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BEST PRACTICES IN ERP AND BUSINESS SOFTWARE: FACT OR FICTION(June 11, 2010) The case for the prosecution
First, assuming best practices do exist, will a reseller be aware of them? Tier 1 vendors have many customers across many industries, and so you could advance a case that they have knowledge of how the best-run companies perform various activities. However, as a potential customer of such a vendor, ask yourself how the reseller will have acquired such knowledge. There is no central database maintained by vendors, not least because each reseller jealously guards from other resellers whatever knowledge they gain in an implementation. Worse, would it even be ethical for resellers to re-use such best practices at their next implementation. Ask yourself whether you would want your nearest competitor to be trained by you in how to run their business better.
Secondly, there are considerable variations in commercial practices in different countries, and you can safely assume that a good way to do business in, say, a third-world country, might be frowned upon in a more developed country - if only because of the economic effect of lower labour rates.
So, are all companies basically the same, and as a result is there a verifiable best practice that can be offered to customers? Perhaps the most obvious problem with this argument is that companies in the same industry frequently vary in size, and there are fundamentally different business practices as a result. These differences are most obvious when comparing large enterprises with SMBs (small to mid-sized businesses). The scale of larger enterprises creates a clear division of responsibilities, which is mirrored by systems. Each division becomes almost a company in its own right. Compare this to SMBs, where the company would soon go out of business if there were not very active communication between every department. Clearly the business model between two companies in an identical market is likely to be fundamentally different.
Even when you find two companies of a similar size in the same industry, it is astonishing how often the business model is completely different. Perhaps we shouldn't be surprised by this: when you peel away all the complexities, the strategic thrust for all companies can be distilled into a handful of key performance indicators (KPIs). Perhaps most tellingly, if there really is a best practice for your industry, why is your reseller proposing so much development work?
And finally, and only slightly flippantly, if resellers have such a wonderful knowledge of the best practice in an industry, wouldn't it be more profitable for them to set up as your competitor than to sell and implement your systems?
Software-based best practices
Does this mean that "best practice" was a clever marketing idea that has had customers fooled for many years?
Our view is that there are generic, "good" ways to do certain tasks, that transcend specific vertical markets. For example, companies from wildly different industries might adopt surprisingly similar purchasing methodologies. In our own software we have combined generic frameworks for each of the different types of automated purchasing identified above (and several others) with a highly flexible customisation language that allows the small variations in formulae to be created in a matter of a few hours.
We have given these generic routines the term "software-based best practices".
We believe this approach addresses all of the drawbacks of the "best practice" methodology as marketed by Tier 1 vendors. In particular:
• since the best practices are within the software, all staff and resellers are automatically trained in them as part of the standard education process - regardless of industry specialisation
• language barriers are removed, as the software is translated into all operating languages
• commercial differences stemming from different national practices or company size can be treated in the same way as other variations between companies - customers get to choose which of the software-based best practices suit them
• ethical issues about whether to share experience gleaned from immediate local competitors are largely avoided, since the optimal choice of best practice in an implementation almost always comes from the experience of a totally different company.
Our experience tells us that SMBs are fundamentally different from larger enterprises, and the entrepreneurial thrust of the SMBs that make up the significant majority of our customer base has led us to develop the kind of software-based best practices that are only really available to enterprises with large development budgets.
So, in summary, the next time your ERP salesman falls back on the promise of ensuring the success of your implementation through his vendor's adoption of best practices, remember to ask to see them demonstrated to you - ideally at the initial presentation!
Related Keywords:HansaWorld, ERP, CRM, Cloud services, Business software, SmartView, Books, Enterprise
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