Economic Usage of Business Software

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1 Economic Usage of Business Software - How to Protect Your Investments - Speaker: Dr. Karsten Sontow, CEO Trovarit AG

2 Who We Are Founded: Founder: Employees: Offices: Competencies: Cooperations: as a spin-off of FIR at RWTH Aachen Dr.-Ing. Karsten Sontow Dipl.-Ing. Peter Treutlein 32 (as of 12/2014) from Engineering, Economics, Informatics and Social Sciences Aachen, Augsburg, Essen, Hamburg, Göttingen, Heilbronn, Leipzig, Vienna (AT), Istanbul (TR), Zürich & St. Gallen (CH, c/o 2BCS), Zoetermeer (NL, c/o pragmatiq) Efficient & save evaluation, implementation and optimisation of business software ERP (Enterprise Resource Planning for all sectors) CRM (Customer Relationship Management) MES (Manufacturing Execution Systems) BI / DM (Business Intelligence and Data Management) DMS / ECM (Document Management) Specialist Institutes (RWTH Aachen, Uni Münster, Fraunhofer IPA, Steinbeis Transfer-Zentrum) Associations (BDU, VDMA, VDI, VOI, BITKOM ) Printing houses, event organisers ca. 25 specialised consulting firms

3 What do we offer? Process Consulting Reference Models Online-Potentials Analysis Process Analysis Process Optimisation Software Selection Requirement Specification Templates Online Market Search & Bidding System Live Tests Req. Spec. Sheet & Contract Negotiations Decision Support Conflict Resolution & Mediation IT-Matchmaker Project Management Specialist Moderation Usage Optimisation Usage Analysis via Online-Portal Definition of Improvement Actions Deduction of Fields of Action ERP-Strategy / ERP-Roadmap Software Implementation Project Coaching Project Set-Up & control Preparation & Support of Acceptance Project Audit & Reorganisation

4 Protection of Investments in Business Software - Structure Business Software Positioning Challenge Business Software Investment Opportunities & Risiks Starting Points for Investment Protection for Business Software Conclusion

5 Business Software in the Value Chain Producer & Service Provider Supplier Suppliers SCM Customers End-Customers Business Process Level ERP Execution Level MES Resources Level BDE Material / Performance flow horizontal/vertical Information flow horizontal/vertical Tasks and Goals Business Software serves the management of the company Process support on all levels and in all company areas Horizontal & vertical integration of cross-company coordinated order processing and planning processes Information transparency on all planning levels, cross-company as well as inner-company Planning & control on the basis of actual data (high resolution, real-time & forecasting ability) refer to FIR at RWTH Aachen, 2014

6 ERP System The Spine of the Corporate Software Landscape! ERP Core* Commercial order processing Reporting Procurement Contact Management Inventory Management Controlling, Cost Accounting Warehouse Management (WMS) Document Management (DMS) Electronic Data Interchange (EDI) Production Planning & Control (PPC) Inventory Control Financial Accounting, Sales Planning & Control * >60% of products ** >40% of products ERP- Peripherals ** Project Management (PMS) Operating Data Acquisition Staff Work Time Logging Product/ Variants Configurator Supply Chain Management (SCM) E-Commerce or Shop System Supplier Relationship Management (SRM) Service Management Handling of Payments Personnel Planning Quality Management (CAQ/QMS) Point of Sale Inventory Optimisation Analytical CRM Data Warehouse Asset Accounting Source: 31st March, 2014, n = 268 ERP- Products

7 Protection of Investments in Business Software - Structure Business Software Positioning Challenge Business Software Investment Opportunities & Risiks Starting Points for Investment Protection for Business Software Conclusion

8 Investment Protection in the Context of Business Software ensure Benefits Economic Efficiency = Effort & Cost achieve & retain limit sustainably Dimensions of Benefits Efficiency Transparency Customer Satisfaction/Retention Process Quality Faster Decisions Flexibility Compliance... Categories of Effort & Cost Procurement (Software & Hardware) Implementation Documentation & Training Employment & Administration Maintenance & Support Modernisation...

9 Benefits of Business Software and Influencing Factors Business Benefits Shorter processing times (e.g. order processing) Less capital employment (e.g. inventory management) Better capital utilisation Better supply with information (Reporting, Data quality) Faster supply with information Faster decisions Lower error rates (e.g. invoicing) Uniform & robust processes Traceability of processes & products (e.g. FDA/GMP) Verifiability of decisions & actions (e.g. compliant archiving) IT-Security (Access, Recovery) Software & Vendor Functionality (e.g. process support, suitability for certain industries) Ergonomics (e.g. user-guidance, mobility) Flexibility of thesoftware (e.g. forms and reports design) Releaseability of the software Consulting competencies of the vendor Vendor s knowledge of the vendor Resources of the vendor... User Clear goals & requirements Team s competencies & resources Leadership & Project Management...

10 Users Confirm: ERP Systems further efficiency & transparency! Fast & simple processes 59.2% Fast & simple information 51.7% Correct & useful information 41.4% Integrated process support 37.7% Traceability of information 35.2% 2,358 participants

11 Expenses for Business Software and Influencing Factors IT Effort & Cost Rights of use (e.g. licence fees) Acquisition costs for infrastructure Implementation (e.g. conception, installation, programming) Design & programming of interfaces (Integration) testing System documentation & training material Data processing & migration Administrator & user training Administration & user support Maintenance (e.g. maintenance fees) Customising of the software Modernisation & release changes Data maintenance and data protection Infrastructure operation (e.g. data center) Software & Vendor Functionality (e.g. process support, suitability for certain industries) Technology (e.g. architecture, platform) Licensing model & prices Maintenance model & prices Implementation method & project management skills of the vendor Know-how of the vendor Resource of the vendor... User Clear goals & requirements Team s competencies & resources Leadership & Project Management...

12 Challenges of ERP Implementation Data migration 34.9% Tight schedule User s resources Too much customisation 19.5% 18.8% 21.7% Mapping of business processes 16.1% Interfaces 10.9% Unclear requirements 9.3% No problems 17.1% 2,358 participants

13 Challenges of ERP Operation Effort/Expenses for releases/upgrades Performance Ergonomics/usability Mobility / Web-Access Reaction time of support Flexibility / adaptability Effort/Expenses for data maintenance Interfaces Operating / maintenance costs 2,358 participants Required support

14 Great Expenses = Great Risk (ERP Software in Mid-Sized Companies*) Ca. 6,000 acquisition costs per work-place Ca. 12 months project duration Ca. 1/3 of acquisition costs for modernisation every 5 years Expenses Ca. 5 internal and 2.5 external employees in the core team 1,5 employees for administration Ca. 500 p.a. per work-place for the software maintenance Acquisition Operation * 50 to 250 employees

15 Quelle: Droege and Comp; FAZ Trovarit AG Bad Result & Due Date Exceeded IT Projects Bear Risks! Results of IT projects not successful successful only 15 % of projects are successful in 85 % the project targets are not reached Delay in IT projects 13 % of the survey participants mentioned delays of more than 50 % more than 50 % noted delays between 25 % and 50 % 0 % to 25 % > 50 % 25 % to 50 %

16 Proportion of installations Anteil der Installationen 2015 Trovarit AG Cost Risks in ERP / Business Software Projects 16% normal: ca. 66% problematic: ca. 33% 14% 12% Ca. 6,000 EURO 10% 8% 6% 4% 2% 0% Anschaffungskosten je ERP-Arbeitsplatz (25-49 User) Acquisition costs per ERP work-place (25-49 users)

17 Characteristics of Business Software Investments Great benefits... Modern business software accelerates business processes and increases the transparency within the company. Being a cross-departmental infrastructure, business software has great influence on a company s economic success. In view of the relatively high penetration it is necessary to take ADDED value as well as LESS benefit into account when assessing the utility of business software.... but also great risks High expenses for acquisition, operation, personnel and run-times Many involved parties with different interests Unclear requirements & performance specifications endanger the benefit and drive the expenses Not much experience with the matter

18 Protection of Investments in Business Software - Structure Business Software Positioning Challenge Business Software Investment Opportunities & Risiks Starting Points for Investment Protection for Business Software Conclusion

19 Starting Points for the Protection of Investments in Business Software Monitoring Planning of actions Sustainable operation Actions, Roadmap Protection Investitions of investments -sicherheit Software selection Projection & contract drafting Structured selection & optimisation Go-Live Contract Appropriate implementation Project Management Acceptance Management Change Management

20 High Degree of Safety 2015 Trovarit AG Strategies of ERP Selection Calculated Decision Academic Exercise Free Search Strategic / On the Link Little Expense

21 Difficult Choice Because of the ERP Market s Diversity Vendors Products System Houses (Industry) Solution Comarch Comarch ERP Enterprise Comarch ERP Suite Comarch Financials ComputerKomplett Impuls VLEX Solutions STS Drink STS Logistics Microsoft MS Dynamics NAV MS Dynamics AX MS Dynamics SL MS Dynamics GP Modus Cosmo Consult Kumavision GOB GWS... FoodVision Modus Plastics Modus Engineering Modus Furniture SAP SAP BusinessSuite SAP All-in-One SAP ByD SAP BusinessOne All for One Steeb Itelligence ai informatics TDS Fujitsu BTC... it.engine it.manufacturing it.trade it.furniture number: >200 number: >300 number: > 750 number: >>1.000

22 Satisfaction with Release-Ability 2015 Trovarit AG Compromises are Required Flexibility vs. Release-Ability Flexible & release-able Releaseability at the cost of flexibility Mittelwert Unflexible & not releaseable Flexibility at the cost of release-ability Satisfaction with Flexibility

23 Satisfaction with User-Friendliness 2015 Trovarit AG Compromises are Required Ergonomics vs. Internationality Good handling but hardly usable on an international scale User-friendly and international International but hard to handle Satisfaction with International Orientation

24 IInstallationgrowth Innovative technologyt 2015 Trovarit AG Compromises are Required "Modern" vs. "Comprehensive Functions" A Relevant for selection A Character: highly innovative systems with limited functionality Selection type:high risk and high potentials B B Character: systems with a balanced ratio of technological innovation and mature, comprehensive functionality Selection type:balanced mixture of security, risk and potentials C C Character: comprehensive functionality at the cost of technological innovation Selection type:high security and low potential = System n Functional power A B Lifecycle C Time

25 IT-Strategy 2015 Trovarit AG Decision Parameters for ERP Projects ERP decisions have many aspects, amongst others Software Vendor Experience, competence, services, location, Economic stability and perspective Requirements & Software Solution Functionality (Scope and type of the support offered) Technology (Supported platforms, protocols, interfaces etc.) Performance Profile & Economic Efficiency Investments (Hardware, software, implementation etc.) Return (Increase of turnover, cost reduction) They are difficult to grasp and often at conflict with each other!

26 Criteria for ERP/Business Software Investitments in Practice Functionality 69.9% Flexibility Software 40.5% Cost/Benefit 33.2% Competence & Demeanour User-Friendliness 30.0% 28.8% 2,393 participants Modern Technology 24.2%

27 Fix Req. Spec., Contract negotiations Presentation, References Concrete definition of requirements Find Market search, Pre-selection Number of candidates 2015 Trovarit AG The Funnel Model of Software Selection >1.000 candidates Requirement Specification Sheet Best FIT Functionality Technology Industry fit Rough costs 3-5 candidates Best Practice (Rough costs) Solving skills Demeanour Look & Feel 1-2 candidates TCO/RoI Scope of services Conditions Security Commitment One partner Contract, plan implementation project

28 Qualitätswesen 2015 Trovarit AG Requirement Specification Sheet (RSS) "Shopping List" for Software Investments RSS describes & prioritises Functional requirements from the business processes Technological requirements Marketing Finances, Accounting Construction Human Resources Volume & Project parameters (Between 100 and 2,000 specifications in comprehensive ERP projects Sales Produktion Einkauf The RSS serves as a basis for tendering/pre-selection Logistik vendor workshops (script, tasks) contract (definition of the scope of services)

29 Cheap 2015 Trovarit AG RSS as a Basis for the Election of the Candidates Pre-selection by tendering Well-Founded Comparison qualified comments from the vendors respecting the task at hand qualified estimation of the project budget and the operating costs comparable data on o o o functional coverage Necessary customisation technological fit o o acquisition and operating costs references o... Suitable

30 RSS as a Basis for Vendor Presentations Vendor presentations The Beauty Contest yields... A personal impression of the software vendors competencies A personal impression of the software solutions handlings (Look & Feel) Critical examination of the support for relevant business processes Insight into the vendor s implementation method Broader decision basis within the company (Involvement of key users)

31 Finding the best software and the best partner Solid basis for the investment decision

32 Robust Contract for a Fair Balance of Interests! The customer wants standard software with all the required functions, a fixed price which is payable as late as possible, a fixed date for the start of the productive use, little disturbance of the business operations during implementation, long-term protection of the investment. The software vendor wants to deliver the standard software as soon as possible and get his payment, to change the standard software as little as possible in order to keep it maintainable, to settle the implementation services according to performance, to avoid to have a responsibility for the project success and liability, Get a software maintenance order as soon as possible. The contract has the task to balance out these interests.

33 RSS as the Basis of Contract Drafting Tasks To further detail the RSS together with the vendor To set-up the project management manual Contract check with regard to contents and compliance Final negotiations of the conditions and signature Contents Software requirements specification Services (training, documentation, data migration etc.) Project manual (tasks & responsibilities) Regulation of Change Requests & Acceptance Milestones & right of withdrawal Prices & terms

34 Starting Points for the Protection of Investments in Business Software Monitoring Planning of actions Sustainable operation Actions, Roadmap Protection Investitions of investments -sicherheit Software selection Projection & contract drafting Structured selection & optimisation Go-Live Contract Appropriate implementation Project Management Acceptance Management Change Management

35 Implementation From Handshake to Go-Live Detailed Concept Realisation Contract Detailed concepts for o o o o customisation & interfaces data migration changeover training schedule Change requests Admin manual Acceptance against RSS System installation System parametrisation Customisation (programming) Creation of forms & reports Integration tests Data transfer Admin/user training Documentation Go-Live Final Acceptance Go-live preparation Go-live monitoring

36 Tasks of Project Management Project Management during implementation Project-Cockpit: Everything at a glance Monitoring of budget, progress and duration Resource Management Information Management: Well-directed distribution of information within the project team Monitoring of change requests, checking against contract conformity Status of interfaces, customisations and analyses Risk Management and status reporting to the steering committee Fortschritt je Teilprojekt Phase Feinkonzeption EK 100,0% 80,0% 60,0% IT 40,0% 20,0% 0,0% SO MIG FIBU SER TEC LG Projektbudget je Teilprojekt PL EK VK LG 10 0 VK Beratungsaufwand MIG FIBU Tage gesamt geplant davon noch offen

37 Claim Management Musterfirma GmbH Documentation of test releases and acceptances on the basis of the contractually warranted scope of services (RSS) Administration of a non-redundant open points or list of defects

38 The RSS as the Spine of the Software Project Selection / Commissioning Implementation Pre-selection/ tendering Detailed concept RSS Vendor presentations Contract drafting Detailed RSS Project control (with reference to contents) Acceptance protocol Contract Go-Live Acceptance Acceptance

39 Starting Points for the Protection of Investments in Business Software Monitoring Planning of actions Sustainable operation Actions, Roadmap Protection Investitions of investments -sicherheit Software selection Projection & contract drafting Structured selection & optimisation Go-Live Contract Appropriate implementation Project Management Acceptance Management Change Management

40 Business Software Roadmap Aspects and Strategy Management Workshop Vision Strategy Strategic benefit (Top Down) Business Model Processes & Organisation Business Solutions Operative fit (Bottom Up) Application Landscape System Landscape Hardware/ Network User survey

41 Vertrieb, Service Übergreifende Themen 2015 Trovarit AG Method and Tools Method Tools Management Point of View Strategy Change Process Maturity Process Value User Survey Satisfaction Process Support Frequency of Usage Suggestions for Improvement Reference model for processes Online tool for user survey Verification & Prioritisation by Management Quick wins Fields of Action ERP Roadmap Pre-defined tools for analysis Kurzfristig Mittelfristig Langfristig 2015 CRM Einführung Kennzahlen- System Rollout CRM Implemtierung BI-Lösung Channel Management Forecasting Remote Maintenance tbd tbd Konstruktion PDM Entwicklung, Fertigung Materialwirtschaft, Beschaffung Rollout, IT

42 Ergebnisse Arbeitsschritte Phase 2015 Trovarit AG ERP Roadmap Project Steps Initialisation Usage analysis Validation Management Workshop Realisation Projecting/ Scoping Initialisation Company/ departmental strategy User survey Evaluation Consolidation Benefit & expenses estimation Prioritisation Management assessment Process-/Reference models Audit-Portal Analysis Templates Scope Strategic targets Process maturity ERP Roadmap Schedule Process relevance Potentials Quick Wins Process landscape Process support Fields of Action Project drafts Software landscape Participants Suggestions for improvements Action Prio A actions Week 1 Week 2-3 Week 4 Week 5

43 Protection of Investments in Business Software - Structure Business Software Positioning Challenge Business Software Investment Opportunities & Risiks Starting Points for Investment Protection for Business Software Conclusion

44 Business Software as an Opportunity, If You Master the Risks! Business Software is a valuable infrastructure for the management of the company with great potentials for efficiency, transparency and fast response which is an absolute necessity for the company s competitiveness & Compliance. with risks adhering to acquisition, implementation & operation because of the great strain it puts on finances and human resources because of the great variations concerning the results, the duration, costs and personnel expenditure because of the latent drifting apart of processes and tool, which requires and puts demands on the management! well-founded investment decision consequent project management leadership und support by the top management Quality management with regard to procurement, implementation and operation Investment protection for business software is continual, hard work in detail!

45 Thank You for Your Attention! Dr. Karsten Sontow CEO, Trovarit AG, Aachen Homepage: Phone: +49 (0) For further information Free Download: Management Summary ERP in Practice 2014/2015

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