October 1st, 2007

Two questions to improve software implementations

Posted by Michael Krigsman @ 11:56 am

Categories: Vendor relationships, Implementation, CIO issues

Tags: Software, Cognos Inc., Enterprise Software, Consulting, Implementation Toolkit, Implementation Service, British Computer Society, Outsourcing, It Operations, Business Operations

Large enterprise software implementations are frequently complex, expensive, and risky undertakings. If you are prospective enterprise software buyer, ask your software and consulting vendors the following two questions:

1. Has your company developed an implementation toolkit?

2. Do you offer packaged, or productized, implementation services?

These questions are intended to help determine whether your vendors have invested in tools and techniques designed to reduce implementation time and cost.

1. Has your company developed an implementation toolkit?

Software vendors should provide a carefully-defined roadmap to guide implementations through a standard process. While it can be profitable for a vendor to reinvent the wheel with each new engagement, it’s what you want as a customer.

The roadmap should include substantive content, giving advice on best practices for executing each step. In addition, distinct roadmaps should be available for different implementation activities; for example, the upgrade process should be not be identical to the steps used during a new software installation.

The following screen capture is from SAP’s implementation methodology and toolkit, called AcceleratedSAP (ASAP). The toolkit was started in the mid-nineties, and is a mature product, offering a rich set of tools, techniques, guidance, and advice for implementing SAP products.

Lotus Development Corp. created an implementation toolkit to help Lotus business partners sell and deploy mail messaging migrations. Note the content is completely self-contained inside the toolkit.

Cognos has created a comprehensive implementation toolkit, covering all steps and procedures necessary to deploy their product.

2. Do you offer packaged, or productized, implementation services?

Many project failures can be attributed to lack of financial alignment between buyers and sellers of enterprise implementation services. Buyers want implementation performed quickly and inexpensively, while implementers are usually compensated on an hourly basis, giving them financial incentive to increase costs.

Packaged implementation services, sometimes defined as “standard, reusable, consulting service offerings, including definition of tasks, deliverables and standard estimates or fixed costs,” offer a solution. The British Computer Society considers packaged, productized services an important means for avoiding “lengthy consulting agreements where ROI is difficult to calculate and development is hard to manage.”

Although packaged services are not right for every situation, be sure to ask prospective implementation partners whether they offer fixed-price bundles to cover at least some components of the project.

Examples of vendors offering packaged services include Cognos and Oracle. From the Cognos website, here is a packaged installation service:

Again, from Cognos (emphasis added):

“Service packages are created from the accumulated knowledge within our organization in working with our many customers around the world. They show we have done it before – many times, and they are the summation of experience by our Consultants, our Support specialists, our Trainers, our Development teams, and hundreds of customers all over the world. From these experiences we apply Best Practice into the package service structure and inbuilt deliverables, with these deliverables being achieved within a defined timeframe. You know what you will get and when, during a full cycle of deployment.

And, from Oracle (emphasis added):

“Oracle Consulting offers additional services to meet your business requirements, time frames, and ROI needs. These repeatable, cost-controlled, out-of-the-box solutions can simplify your implementation.”

By raising these two questions with software and consulting vendors, you communicate that implementation time, cost, and risk are serious issues for your organization. Any vendor that combines a well-designed, proven implementation toolkit with packaged consulting services deserves your consideration and evaluation.

[Disclosure: SAP and Lotus were clients for developing the toolkits shown above.]

July 18th, 2007

Hourly Projects and the Cult of Doom

Posted by Michael Krigsman @ 11:18 am

Categories: Vendor relationships

Tags: Scenario, Enterprise Software, Michael Krigsman

Recently, I was party to a discussion on the topic of hourly contracts in enterprise software services. Here is my take:

Open-ended, hourly projects often balloon in size and scope, precisely because there is little incentive to control costs. In this scenario, the services provider can maximize billable hours, while the customer can fall asleep, allowing this to happen right under his nose.

And the truly weird thing about this nonsensical scenario: it happens all the time.

(Note: packaged, or productized, services is one solution.)

July 11th, 2007

Non-Technical Complexity

Posted by Michael Krigsman @ 11:07 pm

Categories: Vendor relationships, Tools, Project strategy

Tags: Software, Complexity, SAP AG, Michael Krigsman

Why do projects fail? Very often, the roots of failure lie in non-technical areas related to project management, organizational politics, and lack of consensus across stakeholders. In plain English, failures often occur when people with conflicting agendas can’t put aside their own narrow concerns and agree on a course of action that is best for the project as a whole.

AcceleratedSAP and similar methodologies have their place as a standardized roadmap for getting all the implementation parties on the same page, regarding the software deployment process itself. Vinnie Mirchandani has called this a “vanilla” approach. However, the usefulness of such tools for addressing non-technical complexity is highly limited. As a note, a company I started developed AcceleratedSAP, ValueSAP, Roadmap Composer, etc. (the tools, not the methodology) for SAP. Sure, AcceleratedSAP includes review points, but I would also question the objectivity, accuracy, depth, and completeness of those reviews. Lest anyone think I am singling out SAP here, the point is only to use them as an example. Virtually all well-established software companies have their own implementation methodology and process — the names may change but the problems remain the same.

Consulting companies often thrive on this non-technical complexity. Even a company as strong in their market as SAP cannot control greed and ignorance on the part of some customers and partners, which in my opinion is what drives many implementation problems.

As an aside, productized services do offer a way to align software customers and implementation service providers. For this reason, I believe packaged services are the way of the future for forward-thinking consulting companies.

Update: click here to see a discussion of one important technique for measuring non-technical complexity.

May 18th, 2007

Packaged Services in a Complex Environment

Posted by Michael Krigsman @ 12:19 am

Categories: Packaged Services

Tags: Geisinger Health System, Surgery, Michael Krigsman

I’ve written numerous times about how packaged (or productized) services and can improve alignment between the interests of consultants and their clients. The New York Times reports that the packaged approach is now being tested by a hospital group in Pennsylvania. From the article:

The group, Geisinger Health System, has overhauled its approach to surgery. And taking a cue from the makers of television sets, washing machines and consumer products, Geisinger essentially guarantees its workmanship, charging a flat fee that includes 90 days of follow-up treatment.

Even if a patient suffers complications or has to come back to the hospital, Geisinger promises not to send the insurer another bill.

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Geisinger stands out as a group that has transformed the way it delivers care, said Dr. Donald M. Berwick, the chief executive of Institute for Healthcare Improvement, a national nonprofit organization whose goal is better patient care.

In almost no other field would consumers tolerate the frequency of error that is common in medicine, Dr. Berwick said, and Geisinger has managed to reduce the rate significantly. “Getting everything right is really, really hard,” he said.

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In reassessing how they perform bypass surgery, Geisinger doctors identified 40 essential steps. Then they devised procedures to ensure the steps would always be followed, regardless of which surgeon or which one of its three hospitals was involved.

Geisinger has created a true packaged service: fixed-price, defined scope, and strict timetable for service delivery. They even have a well-planned process methodology to ensure consistent and efficient execution across their multiple locations.

Next time a services vendor says your project is too complex to define a fixed price, ask whether it’s more complex than heart bypass surgery. If packaged services can successfully be applied to surgery, they can be applied to enterprise software implementations.

October 25th, 2006

Packaged Services in ERP

Posted by Michael Krigsman @ 10:22 pm

Categories: Vendor relationships, Packaged Services

Tags: Software, Customer, ERP, Consulting, Service, Michael Krigsman

Following up on a post about IBM packaged services, Prashanth Rai from the CIO Weblog asked me the following question in an email:

Yes, it looks like IBM is trying to do something that could really turn into tangible benefit for services customers. This seems to be a step in the right direction, but we need to see how it successful it turns out and how well they execute on the idea.Quick question: Do you see this working in the ERP/Business application implementation space?

Enterprise customers are weary of open-ended, hourly consulting arrangements. These deals often favor the vendor, taking advantage of the human tendency to slide toward complacency and the status quo. In other words, open-ended contracts frequently lead to bigger and bigger projects, scope creep, and a host of other ills. These projects eventually find their way into this blog.

The ERP market has broken into two categories: large, often complex projects executed for big companies, and simpler engagements for the SME segment. At the high end, large implementation customers demand flexibility and are willing to pay for it. Translation: big budgets and open-ended purchase orders. This means happy days for consulting organizations, whether standalone or inside a software vendor. Except, we all know the good times stop rolling when these big projects fall apart and the lawsuits start flying.

Smaller software customers are far more price sensitive than larger ones: they demand more software bang for the buck or they won’t buy. Therefore, to succeed in the SME market, service vendors must carefully circumscribe their offerings, packaging services into straightforward, fixed-price bundles, with clear input requirements and well-defined deliverables.

Productizing services in this way reduces both cost and risk to the customer. Obviously, reduced cost to the customer likely means reduced income to the service provider. Therefore, increased efficiency becomes a key survival skill for service providers. Packaged services involve leveraging and reusing knowledge, which means being efficient.

Packaged, productized, and standardized services are here to stay in the enterprise software market, including in ERP. Forward-thinking services organizations are already moving in this direction, and dinosaurs who ignore the obvious will be left behind.

Click here to see other postings on packaged and productized services.

October 25th, 2006

More Productized Services from IBM

Posted by Michael Krigsman @ 1:16 pm

Categories: Vendor relationships, Packaged Services

Tags: Storage, IBM Corp., Service Product, Michael Krigsman

IBM is really pushing the packaged services. Here is information from CXOtoday.com:

Information Lifecycle Management (ILM) Service Product: It is designed to classify data according to age and relevance to a company’s business. It applies best practices conforming to regulatory guidelines. It enables clients strategically adopt storage optimization, virtualization and archiving practices in a cost-effective and policy based manner.

Implementation Services for Storage Service Product: will provide skills to clients for disk, tape, network attached storage and storage software products that can improve data backup and recovery capabilities, reduce risk of adopting new technology and decrease time to deploy.

Migration Services for Data Service Product- For assisting customers plan and execute data migration by leveraging tools and disciplines to help speed migration time and enhance quality.

Commenting on the newly announced service products, Paul Fried, vice-president, IBM Storage and Data Services said, “IBM is deploying deep infrastructure experience and industry-leading best practices, methods and tools to help clients win now in the battle against information overload. These new service products help businesses reduce risk, get information to users faster and maximize the value of their existing servers, software and applications.”

Note the comment from the IBM vice president: “These new service products reduce risk…”. It’s clear to me that IBM is responding to customer dissatisfaction with open-ended consulting contracts. As I have said before, if you are a services vendor, get on this train. Your long-term success depends on it.

[via CIO Weblog (thanks, Prashanth!)]

October 13th, 2006

Reducing Consulting Costs with Productized Content

Posted by Michael Krigsman @ 10:03 pm

Categories: Implementation, Packaged Services

Tags: Michael Krigsman

High-priced, open-ended consulting deals often fuel enterprise software implementation failures.

As a result, a trend has developed among consulting companies and software vendors to package services into pre-defined, discrete units, decreasing risk and lowering costs for the customer. As examples, see here (pre-configured content shipping with software), here (packaged services), and here (more packaged services).

Pertinent to this subject, Jason Busch at SpendMatters writes, “In the consulting and software worlds, the lure of the billable hour or high margin application deals has traditionally trumped a content- or information-based sale. But perhaps things are changing.” Jason goes on to describe a newly-announced partnership between software company Procuri and consulting company AT Kearney Procurement Solutions.

Procuri will include AT Kearney’s Market Solutions tool content as part of it’s software product offering. The Solutions tool includes “templates and guides for RFPs and auctions, and supply market reports and insights for a broad range of sourceable goods and services.” In other words, AT Kearney has packaged its knowledge into productized form, which can then be leveraged and reused across multiple client engagements.

Of course, there is a place for open-ended consulting arrangements, especially on complex and strategic projects taking place in a changing, dynamic environment. However, open billing arrangements potentially create an incentive for the vendor to rack up hours beyond what is required to get the job done. In contrast, fixed-fee engagements tend to shift project risk away from the customer to the consultant. In many cases, this risk shifting forces the vendor to be more efficient.

For customers, the allure is obvious: lower project risk combined with lower consulting costs.

October 10th, 2006

Productized Services - AT Kearny

Posted by Michael Krigsman @ 1:55 pm

Categories: Packaged Services, Consulting

Tags: Michael Krigsman

Jason Busch at the SpendMatters blog has a great post describing AT Kearny’s procurement-related consulting offerings. His description of AT Kearny’s services is instructive for anyone interested in packaged services:

Procurement Solutions is focused on creating repeatable, expert solutions to Spend Management versus a more traditional management consulting approach which looks at each new procurement and supply chain opportunity from a generalist, one-off analytical lens.

[M]ore sophisticated organizations are most likely to use their services to augment their own capabilities where there is a specific need. In contrast, the management consulting organization is typically a better fit from a sourcing and category basis with clients who are less mature and need greater process help and all around Spend Management expertise and guidance.

The exception to this are more sophisticated companies looking to solve abstract problems or those that demand industry specific expertise — these situations are also a better fit with AT Kearney’s more traditional management consulting services arm. But quite often, the two organizations cross pollinate on projects, joining forces to help clients. Management consulting type-engagements, however, such as a complex make / buy manufacturing analyses, which are large and transformational in nature, are more likely to be led by generalist firm resources than specialized Procurement Solutions ones.

Jason makes a couple of key points to which I want to call attention. First, he emphasizes repeatable vs. one-off solutions: productized services are all about defining repeatable activities, documenting them, and delivering them more efficiently. Second, he correctly notes that the packaged approach is not always a good fit; for example, on large strategic projects where the dynamics are unique and complex.

Packaged, productized services can substantially reduce software implementation time and cost, lowering the risk of project failure. If you are a consulting company or services group inside a software vendor, get on this train, as I have recommended here and here and here.

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October 9th, 2006

SAP Productized Services

Posted by Michael Krigsman @ 9:15 pm

Categories: Packaged Services

Tags: SAP AG, Michael Krigsman

SAP has announced the release of SAP All-In-One ERP for the Australian market. From ferret.com.au:

There are three main components to SAP All-In-One ERP Package:

• Detailed, step-by-step implementation procedures.
• Extensive, reusable documentation for scope evaluation, project team and end-user training.
• Complete pre-configuration settings that provide everything needed to run integrated key processes.

By packaging standard services, SAP is making it easier and more predictable to sell and deploy its product into the SME market. SAP really does understand packaged services and how they reduce time and risk on software implementation projects.

Clearly, the company also recognizes that simplifying implementation is key to success in the mid-market.

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October 2nd, 2006

Reducing Services Costs

Posted by Michael Krigsman @ 2:47 pm

Categories: Implementation, Packaged Services

Tags: Michael Krigsman

Vinnie Mirchandani posts on IBM’s strategy to productize services.

Almost a year ago, Vinnie posed this challenge: “IBM’s SI/outsourcing groups do not think like its software group. They want to sell more bodies, not automation. If they allowed the same software team which is working on self-healing systems management to work on SI automation, I would be willing to bet they could develop significant labor saving tools.”

When I saw this quote, I had to respond.

First, Vinnie absolutely right in asserting the tension between the stated goal of reducing services costs and the way consultants are incentivized. This is a big deal, and productized services can only work in the context of a more fundamental shift in service delivery strategy, which includes adjusting the consultant compensation model.

Second, Vinnie mentions consulting automation tools. I say YES YES YES to that! Recently, I gave a presentation on exactly this subject; here are several approaches to consulting automation from that talk:

1. Implementation toolkits. Document the process, including roles and activities, and package it into a sharable tool. (Blatant self-promotion note: Cambridge Publications has worked with SAP, IBM, and others to create such toolkits. There is no one in the world better at it than we are.)

2. Reusable content. For example, developing pre-configured systems, along the lines of what SAP and Oracle have done.

3. Automation tools. Well-designed tools reduce hours spent on routine consulting tasks. For example (another blatant self-promotion note follows), Asuret has created a consulting tool to perform rapid pre-implementation risk assessments. We quickly gather data and then automate the reporting. There are also a variety of tools on the market to automate such things as data conversion and system configuration.

Consulting organizations that develop such tools will reduce their cost to customers, thereby improving their competitive position in the market. However, as a developer of such tools, I can say with certainty that consulting automation requires an investment that many services organizations will be reluctant to make.

If you are a services group, either standalone or part of a software company, then beware: now is the time to start thinking about automating your routine activities. Rest assured, your smartest competitors have already begun this process for themselves.

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