Welcome everyone to episode 40 of the HSO Dynamics matters podcast.
Your regular sonic dive into the world of Microsoft technology related matters and much more besides.
I’m your host Michael Lonnon, and for today’s episode I caught up with HSOs Head of Dynamics 365 Unified Operations, Will Winter.
I wanted to chat with Will because research suggests large scale ERP implementations have been known to take years without delivering measurable value, and I wanted to find out why, and what can be done about it.
So, grab a brew, sit back, relax, and enjoy the show.
Big Bang or phased?
I like the excitement of the Big Bang, the pressure and build-up of it, but I’ve seen them go horribly wrong. So phased is less risky but not as much of an exciting ride.
That leads me onto the first question. When it comes to Dynamics 365, Microsoft are pushing it into a more modular approach so companies can consume the elements of it as needs dictate. Whether they want to go finance and then come to commerce later or come to project operations. They’re making it easier to consume the platform.
They’ve taken the approach of getting the underlying structure correct. And they’ve put a lot of development in that. They’ve started to build up the functionality on top in all the different areas and then augmented that with data and things. Along the way, Microsoft even added on top of that with machine learning and Artificial Intelligence and those sorts of things. They’re all in different states, some more advanced than others but the underlying building block, they have to get the platform correct, to allow people to cherry pick bits. ‘I’m going to do that and roll it out, and then I’m going to do this which will connect well in the background’. And underpinning this is the data verse. From my point of view, it makes sense to do it bit by bit, but at the same time, you don’t move house room by room. There is an economy of scale as well. I won’t call them ERP programmes because they’re transformation programmes now as ERP is just the vehicle that allows you to get from A to B, but you’ve got all the other stuff alongside, so they are transformation programmes now, but there is an element of doing it as a phased approach. There is some throwaway developments but typically you de-risk it with some additional cost and timeline. It’s horses for courses as to how much a business can do at that point in time and where the pinch points are. Some have a burning platform; they’ve got to get certain elements off. Some have massive holes in their business model that, as customers have evolved, they’ve bolted on bits of software, and they work at that point in time, but they’re not fit for purpose for scaling.
I was going to ask you what the value is for the company that’s then taking a more modular approach with Microsoft Dynamics 365, but you’re right in saying that it’s horses for courses. Some may not want to take a modular approach; they might actually want to go big bang.
It’s for each business to assess what their needs and requirements are at that point in time. It’s very dependent on the drivers. We’ve certainly seen models completely change. Retailers, for instance, were heavily reliant on High Street, and they might have had a 20% online retail business. That’s changed now. It’s 80% online, 20% on High Street. And where they may have previously made do with systems that were a bit flaky and fall over every now and again and were putting pressure on the business, that’s now magnified by four or five times. And it’s got to change straightaway. We’re seeing customers come in now and say, ‘I’ve got to do this’, ‘I’ve got to do that’ within the next six to eight months. If you then load that alongside a Big Bang, or a large-scale change, the business isn’t always ready to consume it. Perhaps they don’t have the resource, or the planning or the ability to roll that sort of thing out. HSO can come in and go ‘okay we’re going to solve this problem for you straightaway and we can do that within six months’, then we can work on the other things as we go through. So, it de-risks projects from a customer’s point of view so you don’t go away and in two years’ time you come back with an ERP project that businesses think I have moved on from where I was 18 months ago, and it’s not fit for purpose any longer.
Microsoft have made it easier to consume the platform whether you go full monty and put everything in at once or whether you take a more modular approach, they’re just making it a little easier. So, what’s the next step? Where will Microsoft take Dynamics 365?
As I said earlier, Microsoft are trying to build up the functionality on all modules. Some are further down the line than others. They are then applying the data verse and saying to the customer, there you go, here’s the underlying structure, that is completely connectable, you can bolt this on, you can bolt that on there’s no issue there, then we’re going to put these processes on top of that standard process that we think your business will need, right from the word go. That then gives you best practice and you know you have a system that is easily updatable, it’s not going to be out of date next year and it’s going to be continuously evolving. On top of that, they’re putting a lot of the intelligence like the business reporting saying we’re going to show the KPI reports for you, because they’re standard in your area. We’re going to build a lot of that reporting structure for you and then on top of that, they will put a lot into machine learning and Artificial Intelligence. That is the next step Microsoft will go to. They’ll build that functionality in and will start to surface it and say, well, if you want to increase your stock churn, or you want to decrease your asset life or something, here’s the Artificial Intelligence and we can switch that on and it will run the calculations for you in the background. And it will come up with suggestions for you. I think that is the next step, some are a lot further on in some areas than others and it’s just a push to bring all of them up.
Once you’ve got the platform you’ve the ability to pull in different and new functionalities as Microsoft bring them through and then consume them easier and faster. I get the advantage of those, and I can see the obvious value and benefit to the organisation’s consuming technology. What about the consumers of our customers – the likes of yourself and I, whoever is buying from the retailer, financial service company, or whoever is consuming that service from the organisation, what is the value to them?
It’s just big data, isn’t it. So you would hope at some point, and I know some customers are segmenting their data already, they’ll do targeted promotions and things, but it will still takes some work to get that data out and Microsoft, when they start to run these big algorithms in the background for our customers, will allow them to tailor advertisements and promos and things. What you would hope as well along the way is that it brings down the price of consumer goods, and also the availability. We’ve seen Amazon with prime where you can get next day delivery or same day delivery and it’s going to be even quicker than that. All of these things allow customers to focus on where their pinch points are in the business and drive those costs down and you would hope they’re going to pass that on to end consumers.
Do you think the energy companies will take note?
I don’t know about that. There’s a whole hornet’s nest layer in that, I think.
So where does HSO fit and how does it help the customer along their transformation journey depending on which direction they want to go?
From an HSO point of view, the enterprise architecture or diagnostic phase as we call it, does help the customer along the journey. The EA’s come in, sit down, and discuss where the pinch points are in the customer’s business. What platforms they are going to phase out and how they want to transform their business, what processes need looking at etc … and where the endgame is. That’s the fundamental question EAs ask the customer, ‘where do you want to get to in five- or 10-years’ time?’, and they help them plan that out. They sit down and say. ‘we’re going to switch this bit of technology off first of all, because that’s an area that’s causing you pain, and we’re going to replace it with this’. Once you’ve that engine in place, you can run this, and we’ll have those interfaces then after six months, we’ll switch that bit off and we’ll start to master a bit more of the data and various different things, but they will help the customer. If they sit down and say you can do all of this in one go, does the customer have appetite or the risk profile for that, then fine let’s go for it because it will ultimately be the cheapest way of doing it because there won’t be any throwaway interfaces and things. However, if they don’t have the ability to do that, we can plan it like this, this and this and they will give three or four different options based on what the customers objectives are. They really help the customer along the way, helping them make an informed decision.
Whether you take a big bang or phased approach to your ERP project depends on your appetite for risk, the urgency of the need, and a host of other factors. But regardless of the approach taken, maintaining an eye on the purpose is critical in keeping your project aligned to the original need. Go off course and the project risks going over time, over budget, and you’re left with an unfit solution that users find ways to work around – an expensive waste of money.
Align functionality to need, not need to functionality to deliver an ERP project that is fit for purpose, and which delivers value.
I hope you enjoyed this episode, do visit www.hso.com/dynamics-matters for more podcasts. And until next time, take care of yourselves.