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May 12, 2016
By Garth D. Laird, CEO
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Data Intelligence,Tips & Tricks,Trends
After many years of the enterprise software market reinventing ERP solutions to run our businesses, why in 2015 would you consider the risk of building an ERP solution when you can buy one like Microsoft Dynamics AX, which has already had NASA program levels of investment leveraged against it?
The simple answer is: you wouldn’t.
Many of you reading this have already taken—or will be taking—the wise step toward supporting the incredible investment that Microsoft has leveraged into the Microsoft Dynamics AX platform since acquiring the solution in July of 2002.
With an ever-increasing R&D investment in this product line, Microsoft has created not only a platform that is inherently flexible and increasingly scalable but also a business model that allows some of the best global consulting firms to support the individual needs of any Customer across multiple industries. It’s hard to understand why any sane selection team would look past this product to any other for the needs of the process and transaction flows of their business.
Enterprise resource planning (ERP) has become a standard requirement for all organizations to manage and process the transactions that run their business. Initially it was all about ensuring that these systems provided the business the capability to have an “unqualified audit” or support taxation requirements; however, as with maturity in all industries, these systems now provide this as a pre-requisite, and there’s a new reason why a business needs to invest in ERP: VISIBILITY.
This need has created a very interesting conundrum for both the consultancy firms that sell and support Microsoft Dynamics AX and Customers who invest in this very platform.
If we go back no more than 10 years, the prime reason for investing in ERP was to support the control of the business process. Today that hasn’t changed. After all, a business needs to know that all aspects of finance, sales, purchasing/procurement, distribution, production, and quality assurance are managed in a uniform and consistent way that can stand up to any scrutiny.
But let me ask this: who of you today—in January 2015—would be selecting an ERP solution like Microsoft Dynamics AX only on the basis of the inputs that you need to manage to ensure that Assets – Liabilities = Revenue – Expenses?
Hopefully, the answer is very few.
Business has changed.
Five to seven years ago, the automotive industry was fiercely selling technology that added more features such as satellite navigation, parking sensors, reversing cameras, and auto-opening doors. Watch any recent commercial from the major auto manufacturers, and you’ll notice that the industry is primarily focused on selling value, economy, green compliance, and safety.
It’s not because the aspect of functionality and capability in cars has dropped in importance; in fact, they are as important as they ever were. It’s simply that they’ve become expected baseline components rather than the deciding factors for purchase. The factors that buyers look at now have changed, much like the factors for choosing an ERP system have changed.
So, where is this leading?
In 2015 almost every organization that is faced with the unenviable task of updating its ERP system is no longer looking to solutions to assist with compliance around audit and tax or to ensure that its retrospective reporting requirements are met.
In almost all cases, the cost justification and business case for ERP today is both visibility and transparency. It’s now absolutely expected that Microsoft Dynamics AX will provide transaction-level accountability. But, the “savvy” buyer will be asking: how do I use this to create management differential, visibility, and transparency in my industry? This question is something that the ERP community, in general, is now rushing to fulfill.
CEOs, CFOs, and CIOs who are commencing a hunt for a system that will transform their businesses for the next 10 years realize the drivers have moved from the efficiency of transaction input to the revelation of management output and how a management team can interact with their ERP system to make smarter, faster, and more informed decisions for their industry.
Purchase orders, sales orders, BOMs, and all the other mundane aspects of an ERP solution are now only the door opener and aren’t the aspects of this investment that will make the Customer rush to close the door. Customers simply expect that after 40 years of ERP market development, solutions such as Microsoft Dynamics AX will provide this functionality.
So now Customers need to understand how they will achieve their goals and assemble a solution that both manages the process flows and transactions—but more importantly—delivers value through integrated outcomes and allows for management decisions and cost justifications to be made.
Traditionally ERP vendors and their Partner ecosystems have had little to no focus on outcome management and business intelligence (BI). This rather unfortunate view means that in many cases, Customers are deploying flexible solutions like Microsoft Dynamics AX with additional process changes and customizations with no reference to the information that management needs when the solution is deployed and in production.
As such, Customers have traditionally gone outside of their ERP provider to system integrators and infrastructure Partners to have a BI solution built. This has without doubt proved to be costly, unsuccessful, and in so many cases, career limiting. The incredible number of “train wrecks” that has been documented over the years has led many Customers to believe that BI is too hard.
So, to boil it down to its bare components: people are investing heavily in solutions such as Microsoft Dynamics AX to enhance their business visibility and operational insight, but then getting derailed when they attempt to add the BI component to actually make the whole endeavor worthwhile.
Clearly if that same question was posed— “would you have built your ERP solution?”—every Customer would say an unequivocal, “are you insane?” So why do Customers then do the very same thing with a BI project that in many cases can be as complicated and as risky as the ERP project?
The answer is that the community of Partners and system integrators sees massive consulting revenues by being available to push Customers down that “build” path. Up until the last 2-3 years or so, there weren’t solutions in the market that could be bought and would be delivered in record time with incredible returns and minimal risk.
That time has come, and now Microsoft Dynamics AX Customers have options to buy BI from vendors that have the entire experience (from conceptualization to implementation) built-in and automated by industry and with many of the standard best practice outcomes and analytics already designed, installed and available. This allows Customers to invest in BI at the same time as their Microsoft Dynamics AX project and ensure the exact outcomes they expect will be available to run their business will be integrated into the production outcomes of Microsoft Dynamics AX.
We have previously gone into great depth about the advantages of buying a BI solution, but suffice it to say, the reasons are compelling and abundant. The time to value/result is significantly streamlined as vendors have built in many system-wide components and tasks that bridge the gap between installation and implementation, and the risk is mitigated since BI vendors take into account the risks faced by failed implementation, adjust for them, and demonstrate the experience garnered by numerous successful deployments. Lastly, we have to consider the adoption by the end user community. More than 60% of BI projects fail due to a simple lack of end-user adoption, which is primarily caused by insufficient understanding of how to apply the BI tool to real business scenarios.
When one buys a BI solution, they are also buying the years of experience spent brainstorming and devising the connection between analytics, dashboards and KPIs, and how those translate to concrete business situations. Time is spent surveying the industries the vendors serve and catering directly to them in an effort to make sure their applications will resonate successfully. These come with pre-built “answers” to big business questions and fundamentally underpin the ability to get users excited about adopting the software.
Why? Well, because it works, it’s relevant and easy to use.
So, in 2015 the opportunity for Microsoft Dynamics AX Customers and prospects to know that one of the main reasons that they invested in Microsoft Dynamics AX is the ability to better manage their business into the future is finally available in a set of BI solutions that is being deployed globally across many industries with dozens of references in record times.
Take some time to look at the business intelligence options now available in the market. They can take an average outcome and turn it into a result that will have the entire organization understanding why the pain that was endured in changing ERP systems has been worth it.
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