o:p></o:p></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-weight: bold;"><br /></span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-weight: bold;">In January
12, 2008 </span><span lang="EN-US">At the Detroit Motor Show, Matthias Wissmann,
president of German automotive industry association VDA, says 2008 will be the
year in which “clean diesel” achieves a breakthrough in the U.S. market. He
predicts diesel cars will increase their market share from 3 to 15 percent by
2015, thanks to rising oil prices and stricter emissions standards.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-weight: bold;"><br /></span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-weight: bold;">In August
2008 </span><span lang="EN-US">Volkswagen announces the launch of the VW Jetta
2.0 TDI in the United States, based on the EA 189. The company highlights the
car’s low fuel consumption and low emissions, which have been made possible
thanks to the cheat software.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-weight: bold;"><br /></span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-weight: bold;">Early 2014
t</span><span lang="EN-US">he environmental organization ICCT tests actual
emissions figures for diesel cars and finds that the two Volkswagen models are
well above the limits, exceeding the guidelines 35-fold in extreme cases. In <span style="mso-bidi-font-weight: bold;">May 2014</span> two U.S. authorities are
informed of this, the Environmental Protection Agency and the California Air
Resources Board, a state agency. They commence official investigations into
Volkswagen. VW indicates that it is willing to discuss the matter, conducts its
own investigations and repeatedly compares the results on both sides.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">It is clear that the drive to be number one
resulted in practices and decisions being made that were, at least in hindsight
– however should have been known at the time, deceitful and unethical. Again my
belief is if the advantage of efficient diesels were in fact the game changer
they expected – the setting goals around this would have helped them become
number one. No target being number one as a prime goal.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: 36.0pt; text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l2 level1 lfo2;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><span lang="EN-US" style="mso-ansi-language: EN-US;">Sears
Roebuck in the 1990s found themselves in a situation where executives mandated a
sales goal for automotive mechanics of $147 an hour. Rather than work faster, as
was the expectation, employees met the goal by overcharging for their services
and “repairing” things that weren’t broken. </span><o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l2 level1 lfo2;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->The 2008 financial collapse, in which “motivated
blindness” (explained below) contributed to some bad decision-making. The
“independent” credit rating agencies that famously gave AAA ratings to
collateralized mortgage securities of demonstrably low quality helped build a
house of cards that ultimately came crashing down, driving a wave of
foreclosures that pushed thousands of people out of their homes. Why did the
agencies vouch for those risky securities?<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">These four examples demonstrate the unexpected consequences of
poorly thought out goals. A smaller but no less important example is where
companies of all sizes mandate cost cutting programs (see my article <a href="http://www.davidogilvie.com.au/resources">7 reasons why cost cutting is
the worst thing for your business</a>). Procurement cost cutting more often
than not results in the purchase of inferior quality parts that leads to
further expense somewhere down the supply/manufacturing/maintenance chain.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">It’s well documented that people see what they want to see and
easily miss contradictory information when it’s in their interest to remain
ignorant—a psychological phenomenon known as “motivated blindness”. The root
cause of this blindness or self-interest is in the setting of goals and the incentives
attached to those goals.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
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<span lang="EN-US">So how do you avoid these consequences when you want to set goals
and incentives within your business? I have developed 5 steps to setting
worthwhile goals:<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span lang="EN-US" style="mso-ansi-language: EN-US; mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Examining what behavours you want in your
business. <span lang="EN-US" style="mso-ansi-language: EN-US;">Leaders setting
goals need to view the situation from the perspective of those whose behavior
they are trying to influence and think through their potential responses. This
will help head off unintended consequences and prevent employees from </span>“motivated
blindness”. <span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span lang="EN-US" style="mso-ansi-language: EN-US; mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Having goals<span lang="EN-US" style="mso-ansi-language: EN-US;"> such as honest reporting are just as important to reward if not more
so. When leaders fail to meet this responsibility, they can be viewed as not
only promoting unethical behavior but also blindly engaging in it themselves.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->Identify
how one measures the achievement of these goals. The goal has to be
quantifiable. <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->Set
up the measuring of this goal so that it occurs as part of the normal process
of conducting business. Your ERP system should be able to assist here albeit it
may require a modification or specific BI report to be written. It is not until
we examine what behavours are occurring in the business are we in a position to
understand if the consequences are unexpected or not. <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">5.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->As
with all KPI’s or incentives constant monitoring of the result and the act of
asking questions around the specific KPI results, is crucial to making this
process work. One must monitor if the goal or incentive is having the desired
impact. Without these actions being taken – the chances of motivated blindness
dramatically increase. <o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span style="mso-bidi-font-family: Cambria; mso-bidi-theme-font: minor-latin; mso-fareast-font-family: Cambria; mso-fareast-theme-font: minor-latin;"><span style="mso-list: Ignore;">6.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]-->Examine
<span lang="EN-US" style="mso-ansi-language: EN-US;">how the cognitive biases that
result from the motivated blindness could potentially distort ethical decision-making.
</span>For example, the most common problem executives report around the
setting of goals and incentives is that their sales forces maximize sales
rather than profits. I see this every day in all the client’s businesses I work
with. I ask what incentives are they giving their salespeople, and they confess
to actually rewarding sales rather than profits. <o:p></o:p></div>
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<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The lesson is clear: When employees behave in undesirable ways, it’s
a good idea to look at what you’re encouraging them to do. Examine if you have
followed the six steps completely. If you do; your chances of goals and
incentives being productive is greatly enhanced.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
<div style="margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US" style="font-family: Arial;">Contact
Details:<o:p></o:p></span></b></div>
<div style="margin-bottom: .0001pt; margin: 0cm;">
<span lang="EN-US" style="font-family: Cambria; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;">David
Ogilvie <o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0cm;">
<span lang="EN-US" style="font-family: Cambria; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;">Ph: +61 (0)
438 787 759<o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0cm;">
<span lang="EN-US" style="font-family: Cambria; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;">Email: </span><span lang="EN-US"><a href="mailto:david@davidogilvie.com.au"><span style="font-family: Cambria; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;">david@davidogilvie.com.au</span></a></span><span lang="EN-US" style="font-family: Cambria; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;"> <o:p></o:p></span></div>
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<span lang="EN-US">© Copyright David Ogilvie 2015</span></div>
Anonymoushttp://www.blogger.com/profile/08143452274423855566noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-60802347067022404992015-12-08T16:02:00.000+10:002015-12-08T16:02:09.587+10:00<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Dateline: December 2015.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Our Prime Minister Malcolm Turnbull wants the business community to become more
innovative. He has set aside $1.1 Billion dollars for programs to foster
innovation in our business community.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US" style="mso-bidi-font-weight: bold;">An ABC report trumpets, “<b>The
Federal Government will spend almost $1.1 billion in the next four years to
promote business-based research, development and innovation. </b></span><span lang="EN-US">Prime Minister Malcolm Turnbull unveiled his much-anticipated
Innovation Statement in Canberra on Monday, saying he wanted to drive a
so-called "ideas boom"”.<b><o:p></o:p></b></span></div>
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<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">How successful will this be? Much is aimed at start ups with early
stage investors in start-up businesses receiving a 20 per cent non-refundable
tax offset and a capital gains tax exemption. Much of the technological
breakthroughs are to be left to university research and CSIRO to discover and
the new alliances and connections with business are to market and leverage the
new products that result.<o:p></o:p></span></div>
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<span lang="EN-US">This Government program will set up the environment for money to be
invested in new technology and new businesses, but is money all that is needed
to generate innovation? It also needs a culture of innovation – something
business hasn’t been good at to date. Otherwise if it had – this initiative
wouldn’t be necessary.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US">So how does one magically make business innovative if simply adding
money to the mix isn’t the answer? <o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Innovation can be manufactured – its a process and when followed can
be created. It requires a deliberate strategy and effort to find new
opportunities and uniquely be innovative. According to Alan Weiss in this book,
“The Innovation Formula” there is four steps to innovation:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2;">
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Search<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2;">
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Assessment<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2;">
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Development<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2;">
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Pursuit<o:p></o:p></div>
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<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Innovation “is the willingness to look at things with an open mind
and to examine change in an objective, confident manner.” <o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">For this Government initiative to be successful it will require a
significant change in behaviour from existing businesses to be anywhere near as
successful as the PM wants. Maybe that’s why he has loaded the new start
concessions as heavily as he has – he knows the best chance of success is from
those who don’t have an existing culture and mindset. It’s easier to create the
mindset from scratch than it is to change an existing one. The challenge has
now been laid down to existing business – change or innovation may overtake
you.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
© Copyright David Ogilvie 2015</div>
Anonymoushttp://www.blogger.com/profile/08143452274423855566noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-2973857763569143872015-11-16T14:03:00.000+10:002015-11-16T14:03:00.109+10:00Selecting the right ERP system<div align="center" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm; text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">Selecting the Right ERP Software:<o:p></o:p></span></b></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">David Ogilvie’s Lucky 13 Tips for a Successful ERP Selection<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The ERP landscape is littered with horror stories of bad
implementations costing companies many millions of dollars for absolutely no
benefit (in some cases). Many of these failed implementations have ended up in
court, or at least have involved an acrimonious split between customer and
software vendor/partner. Studies have shown that selecting the wrong product in
the first place is a main driver of the ERP implementation failure rate.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
With the seriousness of the impact of a poor selection in mind, I
have devised 13 key tips to a successful ERP selection.</div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Before I cover the keys to success in detail, let me quickly examine
the historical landscape as it relates to off-the-shelf software selection:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l2 level1 lfo2;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Executives rarely run this type of project.
Executives are hired to run the business. They have a particular skill set and
experience that helps them to run a particular business in a particular
industry. Selecting and implementing ERP systems is not their core skill set.
As such, they are often working outside of their skill sweet spot, experience, industry
knowledge and network. Therefore, the result is often less than successful.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l2 level1 lfo2;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->The lessons from past failures don’t seem to be
learnt. Looking in from the outside, it seems that companies and executives
continue to make the same old mistakes over and over again. This is potentially
due to the fact that executives don’t do this ERP selection frequently, and
therefore resort to using the same ole methodology, even though past results
are poor. Was it Einstein who said the definition of insanity<i style="mso-bidi-font-style: normal;"> </i>is <i style="mso-bidi-font-style: normal;">“</i>doing
the same thing over and over again and expecting different results<i style="mso-bidi-font-style: normal;">”</i>? <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l2 level1 lfo2;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->RF(X) represents the historical method of selection
where customers go to the market with different requests: RFP (request for
proposal), RFI (request for information) and RFC (request for contract). This
is a situation where often-lengthy requests are made of the software market,
and the vendors/partners are required to respond. At this point, vendors will generally
respond favourably to all or most of the requirements listed in the request
because they don’t wish to be cut out early. This can lead to vendors’
responses being misleading in one way or another, such as providing lowball
offers. The customer then develops a short list of vendors. These vendors are then
required to run a demonstration of the software. Some low-level reference
checking is performed and, if all checks out, the customer is required to make
some determination as to who wins.<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l2 level1 lfo2;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->An ERP sale can run into many hundreds of
thousands of dollars at the lower end, and many millions of dollars at the
upper end. The value of commissions payable on these sales is substantial, and
therefore the competition is fierce. When these levels of commissions are on
offer, it tends to encourage <i style="mso-bidi-font-style: normal;">some</i>
sales people to be less ethical than they should or could be, meaning you need
to be cautious about whom you deal with.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The historical method of selection simply isn’t working anymore, if
it ever really did. There are many reasons for this:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->The majority of the systems being reviewed can
in most cases meet the list of required functions given in any RF(X). In many
ways, the functionality war is over and has been for more than 15 years.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Budgets are usually required as part of the
RF(X) submission. Again, vendors often lowball their submissions because they
don’t wish to miss out so early in the process. It is ironic that past
customers in many ways contributed to or caused this behaviour. Software
companies lost deals during the budget step of the process, often unfairly,
when they were being truthful and indicating what implementation costs really were.
Unfortunately, customers didn’t want to hear so high a cost at the beginning of
the process and eventually went for a cheaper option, only to find out later that
additional costs really were required to make an implementation go well. These
additional costs have helped formed the ERP legend that budgets are almost
always exceeded. But could it be that the original budgets were not realistic
in the first place?<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Differences in submissions are difficult to
discern. Each vendor will calculate costs and present their submission in a
different format from the other submissions, no matter how structured the
customer tries to make the response forms. It’s a fact of life in these
selections: comparisons can be difficult to make, and the differences can be very
difficult to discern. <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Demonstration presenters and sales people are
not implementers. They rarely have worked on a real implementation and are
prone to make promises the implementing team cannot fulfil. Those charged with
making the presentations are knowledgeable and smart people. They can generally
think quickly on their feet and have the ability to show the product in its
best light, thereby avoiding often-embarrassing gaps in capability. ERP
implementation history is littered with stories of promises made in
demonstrations that are unable to be fulfilled by functional consultants when
the rubber hits the road: in the implementation. <o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Software vendors/partners will often conduct the
demonstrations using their scripts, which don’t actually reflect <i style="mso-bidi-font-style: normal;">your</i> business process. They follow, for
example, a generic process, such as procure to pay, to demonstrate that the
system will comply with requirements. <o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">This flawed process has contributed to fostering certain behaviours
from software vendors/partners. Here are the behaviours you are likely to see
if you continue to follow this process:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Some will lie, while others will spin the facts
to best suit their product. Their behaviour is about ensuring the product is
shown in its best light and safeguarding their position so that they aren’t cut
out too early in the process.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->They will attempt to bypass procurement
structures, if you have them in place. They will want to speak to the people
who sign the cheque, and not the selection committee charged with the role of
selecting the product.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->They will attempt to make the selection process
as easy for themselves as possible and will resist any attempt at providing detailed
work to respond to your demands.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->They will be investing in your sales process, so
they will expect some value for their investment.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->They will create doubt anywhere they can,
especially with the opposition and potentially with your team.<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo3;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->They will try to say your way isn’t the right
way—and in many cases they are right.<o:p></o:p></div>
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<!--StartFragment-->
<span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;">So essentially, I am saying there is no surefire
way to guarantee a perfect fit when looking for a new business application.
There are a myriad of variables that can contribute to picking the wrong
application. And picking the wrong application is number one of my “14 deadly
sins” to ERP implementation failure, as I mentioned in my article “<a href="http://davidogilvie.com.au/resources/3/david_ogilvies_14_deadly_sins_erp_minefield">David
Ogilvie's 14 Deadly Sins</a>.” There are, however, a number of measures you can
take to dramatically lower the risk of selecting the wrong application. In my next post I will go through my 13 lucky tips to selecting the right ERP system.</span><!--EndFragment-->
Anonymoushttp://www.blogger.com/profile/08143452274423855566noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-57568593870558715342015-10-20T11:19:00.001+10:002015-10-20T11:19:41.375+10:00Undercover Boss: Reality TV Crap or Genuine Business Lessons<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-aJd14Zo5urU/ViWWHjFAC5I/AAAAAAAAABo/cCL2sfjC-a4/s1600/Undercover%2BBoss.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://1.bp.blogspot.com/-aJd14Zo5urU/ViWWHjFAC5I/AAAAAAAAABo/cCL2sfjC-a4/s1600/Undercover%2BBoss.jpg" /></a></div>
<div align="center" class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm; text-align: center;">
<br /></div>
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</v:shape><![endif]--><!--[if !vml]--><!--[endif]--><span lang="EN-US">The
Australian version of <i style="mso-bidi-font-style: normal;">Undercover Boss</i>
lasted just one season; however, the U.K., U.S. and Canadian versions are
seemingly having a strong run. For those who haven’t seen the show, it is a
reality-type series where “<i style="mso-bidi-font-style: normal;">each episode
features a high-positioned executive or the owner of a corporation going
undercover as an entry-level employee in their own company. The executive
changes appearance and assumes an alias and fictional back-story. The
fictitious explanation for the accompanying camera crew is that the executive
is being filmed as part of a documentary about entry-level workers in a
particular industry. They spend approximately one week undercover, working in
various areas of the company's operations, with a different job and in most
cases a different location each day.</i>”<a href="https://www.blogger.com/blogger.g?blogID=6761989244930274507#_ftn1" name="_ftnref1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></span></a><o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<span lang="EN-US">During the show the producers regularly cut to an interview with the
CEO away from the staff, where the CEO expresses how hard some job is, how they
haven’t worked this hard in a long time or how they are surprised that
processes are not working as expected. At the end of the show, the workers are summonsed
to the head office, where the executive enters the room out of disguise, comes
clean and introduces themselves to the people they have worked with. The executive
discusses in a genuine manner what great people these workers are and gives
away some rewards as recognition for their efforts in the business.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
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</v:shape><![endif]--><!--[if !vml]--><!--[endif]--><span lang="EN-US">Initially,
I found it difficult to accept the basic premise of the show. How could such a
situation exist, and how come people do not recognize the bosses, considering
the really bad wigs they are wearing? The disguises are so fake. </span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-71e2MQj0frs/ViWWUB5C-VI/AAAAAAAAABw/fTgquM66u-4/s1600/Undercover%2BBoss%2BDisguise.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://2.bp.blogspot.com/-71e2MQj0frs/ViWWUB5C-VI/AAAAAAAAABw/fTgquM66u-4/s1600/Undercover%2BBoss%2BDisguise.jpg" /></a></div>
I wondered, How
real is this when there are so many cameras around; surely the ruse had to get
out—but apparently not. Clearly, the behaviour we see is not what normally
happens without cameras in these businesses. I think it is the Heisenberg uncertainty
principle which states that a condition is changed purely by the fact that it is
being observed. Clearly, this would be at play in these situations?<o:p></o:p><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-274A7b2kXKI/ViWWejF0WII/AAAAAAAAAB4/Bjj6hxEUGFs/s1600/Undercover%2BBoss%2BWorking.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://4.bp.blogspot.com/-274A7b2kXKI/ViWWejF0WII/AAAAAAAAAB4/Bjj6hxEUGFs/s1600/Undercover%2BBoss%2BWorking.jpg" /></a></div>
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<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">But then I got thinking, are there any points in this show that we
could learn from? If you think about it, there are some real gems. Consider the
following lessons from the series:<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;">Shows
that not enough executives shop their business. <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: none; text-indent: 0cm;">
My experience in owning my own business and
in consulting for both public and private companies shows that there are many
situations where the senior executives do not have a feel for what really
happens in the business or do not understand the exact experience their
customers face.<o:p></o:p></div>
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<br /></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 35.7pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l1 level1 lfo2; text-indent: -17.85pt;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;">Clearly
demonstrates communication channels that don’t work.</b> <b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></div>
<div class="MsoNormal" style="margin-left: 36.0pt;">
<span lang="EN-US">Often, the series
will show situations where the head office would distribute or mandate, for
example, marketing material or new recipes, only for the owner to find out that
the use of these materials is not as expected. This problem highlights the
criticality of communications within the business: to keep everyone on the same
page. <b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></span></div>
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staff that there are executives out there who care about their people.<o:p></o:p></b></div>
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moments. Many of the owners on the show are genuine in their feelings towards
their staff, and it reminds us that not all bosses or owners are coldhearted
towards their employees. There are owners in business that sincerely care for
their staff.<o:p></o:p></span></div>
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<span lang="EN-US" style="mso-ansi-language: EN-US; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-theme-font: minor-fareast;"><br /></span></div>
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</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;">Reminds executives
how important staff are to a company.<o:p></o:p></b></div>
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<div class="MsoListParagraph" style="margin-left: 36.0pt; mso-list: none; text-indent: 0cm;">
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in each episode have some major challenge they have been facing throughout
their lives. For some, it is a relative with a major illness like cancer; for
others, they might have been brought up in a broken home; and for the rest, it
might be a wayward past, and they are seeking redemption. The show reminds us that
everyone has stuff to deal with on a daily basis and that support in those
areas can be a huge motivator. <o:p></o:p></span></div>
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<div class="MsoListParagraph" style="margin-left: 36.0pt; mso-list: none; text-indent: 0cm;">
<span lang="EN-US" style="mso-ansi-language: EN-US; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-theme-font: minor-fareast;">While the rewards at
the end of the show couldn’t be provided to all of the staff in the organisation,
the personal impact these rewards have on the individuals involved is clearly
demonstrated by the seemingly genuine emotions portrayed. (It would be
difficult for the show to get the high level of emotion shown from normal
everyday people who are not actors.) The emotional impact of these rewards should
be a reminder to everyone of how important it is to recognise the effort the staff
puts in.<o:p></o:p></span></div>
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<div class="MsoListParagraph" style="margin-left: 36.0pt; mso-list: none; text-indent: 0cm;">
<span lang="EN-US" style="mso-ansi-language: EN-US; mso-bidi-font-family: "Times New Roman"; mso-bidi-font-size: 12.0pt; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-theme-font: minor-fareast;">Rather than simple pay
raises, personal rewards are most effective. While some employees on the show are
clearly underpaid for the value they bring to the company, and they are
grateful for the raise, it is the rewards focused on family that make the
biggest impact.<o:p></o:p></span></div>
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</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;">Reminds
us that there are always areas to be improved. <o:p></o:p></b></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: none; text-indent: 0cm;">
Also, the best ideas come from those who do the
work. Many of the episodes have the boss walking away with new ideas about how
things can be done. This has been an old source of improvement—ask those who do
the work. Not enough companies do this.<o:p></o:p></div>
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<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm;">
<span lang="EN-US">Copyright © 2015 by David Ogilvie. All rights reserved. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<span lang="EN-US">David Ogilvie
is a global expert in profit improvement and maximising ERP investments.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm;">
<span lang="EN-US">Contact Details:<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm;">
<span lang="EN-US">David Ogilvie<o:p></o:p></span></div>
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<span lang="EN-US">Phone: +61 (0)438 787 759<o:p></o:p></span></div>
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<span lang="EN-US">Email: <a href="mailto:david@davidogilvie.com.au">david@davidogilvie.com.au</a><o:p></o:p></span></div>
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<a href="https://www.blogger.com/blogger.g?blogID=6761989244930274507#_ftnref1" name="_ftn1" style="mso-footnote-id: ftn1;" title=""><span class="MsoFootnoteReference"><span lang="EN-US" style="font-size: 6.0pt;"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span lang="EN-US" style="font-family: Cambria; font-size: 6.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></span></span></a><span lang="EN-US" style="font-size: 6.0pt;"> Source:
https://en.wikipedia.org/wiki/Undercover_Boss_(U.S._TV_series)<o:p></o:p></span></div>
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Anonymoushttp://www.blogger.com/profile/08143452274423855566noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-33431080604069836472015-09-23T12:31:00.000+10:002015-09-23T18:32:26.778+10:00What has happened to Customer Service?<div class="MsoNormal">
<span lang="EN-US">A good buddy of mine and me often get
together and discuss how our experience with the service from different
companies is painfully getting worse. Either he or I regularly experience
really poor service from one company or another. We then ring and share our
experience.<o:p></o:p></span></div>
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<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">It happened to him again recently and he dutifully reports in and
explained his experience again. It got us discussing what is it that is causing
this regular experience. Why is it that companies on such a regular basis let
us down in this department and why is it that when you do experience good
service it stands out<span style="mso-spacerun: yes;"> </span>so glaringly.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">We came up with a few that we feel are all contributing and they are
listed below. I would be interested in hearing if you feel we have missed and
what specifically they might be.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Our list:<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Australia hasn’t experienced a recession for
over 25 years. There are multiple generations who have never had to run a
business at a profit during difficult times. So anyone who entered the
workforce at or after 1990 falls into this bracket. Assuming they were 20 at
the time means any one younger than 45 hasn’t really experienced what it takes
to run a company profitably in difficult times. How many of the customer
service departments of companies today are run by someone at or younger than
45? We think there are quiet a few. So the demands on customer service and
consequences for not providing first class service haven’t been great for quiet
some time. Do you feel a change in the wind coming?<o:p></o:p></div>
<div class="MsoNormal" style="margin-left: 36.0pt;">
<span lang="EN-US">Which raises the
question – what are you doing in your business to prepare for and to thrive
from this change in the wind?<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Cost cutting initiatives often transfer costs from
the company to the customer. The airline websites are a clear example of this.
In today’s Internet driven world the effort in finding suitable flights, making
and paying for the booking is pushed back up the supply chain to the customer. <o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo2;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Businesses are becoming comfortable with the
disconnection brought on by technology. Telephone and Internet providers are
another example. Have you had a problem with their service and tried to get
service recently? You are provided with a list of things to try while you wait
on the line for a customer service person to answer your call. You are told one
million four hundred and twenty three thousand six hundred and twenty three
(1,423,623) times how important your business is to them. You are told that the
call will be recorded for customer service improvement purposes – yet it never
improves. Who listens to these things? An finally when the calls are actually
answered by a human being, those behind the keyboards are comfortable hiding
behind the screen/phone line. They can get you to do all the work, unplug this,
re-plug that, restart this and take a photo of that and send it to us.<o:p></o:p></div>
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it could be?</span><!--EndFragment-->
<br />
<span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;"><br /></span>
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<span style="font-family: Arial, Helvetica, sans-serif;">© David Ogilvie 2015 All Rights Reserved<o:p></o:p></span></div>
<span lang="EN-US" style="font-family: Cambria; font-size: 12.0pt; mso-ansi-language: EN-US; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: "MS 明朝"; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-fareast; mso-hansi-theme-font: minor-latin;"></span><br />
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<span style="font-family: Arial, Helvetica, sans-serif;">David is a global expert in profitability improvement and maximising investments in ERP systems.</span></div>
Anonymoushttp://www.blogger.com/profile/08143452274423855566noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-6580046208140673212015-09-08T18:40:00.000+10:002015-09-08T18:40:19.658+10:00Discounting: The Profanity of Quiet Times<div class="MsoNormal" style="margin-bottom: 12.0pt; text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">The
financial press of late has been full of stories of how the economy is turning
for the worse, how China’s downturn will be bad news for Australia and how
unemployment is set to rise. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">As I was
reflecting on this news, I recalled a recent shopping expedition. My better
half and I spent a lovely day in the city utilizing all the gift cards I had received
as Christmas presents. I was simply amazed by the number of stores offering
massive discounts on their products. With the increase of For Lease signs in
shops, it is not hard to tell that retail has been tough. However, the amount
of discounting on offer was something I don’t recall having seen quite at this
level before. (I humbly admit I am not an avid shopper, so that doesn’t
necessarily mean much.) Having had a retail arm at a previous business I owned,
I was really feeling for them, knowing full well the level of damage
discounting does to your profitability. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">While there
are a small number of legitimate reasons for discounting in some industries
(fashion, for example, when the current stock is out of style), in general
terms I abhor discounting. And in fact even in fashion, superior supply chain
management and inventory control can help prevent the need for clearance sales.
Discounting places substantial pressure on profitability. <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">The level of
damage done can be clearly demonstrated by examining the widely used <i style="mso-bidi-font-style: normal;">profitability discount matrix.</i> In
summary, this is a traditional matrix that shows the gross profit (GP) percentage
on one axis and the percentage of your price cut on the other. The intersecting
cells indicate the increase in sales volume that is required in order to make
up for the discount you have provided. Let me repeat that: <b style="mso-bidi-font-weight: normal;">The increase in sales required to make <u>exactly</u> the same level of
gross profit. Not more, but exactly the same amount.</b> <o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">For example,
if you are operating with a 25% gross margin and you reduce your sales price by
10%, you will have to increase your sales by 66.7% to make the same dollar profit.
This is also assuming you can accomplish the following things: <o:p></o:p></span></div>
<div class="ColorfulList-Accent11CxSpFirst" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; tab-stops: 36.0pt; text-indent: -18.0pt;">
<!--[if !supportLists]--><span style="font-family: Arial, Helvetica, sans-serif;"><span style="mso-list: Ignore;">a)<span style="font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><!--[endif]-->You are actually able to achieve a 66.7%
increase in sales as a result of the discount.<o:p></o:p></span></div>
<div class="ColorfulList-Accent11CxSpLast" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; tab-stops: 36.0pt; text-indent: -18.0pt;">
<!--[if !supportLists]--><span style="font-family: Arial, Helvetica, sans-serif;"><span style="mso-list: Ignore;">b)<span style="font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><!--[endif]-->You are able to achieve this increase <b style="mso-bidi-font-weight: normal;">without</b> incurring any increase in other
operational costs, such as additional sales people or delivery costs. A
detailed “cost to serve” analysis will help you here. (If you don’t know what
cost to serve is, give me a call—you’re missing out big time.)<o:p></o:p></span></div>
<div class="ColorfulList-Accent11CxSpLast" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l0 level1 lfo2; tab-stops: 36.0pt; text-indent: -18.0pt;">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">The increase
required to cover the reduction escalates rapidly the higher the discount goes.
For example: Again your GP is 25%. A discount of 13% requires an increase in
sales of more then double (110%). So for an additional 3% increase in the
discount, an additional (approx.) 30% increase in sales is required to make up
the difference.<span style="text-align: right;"> </span></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">Hopefully,
you can quickly see why competing on price is the scourge of business. My
philosophy is always to compete by providing extra value, not a lower price.
When times are competitive, look for ways of adding value to your customers’
experience rather than reducing the price. If you don’t have a copy of this
discount matrix, send me an email at david@davidogilvie.com.au with “Discount
Matrix” in the subject line, and I will forward you a copy.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt;">
<span style="font-family: Arial, Helvetica, sans-serif;">© David Ogilvie 2015 All Rights
Reserved<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">David is a
global expert in profitability improvement and maximising investments in ERP
systems.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 12.0pt; text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">Contact
Details:<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">Email:<span style="mso-tab-count: 2;"> </span><a href="mailto:david@davidogilvie.com.au">david@davidogilvie.com.au</a><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt; text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">Web:<span style="mso-tab-count: 2;"> </span><a href="http://www.davidogilvie.com.au/">www.davidogilvie.com.au</a><o:p></o:p></span></div>
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<div class="MsoNormal" style="margin-bottom: 6.0pt; text-align: justify;">
<span style="font-family: Arial, Helvetica, sans-serif;">Phone: +61
(0)438 787 759</span><span style="font-family: Cambria;"><o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/08143452274423855566noreply@blogger.com0tag:blogger.com,1999:blog-6761989244930274507.post-79737978205894373512015-09-01T20:08:00.003+10:002015-09-01T20:08:54.329+10:00Business Lessons Learnt from Saturday’s Dinner<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Some businesses can’t help themselves and don’t seem to want to
succeed. The following story and subsequent business lessons come from a recent
dining experience.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Saturday evening last week, I decided to go out for dinner. Being in
Perth and being 4,500 km away from home on a project, I quite frankly didn’t
feel like cooking, so out I went dining on my own—something I get quite used
to. I had seen a TV segment on a new part of town that had recently been
redeveloped, so I decided to go and have a look.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The segment had obviously done its job, as this section of the city
was substantially busier than other parts of the city. While walking through
the arcade, I found a restaurant that caught my eye. It was busy but not full,
having quite a few tables available, and without Reserved signs on them. I
approached the concierge, and she said she needed to check with her manager to
see if they would take a table for one. She came back and politely told me
there weren’t any tables available. I pointed to the 10 or so tables I saw with
no one sitting at them and asked, “But what about those?” and she responded
with, “I’m sorry, sir—we have no tables available.”<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">I went on to another restaurant, had my dinner and then went for a
walk around the city that took me past the first restaurant. Lo and behold, as
I walked past, there were the tables—still empty. How would you be feeling
about now?<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">It made me wonder, What was that manager thinking, and what was he
trying to achieve? While not having spoken to him to get the exact specifics, I
can’t help thinking he was trying to maximize the use of the tables. He had
tables for two and four available, but by putting one person on a table for two,
that table was only yielding him 50% of its potential.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Compare this to a successful restaurant near my unit where I often
visit and where the owner has a completely different mind-set on how to manage
this situation.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">His restaurant is substantially busier than the one I visited on
Saturday, yet he manages to fit me in without any difficulty at all. Before you
ask, there is no substantial difference in the number of tables at either
restaurant. His approach is to take me in and make sure I receive quick service.
The waiters are quick to give me the menu, ask for my drink order and get my
dinner order. The meal is delivered quickly, as is the bill, which is delivered
soon after I have finished eating and have indicated that I don’t want dessert.
His mind-set is about table churn. I have often seen the table reset and a
couple sitting at it by the time I have paid my bill at the counter.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">His restaurant’s reputation and business are enhanced because of his
actions:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo2;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->He takes me in while being busy even though I am
a table for one.<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo2;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->He ensures that I get quick service. <o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo2;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->He resells the table shortly afterward.<o:p></o:p></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">One manager was focusing on maximizing the numbers at the tables at
any particular point in time, while the other owner was focusing on maximizing
the number of people throughout the evening. Quite a different target and quite
a different result. It goes to show that you need to be careful where you
focus. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Another lesson I see in this is that the owner of the first business
seems isolated from what is happening on the front line. This separation
between the manager and the daily activities of the business is the main thrust
of the TV reality series called “Undercover Boss.” (You may wish to review my
article on this show and the lessons to be learnt from it.)<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">These lessons become even more important when you consider the
current economic climate in Perth at the moment. Just walking around, it is easy
to see that Perth’s economy is not in good shape. Every day a new shop empties
out and a For Lease sign is posted. Office space is available everywhere as
companies either close up or close their Perth office. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Perth has had it good in the recent past. Recent prosperity is one
of the reasons why everything here is so expensive and why the quality of
service is, to be frank, quite bad. Businesses here have not had to work hard
to get patronage. Particularly in the hospitality trades, pubs and restaurants
provide very low levels of service and charge expensive prices for substandard
meals. <o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The rotating nature of the mining boom means that new people are
rolling through the city every few months, so businesses haven’t needed to work
on the basics of building a loyal following amongst their customers. When one
rotation finishes, the next group of people comes through; many of them are new,
and so the cycle continues. This cycle means that business will come through
the door whether organisations do a good job or not.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">The lower commodity prices will change this, and when it does (as it
seems to be doing at the moment), these operators will struggle. My local
Italian restaurant will continue to thrive while those new ones, yet to learn
these lessons, will soon be moaning about how the bad economy is the cause of
their struggles.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US"><br /></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<b style="mso-bidi-font-weight: normal;"><span lang="EN-US">Lessons to be learnt<o:p></o:p></span></b></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">Successful business people focus on maintaining the basics and
executing them flawlessly. They get what they focus on.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span lang="EN-US">What are you focusing on at the moment? Could a mind-set
rearrangement help you and your business? Here are some things you can do
tomorrow:<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo2;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Take a look at how your mind-set is impacting
your business. <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo2;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Shop your business and find out what is really
happening. <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo2;">
<!--[if !supportLists]--><span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Ensure your focus is on improvement activities
like these:<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 36.0pt; mso-add-space: auto; mso-list: l1 level1 lfo2;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level2 lfo2;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->What is my customer’s experience like?<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level2 lfo2;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->What is my return on capital?<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l1 level2 lfo2;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Can I increase my inventory turns?<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="mso-list: l1 level2 lfo2;">
<!--[if !supportLists]--><span style="font-family: "Courier New"; mso-fareast-font-family: "Courier New";"><span style="mso-list: Ignore;">o<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->Do I have customer payments that are outstanding
for longer than 60 days?<o:p></o:p></div>
<div class="MsoNormal">
<span lang="EN-US"><br /></span></div>
<div class="MsoNormal">
<span lang="EN-US">If you want assistance in any of these
areas, contact me:<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<span lang="EN-US">David Ogilvie<o:p></o:p></span></div>
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<span lang="EN-US">Phone: +61 (0)438
787 759<o:p></o:p></span></div>
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<span lang="EN-US">Email: <a href="mailto:david@davidogilvie.com.au">david@davidogilvie.com.au</a><o:p></o:p></span></div>
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<span lang="EN-US">© David Ogilvie 2015 All rights reserved<o:p></o:p></span></div>
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<div class="MsoNormal" style="margin-bottom: 6.0pt;">
<span lang="EN-US">David Ogilvie
is a global expert in profit improvement and maximising ERP investments.<o:p></o:p></span></div>
Anonymoushttp://www.blogger.com/profile/08143452274423855566noreply@blogger.com0