Using AI/ML to Build Customer-specific ERP Roadmaps

How much does it cost to create a customer-specific ERP roadmap?  $50k, $200k, $1m+?  This effort typically requires the higher end consultative guidance and advisory role(s).  It also requires a significant amount of customer leaders’ effort/time to support this activity.  What if I can show you an approach where one can automatically generate a custom ERP roadmap? If interested then allow me to elaborate.

Are you a Believer?

Before we start, I will ask you to make an investment.  I have a habit of repeating myself therefore I will ask you to review the following blog postings before I begin:

Now, if you are still interested then I will ask you to stretch a little further.

Model versus Reality

I consider myself more of a pragmatist than a theorist.  Models are great to elaborate upon concept(s) for discussion and argument.  However, conceptual models are limited in the value they provide to customers if there is no method to align reality (i.e., “as is”) with the optimal path.  Consider the following illustration:

Key Points and Observations:

  1. In a majority of cases, there is a difference between potential ERP utilization and actual ERP utilization experienced by customers.
  2. In order to promote repeatability, there should be a logical progression that enables customers to maximize ERP utilization (i.e., roadmap).
  3. To minimize ERP Total Cost of Ownership (TCO) and eliminate cost constraints, ERP cloud vendors should provide customers with the ability to increase ERP utilization without heavy reliance on consulting services ($$).

The goal is to define an ERP utilization approach that is repeatable and reliable.  Far too often, customers spend thousands of dollars on a “point in time” ERP strategy that requires additional funds to revise the strategy as technology changes.  The ERP utilization strategy must start with “where the customer is at” and provide a series of ERP features and prerequisite enablement activities in order to increase utilization.

ERP Utilization Roadmap Model

Based on my experience, I recommend that long-term ERP utilization should be a series of incremental quick-wins (i.e., Business Process Management) and minimal paradigm shifts (i.e., Business Process Re-engineering).  Consider the following illustration:

Key points and observations:

  • Any deployment of ERP features that require a significant organization change is not a quick win.  People do not change overnight.
  • An incremental approach like Business Process Management (BPM) is required when deploying new ERP features at the same CMMI level for a given business process.
  • Set A includes the BPM enablement activities and ERP feature deployments required to align with the logical maturity path.  Note that only incremental change is required to implement targeted ERP features (thus, a quick-win).
  • Set B includes the Business Process Re-engineering (BPR) enablement activities and ERP feature(s) deployment required to align with the logical maturity path.  Set Y is not a quick win.

The practical aspects of this model are (1) the roadmap must start where the customer is at in their business process maturity, (2) utilize an increment (agile) approach to build organization momentum, and (3) realize that organizational momentum will carry a customer through the radical changes required for maximizing ERP utilization.

Automating Implementation Guidance & ERP Roadmap

I will utilize the following illustration to put the previous concepts into view.

There are 3 key automation players in the mix. 

  1. ERP Configuration Manager:  This is a feature of the ERP software that provides an ordered list of data and functional configurations required to implement a feature set within the ERP solution (aka table loading sequence).   A competent ERP vendor should provide this capability out of the box.  Unfortunately, most ERP vendors only provide ERP configuration manager functionality that only provides the “technical” guidance for configuration.
  2. Implementation Advisor:  The implementation advisor compliments the existing ERP configuration manager by providing functional and organizational guidance to the customer during the implementation.  The guidance is harvested utilizing AI/ML recommendations based upon findings and trends identified across the ERP vendor’s customer base.  The implementation advisor would utilize both structured and unstructured learning to provide the most relevant guidance.
  3. Solution Advisor: The solution advisor focuses on providing the iterative and progressive ERP product feature set(s) required to attain the targeted CMMI level for a business process.  The solution advisor must have access to current ERP features implemented but also how effectively business users are utilizing ERP features

The key strategy of the ERP Utilization model and the solution advisor is to provide an incremental, progressive maturity path that is risk adverse and minimizes huge organizational change.

What’s Missing? Challenge to ERP Vendors

As stated earlier, the majority of ERP vendors provide business process models that highlight how ERP vendors define business processes within their software.  The gaps I’ve observed with most ERP business models are there are no relationships defined between the business activity and the corresponding CMMI maturity level and ERP product feature(s).  Adding this metadata to the model will enable an automated approach to implementation and roadmap guidance.

Summary

Implementation costs remain the largest part of an ERP TCO analysis.  The cloud delivery model has greatly reduced the hardware/software/infrastructure costs.  Unfortunately, the ERP market places more focus on vendor capabilities and emerging technologies versus ease of implementation and customer self-sufficiency with ERP services.   No technology adds any business value until its in production.  Second, an automated ERP solution advisor provides real-time guidance to customers versus periodic, manual feedback that generally results in “leap-frog” implementations that have greater risk(s) and cost(s).   Stay safe!

P.S. – Despite my sincere attempt, I did repeat myself.

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Using AI/ML to create a Customer-specific ERP Business Process Maturity Model

In this post, I will define a case study where my utilization model is applied for a customer.    A key point to be made here is that the health and effectiveness of the business process is directly related to the performance and utilization of ERP features that support the business process.

Case Study – Procurement Business Process

For our discussion, we will focus on the procurement business process.  Following is a generic definition of the procurement business process.

To continue this illustration,  I will define the key business activities associated with the procurement functions highlighted.  I will also define how business activities are likely executed based upon the business process Capability Maturity Model Integrated (CMMI) level.

Legend:

  • Manual:  The business activity is performed manually.  We can assume that since the process is manual that the organizational capacity (resources) is lower for adopting mature business activities.
  • Partially Automated:  The business activity is partially automated.  Manual effort is still required to complete the business activity.  Integration is performed manually.
  • Automated: The business activity is completely automated.  However, the inputs and/or outputs for the business activity are point integrations at best.  Example of this scenario is when a customer utilizes an isolated point solution for a specific activity.
  • Integrated:  The business activity is automated with limited integration.  Integrations are limited to the immediate input and output business activities.
  • Closed Loop:  The business activity is both automated and integrated across the entire business process.  The customer has visibility to data and metrics across all business activities.

Disclaimer: Now, you may not completely agree with all the information presented in the above illustration, but please do not let that derail you from our discussion. 

A key premise of the above model is that mature business activities will provide very limited to no business value until the underlying business process maturity levels are implemented.  There are two key factors that directly influence business process maturity levels: technology and people.  Practically speaking, we can agree that reaching a CMMI Level 4 or Level 5 requires an integrated and closed loop technical infrastructure that supports the entire business process.

To complete the model we need to answer the following question: “How does this relate to ERP product features?”  There are two aspects to consider.  First, what appropriate ERP feature(s) support the business activity.  Second, to what level of functionality should the feature be deployed.   For example, a standard feature in the accounts  payable function is matching.  Matching is an audit performed for goods and services through the entire process.

Continuing the discussion, if I am working with a customer with a procurement CMMI Level 1 then my focus (scope) will be on implementing either 2-way or possibly 3-way matching in accounts payable.  For many of my seasoned colleagues in ERP consulting, this conclusion would appear self-evident.  However, to an emerging customer or a new millennial in ERP consulting or sales, this automated guidance would be insightful.

Application in the Real World

Let’s say I am a customer performing research of ERP vendors for a procurement solution. Today, I have two options:

  1. I can gather information via the ERP vendors’ websites. Generally speaking, there are at least 4 ERP products (purchasing, inventory, account payables, and supplier management) that support the procurement business process. For argument stake, let’s assume that each ERP product has 20 features and most ERP vendors provide a feature list for each of their product offerings.  If my math is right, that means that I would have to wade through 80 features to determine if the ERP product(s) are a possible fit.
  2. I contact a sales representative or presales assistant to gather information. Next is a series of business need assessment questions I have to answer before I can get the information I need.  Most likely, I would also have to involve business users in the ERP vendor’s information harvesting to get any value from the activity.

I would prefer a self-service option that would ask me two key questions:

To expand on this scenario, I provide the following information to the above questions:

  • Procurement CMMI Level: 2
  • Organizational Capacity for Change (OCC): Low

We can leverage the above information to quickly refine our ERP product focus to the area highlighted

The power in this approach is to quickly focus on the business activities and corresponding ERP product features that can mature the customer’s procurement business process.  Instead of asking a battery of questions that add little value, we can focus on the “low hanging fruit” that can generate quick wins for the customer.  However, keep in mind that the customer responded that they have a low OCC.  This indicates that we should implement ERP product features that aligns to the customer’s current business activities/maturity.  Technology alone does not mature a business process.  Keep it simple!  Keep it fast!

Value Proposition

Customers are looking for a specific, cost-effective ERP adoption roadmap that will enable them to mature their business model in a rational manner.  Today, this guidance is created by outside consultants costing thousands of dollars and time commitments from business executives.  Using the above model gives us a solid foundation that we can enhance versus rebuilding the wheel for every customer.  Automating this model and improving guidance via machine learning enables ERP vendors and consultants to accelerate guidance delivery to customers.

Summary

Even with the cloud, ERP implementation services and guidance are still the largest costs that make up Total Cost of Ownership (TCO) for customers.  As the cloud delivery model continues to squeeze TCO, ERP vendors and consultants have to find most cost effective methods to deliver specific value and guidance to customers.  Machine Learning, CMMI Business Models and ERP Utilization Models can be key enablers to automate business solution guidance.

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