Podcast

Episode: 397 |
Sam Gupta:
ERP Systems:
Episode
397

HOW TO THRIVE AS AN
INDEPENDENT PROFESSIONAL

Sam Gupta

ERP Systems

Show Notes

Sam Gupta has nearly two decades of experience in commercializing technology solutions, building multi-million dollar technology practices, and managing large enterprise software programs to drive digital transformation initiatives. He is the principal consultant at ElevatIQ, Inc., and in this episode, he talks about manufacturing enterprise resource planning (ERP) systems. 

Sam can be contacted at https://www.linkedin.com/in/samguptausa/ or the website https://www.elevatiq.com/

Key points include:

  • 07:20: The key processes of ERP
  • 16:16: Inflection points and the integration of ERP systems
  • 24:50: The range of activities of Elevate IQ
  • 27:29: Big name companies selling ERP software
  • 29:06: The rip and replace process

 

One weekly email with bonus materials and summaries of each new episode:

Will Bachman 00:01
Hello, and welcome to Unleashed the show that explores how to thrive as an independent professional. I’m your host Will Bachman. And if you go to umbrex.com and click on the Unleashed tab, you can sign up for the weekly Unleashed email where I’ll tell you about all of the episodes of this now, Daily Show, and case you don’t listen to every episode, you can find ones that you want to catch. I’m excited to be here today with Sam Gupta, who is the principal consultant at elevate IQ, a firm that focuses on manufacturing er p systems. Sam, welcome to the show.

Sam Gupta 00:38
Thank you so much for having me. Well, I’m super excited to talk to your fun listeners.

Will Bachman 00:42
All right, fantastic. So, Sam, let’s just start with what is the fine terms? What is an E RP system in a manufacturing context, but what does that cover?

Sam Gupta 00:54
So let’s first agree on what m e RP is. And there is a lot of confusion around what what an E RP is some people like to define it as the accounting system, some people like to define it as the order management system, the way I like to think and the way I like to break it down is there are three key words in case of MRP, it is going to be your E or NP. Okay, E stands for the enterprise, or for resource, and P for planning. So when we talk about the enterprise, that’s where the notion of integration comes in. So for example, let’s say if you have the siloed, or ad system, only serving a specific function in an organization, for example, it could be just the accounting, or it could be it could be just the sales or operations, right, those would not be qualified as an E RP system. Because it’s not just one system for the entire organization, it does not really have the cross functional functionality, right. So so the E RP has a keyword called enterprise. So it’s basically to maintain all the resources related to the enterprise. Now, the second part, as I mentioned, is really the resource. So in case of resource, it’s going to be anything related to your labor, it’s going to be it’s going to be your your materials that you’re using to be able to make the products and majority of the time he RP systems are typically used in the in the product centric industries, those are going to be your manufacturing organization, it’s going to be distribution, it’s going to be retail, it could be used in the service centric industries as well. But for the purpose of this conversation, we are going to be limiting ourselves to a product centric organization. So from the EOB perspective, the resources are going to be the materials that are used in producing the product, the second is very going to be the labor, number three are going to be any of the machines, then some more resources could be there such as tools, equipment, so anything and everything that actually goes in building that product in terms of determining the product cost is going to be a resource that is managed by an MRP system. And the third thing that we have is going to be really planning. So how do we plan for these resources, and the planning could be more in terms of the scheduling, because as you know, in case of the distribution of vibration, or the manufacturing organization, scheduling could be extremely, extremely tricky, because that actually tries a lot of different things. For example, it could be your energy costs, if you don’t schedule your machines, well, then that might have a lot of implications. So the from the planning perspective, it’s going to be your financial planning, it’s going to be your supply chain planning, it’s going to be your production plan planning, it’s going to be your operations planning, it’s going to be your sales planning. So anything in everything that is going to be slightly more cross functional combining all of the departments, that is what any RP is now coming back to your second question related to manufacturing GRP typically in the manufacturing organization, again, there are sub buckets of the manufacturing organizations as well. And each of those manufacturing organizations are going to have their own specific processes Okay, and when it comes to E RP, because e RP has the financial and accounting insight embedded as part of the transaction, that’s why the processes are going to be extremely critical for each of the sub industry. So for example, let’s say if we have a DRP system that may work for the district district manufacturing, but the same EAP system may not work for B, the process manufacturing the ER p system that may work for the automotive industry is may not work for let’s say the electronic manufacturing. So, in case of any LP there are a lot of different process level nuances. So now coming back to the manufacturing eirp. So in case of a manufacturing e RP, you are going to have certain features that are probably not going to be in some of the vanilla GRP that might not support the unique needs of manufacturing. Number one is going to be your bill of material. The bill of material that we have for your manufacturing is going to be fixed. Complex, depending upon how complex your manufacturing is, if it is going to be simply distribution, sort of MRP system, then you may have very light bill of material. And the best way to think about bill of material is going to be in the form of a recipe. So let’s say if you’re trying to cook something in the kitchen, let’s say if you’re simply doing the breakfast, right, the recipe for a breakfast is going to be very simple. So probably you can do things like you know, bed and breakfast, in case of in case of breakfast, you don’t necessarily have the sophisticated kitchen. But in case of manufacturing, when you are manufacturing sophisticated products, such as you know, if you are, let’s say producing cars, or let’s say if you are producing, I don’t know a rocket ship, right? All the aircrafts. And in those cases, the manufacturing could get extremely, extremely complex. And that’s why your bill of materials could be extremely complex as well. And depending upon the complexity of the product, the bill of materials may vary. And then you have certain other modules such as MRP, and APS, these are very manufacturing specific. So again, manufacturing up is very, very, very specific. And the way they work, it has very unique features in terms of the product costing in terms of the product scheduling, in terms of the way the the products are maintained, and built and move through the pipeline. The manufacturing here is extremely unique in terms of features.

Will Bachman 06:25
Okay, that’s very helpful. Solet’s walk through kind of the main processes that an ER P is going to touch, right, so starting at the very beginning of, you know, a salesperson gets an order, let’s so let’s kind of walk through the entire process, a salesperson gets an order I smashed, that gets put into the earpiece system, and then there’s probably some other module where someone in production is or someone in supply chain is looking at all the orders yet, at some point, you know, placing orders for raw materials, some person is planning, you know, scheduling, production, and then tracking inventory. So walk me through that walk me through that entire process of the different modules of a manufacturing MRP. So we understand all the different stakeholders, that it’s that it’s touching.

Sam Gupta 07:20
Yeah, so there’s a term for it. And there are key processes that are supported by the Alp system. And when you say, you know, it has to start with the let’s say, order, not in every industry, the process is actually going to start with an order, it might start with the estimation or quote, and that may have, let’s say, five different steps right there. Because you need to work with your customer, make sure that the estimation is going to be approved with your customer, because you might need to do multiple rounds there before it can be converted into the order. So the key term for that process, that one that you were referring to, is going to be called order to cash. So the way it works is, you know, it’s going to start from your order, then it’s gonna come to your, let’s say, the warehouse that if you are a distribution shop, if you are a manufacturing shop, and this is the make to order scenario, in which case, you are not really stocking these goods in your inventory. So you are literally producing based on the order. So as soon as I get the order for, you know, I don’t know, maybe I’m building the aircraft, right. And I’m not going to be storing these aircrafts in my inventory, because these products would be very expensive. So what I will be doing is, I’ll be waiting for an order to come in. And once the order comes in, then I will be kicking off my process. From the manufacturing perspective, the design needs to be approved, the budget needs to be approved. And the client needs to make sure clients need to understand the delivery date when we are going to deliver because you know, they might be talking to five different competitors. So your delivery date is going to be a key date as well. So in terms of the overall process from the order, you know, the second is going to be now you might just see production, you might not touch the production depending upon how your manufacturing is set up. If you are in let’s say the make to stock scenario, right. So in case of a make to stock scenario, what you are going to do is you are going to be building a lot of products that you are going to be storing in your inventory. So typically your order to cash scenario is going to be you get an order and you are fulfilling from your inventory. And it could be things like your laptops, it could be your keyboard, you know, in case of electronics manufacturing, it could be let’s say as a very small tool or a part that everybody needs. Those could be the make to stock scenarios, right. So here the demand is typically driven by the some sort of forecasts, okay, so the forecast is going to be okay, I’m typically selling let’s say 1000 parts and in a given month, then I should be building those 1000 points. So typically production is actually going to drive the demand demand or your contracts could be driving the demand. So let’s say if you have a lot of contracts signed up with your customers and they are dictating that, you know what, I definitely need this much so so based on let’s say if you have 100 customers based on your 100 customers, you may be forecasting your demand that Okay, my demand is, I don’t know, 100,000 parts, so I should have this much in inventory before, you know I can I can start selling. So depending upon how you plan your demand right, now, the next step in the process is going to be, let’s say if you’re simply fulfilling from the inventory, right, so, in case of the inventory, now there has to be a warehouse process, where you are going to create some sort of shipment, right, so in the warehouse terminology, there’s going to be a process called pick, pack and ship. So the B pick, pack and ship process works as as you know, typically, these warehouses are going to be very large in majority of the distribution and manufacturing shop. So somebody has to pick those items and place it somewhere before the packer can go and verify from the order and there are many different strategies to to optimize the warehousing processes, because it could get very expensive, let’s say, if you’re asking your worker to pick a one part each time, then that could be very efficient from the cost perspective, also from the labor perspective, right. So there is a very specific process in which you might be combining multiple orders, you might be designing your, your routes inside your warehouse, so that you are not really wasting your time, you are not wasting your labor, right. So that’s the big process, then you have the pack process. Now, let’s say you are packing, I don’t know maybe 25 different orders and they might have different configurations, you have your your order in front of you right and then based on that you are simply trying to pick now there is a sort of the the barcode reading process right, that is going to be implemented as part of udrp as well. So these big tickets that you are you are having, then there might be a bunch of skills that you need to read before you go to your your warehouse because you know if you are doing data entry, especially if your hands are going to be dirty, it’s not going to be a very fun process right for the workers. So, you have that process as well then you you pack and then finally you are going to ship the shipping process is really new or you’re simply shipping you may have a you know tracking number that you may put it back in your DLP but for the most part the EAP processes are designed more from the costing perspective right. So, so, anytime the the processes go in text e RP, there is going to be some sort of cost implication once that is done then there is going to be a financial process but which is going to be in case of your invoice. So you need to send the invoice to your customer and once the let’s say the customer decides to pay based on the depending upon what kind of invoice it is, it may if it is consolidated invoice then from their perspective also, you know, there might be some some processes because they need to settle that right and then finally, there’s going to be a payment, which is a completely different event right once it came in comes in obviously you need to match this. So, this is just one process of AARP which is called your order to cash. Now, the second process could be procure to pay, which is completely different. So, you mentioned one of the scenarios there that okay. So, if I have the order, then somebody is going to be purchasing typically procurement does not work that way, what procurement is going to do is if you have the large order, they might be involved in your order to cash process, but for the most part, they are going to drive the demand based on what their production is asking and what their sales is asking and based on that they are going to be ordering these goods and making sure they have the enough inventory levels levels to be able to meet the demand for the production as well as for sales. So, that is what is called procure to pay it has similar workflow as you would have in your order to cash process the reference really is number one, let’s say if you are doing a lot of internal purchasing right, because you have to have the cost control in case of procure to pay as well. So, what you are going to do is your process may start from the purchase request and this purchase request could come from many different employees inside your organization, then the next step is going to be your purchase order which is going to be an actual other order that actually goes to your your vendor who was actually fulfilling your supply right and then the vendor is actually going to send the goods in your warehouse. So there is going to be some sort of receiving and inspection process. And then once you have that then obviously you need to pay to the vendor as well. So, vendor is actually going to send the invoice you need to make sure that you are actually doing the 3d match of the you know, whatever you are receiving the whatever invoice the vendor is going to send sometimes there might be errors. So, you know, there may be a financial loss there, when you are doing DPO you have the peel you have the vendor invoice and then you have the actual payment. So, you have to you have to do the three will match. So, this is another process. Now in the manufacturing scenarios. You know, there might be some other process for example, one of them could be designed to produce now when you talk about designed to produce that could be a very robust process especially when you talk about very heavy engineering shops, but the whole idea of designed to produce is going to be you are going through the The whole design process. And then finally you are you are sort of, you know, the producing it, it’s setting the production. But for the most part, this is done either by the engineering, sometimes your, you know, departments like beckoning may be involved in that as well, depending upon, you know, whoever is involved, let’s say in the r&d or build phase, then we talk about the finance side. And in case of finance, it’s going to be record to report is the name of the process. So recording of the transaction is going to be really your, your financial process. And then finally, you have to report as well as part of your financial statements. So before the long winded answer, I don’t know if that answers your question.

Will Bachman 15:37
No, that’s fantastic. So talk to me, just briefly, I want to focus mostly on er p in this discussion. But let’s talk just a little bit about some things that are not included in the earpiece system, I know that your firm also works on HCM, and CRM systems. So I think that stands for human capital management and customer relationship management. So talk to me, because it the way you’re describing to European almost sounds like that’s everything in your business. But what are some things that MRP systems say for manufacturing would not include and would typically be in some other system that integrates with it.

Sam Gupta 16:16
So let’s talk about the status of the company first, you know, how their e RP journey is going to be. And typically, these are called the inflection points. And there are two stages when you are going to require a lot of different siloed system just because of the limitation or of the organization, or they might be too sophisticated. Okay? So when you start in the AARP journey, that is going to be let’s say, you have $0 revenue in your company, and you’re simply starting from scratch, okay, and then you reach until the $10 million, right. So your manpower capacity is going to be roughly, you know, six people, 10 people, something like that, I mean, that’s what we see, for the most part in most industries, until you reach that $10 million point, right. So majority of your functions are going to be siloed majority of the people that you are going to have in your organization, they are going to have the independent responsibility, they are not going to have as much cross functional interaction between the organization. So in this case, typically, your siloed systems are going to be okay. And that’s why you will see a massive influx of the SAS application in this particular space, okay, where the SAS companies are really targeting the super small business. And that’s the majority of the market. As you know, that’s probably the 85% of the market. That’s super, super, super small. Right. So in this particular case, the the, the company is not going to have the internal capabilities to be able to integrate these systems, the majority of the systems are going to be isolated. So the best example of the architecture in this particular space is going to be they are going to have accounting systems such as QuickBooks, they might have an e commerce system such as Shopify, or WooCommerce, or big commerce, one of those, right, and then let’s say if it is a manufacturing shop, they might have a PLM tool or a CAD tool that they might be utilizing to maintain their version. And then they might be utilizing for their engineering as well. They may not necessarily have any RP, again, if it is a sophisticated manufacturing shop, then they will definitely get the E RP because they have to do the product costing and the scheduling is well, that is typically you’ll not be able to do it unless you have some sort of either MRP system or the MRP system. So in this particular case, and what’s MRP stands for, it’s the manufacturing resource planning. So typically the demarcation between MRP and E RP is going to be in case of MRP that does not have the inbuilt accounting, for the most part. That’s how MRP MRP systems are defined. Traditionally, we didn’t have the technology to be able to build the overarching e RP system. That’s why we had one company doing the accounting system, one company doing the the MRP system, but then we started having the this big bloated system that could do pretty much everything as you as you have defined, right. So that’s what is E RP system. That’s the next stage of the MRP system. Now, let’s move to our inflection points, we are talking about the inflection points, right. So once you reach that million dollar point, that’s when your problems are going to be bigger in terms of your planning in terms of your control, because you are going to have a lot more people in your company. And what we are going to do is, let’s say if you have multiple people working in the same department, when you have just one person, obviously, he or she is going to be dreading the process. But once you have two people, there is going to be a lot of conflict, you know, they each are going to be designing their own processes. They might be maintaining their own spreadsheets, and then you know, it’s going to be a nightmare to to sort of have the consistency to be able to bribe the department. So typically, at that point, you will require some sort of earpiece system and that’s where companies like to call themselves as Hey, I’m outgrowing my systems, I’m outgrowing my accounting system, and I need something integrated, or I will have sleepless nights. Okay. So so that’s the sort of stage when when they start realizing that, but again, let’s say if you talk about companies that are in the b2c market, right, and b2c is going to be where they are targeting consumers. Now, e RP systems are not designed to do the e commerce functionality. So these companies will still require some sort of Shopify or you know, bigcommerce, or Magento, or WooCommerce, or some sort of e commerce front. Now, if this company is very sophisticated in the CRM functionality, for example, let’s say if they do marketing automation, okay, they do a lot more sophisticated processes before sales, right, then they would acquire a system similar to HubSpot or par dot, depending upon which system they want to utilize for their marketing automation needs. For the most part, the way the ELD systems are designed, they are slightly traditional in their design. So from the LP perspective, everything starts, let’s say, either from code or some sort of, you know, financial order, because end of the day, your earpiece system is supposed to be your financial system, right, even though it is the integrated system, and it can do a lot of things. But still it is a financial system. So anything that does not touch the dollars or finance probably does not your, your your earpiece system, for example, let’s say marketing automation, whatever marketing does, you know, until they they received some sort of dollar, right, that earpiece system does not care for those processes. So that’s why they don’t necessarily belong to an earpiece system. So again, in the mid market, let’s say if you’re talking about 20 $30 million companies, most of the time, they might be able to live only the DRP system, probably they don’t necessarily need the second or third system, right. But sometimes they might need if they have a sophisticated need. But when you let’s say outgrow all of this many outgrow your, your core EAP system, that’s when your enterprise need is going to be there, which is going to be your sophisticated, large, you know, companies that cannot survive based on the processes that are standard earpiece system is providing. So what they would do is they will have the specialized CRM, because the default CRM provided by your earpiece system is not sufficient for their needs. So what they have to have is a CRM that is slightly more customizable, slightly more aligned with their pulses as MD advantage these companies have, they have their internal IT department, so we can integrate these things internally. That’s the assumption here, in case of your mid market, you are not necessarily going to have an IT department because as you know, it is very expensive in these small companies, obviously, we’re not going to have it, but then you don’t have integration either. So yeah, so all of these So, as you mentioned HCM right HCM is going to be a very specific HR function need, right. So, earpiece system does the HR only from the finance perspective, it does not handle the core processes that your HR people are going to need. So, some companies and most companies use some sort of HR system, because HR still needs some sort of system right. So, it could be a very small system that they might be using, that may not be integrated with your EA RP, but he RP is going to be in the picture when you have some sort of dollar conversation some sort of financial direction.

Will Bachman 23:24
So, HCM would be like tracking benefits for your employees and tracking their an offer letters and their salary and their vacation days and their promotion and sort of all those kind of factors.

Sam Gupta 23:45
Exactly. So, when you look at the HR, whatever they are doing on a daily basis, so the hrs role is going to be number one obviously, they are going to be involved in recruiting. Now ELD system is not designed to recruit anybody. So obviously they have to publish the resume, they have to screen people, you know, once they hire than they have to have some sort of training, some sort of own onboarding, then once that is done, then they have to work on the performance, then goals then benefits then salary. So from the LP perspective, the only thing he RP system cares for is the financial interaction. So when you talk about benefits, right, so EAP system means just the your GL entry. Okay? Tell me your journal entry whatever you paid for the employee, I don’t even need to know who I you know, paid for him sometimes. I just need to know the cost.

Will Bachman 24:35
Awesome. So talk to me a little bit about the range of activities of elevate IQ and you don’t need to discuss limited to manufacturing MRP systems just give us a little bit of an overview of your firm’s services and then we can dive in a few areas.

Sam Gupta 24:50
Yeah, sure. So we get involved in a lot of different areas is because we are slightly bigger than E Rp. So we like to divide ourselves and three different engagements because they are slightly different, right? So number one is really going to be sort of the selection engagement. And if the company require or how in identifying the right system and the right solution architecture for the company, and our role is going to be to go there and figure out what their processes are. And if they are going to require any help in optimizing those process, because in our, you know, view, and in our experience, typically, system is going to be just 20% of the problem. 80% is typically the processes and your people side of issues, right, so they need to be streamlined before a solution, or a tool could be introduced in the next, the next kind of engagement that we have is going to be really the upgrade or optimization or integration. If somebody needs again, this is slightly similar to what we have in the first one. But in the first one, the references, this is probably going to be slight in net new engagement, right? In the second case, it’s going to be existing, the company has the IP system, they just don’t know how to use it effectively, they they have very poor adoption inside the company. That could be another reason why we would be called and we would be analyzing their processes, we would be analyzing, okay, why people are not able to use this is it just because of the training, or you know, the processes are just too over engineered. And because of that just people don’t enjoy using the system, or maybe maybe they are too blocking for them. Right. So those are some of the issues that we typically face. So that is the second kind of engagement. The third kind of engagement is rip and replace. And in the third engagement, what we do is we install the new e Rp. So in this particular case, our rule is going to be the let’s say the customer or the prospect is coming to us and they are asking us, okay, so you are going to be working on a specifically or this system, we are going to run the entire sales process for them, we are going to be helping with the implementation, we are also going to be helping them with the training, okay. But in the other case, we are not really replacing the key RP system. So these are three different areas that we typically operate in. Right?

Will Bachman 27:13
When we talk about era, RP systems, what are some of the most common big names of companies selling this kind of software, just to familiarize those of us who you know, aren’t super familiar with the space?

Sam Gupta 27:29
Absolutely. So let’s talk about the the enterprise market, right, that is the top and that probably everybody correlates them with any Rp. So your SAP is of the world oracles of the world, Microsoft of the world, right? These are sort of three enterprise players that are really big giant companies that target bigger companies, right, then you have the mid market players. And that is going to be You’re in for epic wars of the word. And then you have slightly you know, smaller companies that not from the size perspective, but they are attacking more of the the small business market, right? So that is going to be your, for example, the sage intact of the world, it is going to be your animatic of the world, it is going to be NetSuite of the world. So from the company perspective, the companies that are really super popular in the these days are going to be SAP Oracle, Microsoft, those three, infor epicor acumatica is big now and sage, I would I would think those many obviously, we have a lot of niche players as well in the RP space, we can talk about those as well if you if you need to know them. Okay.

Will Bachman 28:39
Talk to me a little bit about the process of doing a kind of rip and replace. So if someone is at one of those inflection points, and they’re now ready to, you know, they’re grown, so they realize that they need a more integrated enterprise level system. What does that project look like? What are the different phases, you know, what should a company expect if they’re going to go through that?

Sam Gupta 29:06
So typically, let’s say an undertaking this scenario, but we rip and replace could be applicable in a lot of different scenarios. And one of that scenario could be, let’s say, if you acquired a company, and they don’t necessarily have any IP system, that would also be a scenario of rip and replace. But here, my assumption is that we are taking a scenario in which let’s say the company was either on some sort of, you know, safety system or maybe QuickBooks financial system and they are thinking that they are outgrowing and they need slightly more cross functionally integrated system and in our definition, there is any RP system. So the process number one is going to be obviously they need to go through the Select selection process, right. So first, they need to start understanding, okay, which industry do they belong to? What kind of processes do they need, what kind of feature set do they need? Because in case of an earpiece system, you can’t simply have a checklist because each Have the feature set or the requirement, let’s say if you actually install an incorrect PRP, the reason why you are installing any IP it’s almost like buy versus build mindset in the management philosophy. So you are buying a product as opposed to building it yourself and you are buying a product because you are financially constrained, right, you don’t want to invest that say $2 million or or $5 million, you want to spend that 100,000 $200,000 and you want to operate your business right you don’t you may not necessarily have the it capabilities to be able to develop and build the product. So, in the year people when you hear that you know the MRP implementation failed the reason why they typically fail is they are not able to meet the business objective or be installed an incorrect a RP system now the reason why it is incorrect is because you know, let’s say if a system is going to be designed for the manufacturing business now if you are going to use in the distribution business, your supply chain planning is going to be very different, the way you plan for your resources is going to be very different. So it’s going to be a very misread you will feel as if you are stretching yourself when you are going to use that some people will not be enjoying the process when they are with us because it will not feel natural. Okay. So that’s why understanding who you really are and sometimes for businesses especially when you’re talking about the the smaller businesses it could be very hard for them to be able to understand Okay, who am I am I the distribution company and manufacturing company, sometimes companies just don’t know that because they are doing a lot of different things right sometimes their business model maybe 80% retail 20% distribution, but they might not be aware of that and they might install let’s say the the manufacturing system and they might burn themselves. So, the first phase is really going to be understand your requirements understand your needs, document them create a checklist then understand how you are going to be mapping that with any RP system then you are going to figure out okay, if you have any RP system, if there is a deviation in the process, for example, you might have a certain way of doing your business now, when you look at the E RP system e RP system might might have a completely different process for that now, you need to figure out okay, is it because you are you have over engineered your process? Or is it really because is it really because the IP system is completely off, right those could be two scenarios. Now, in this particular case, so, your goal is going to be to somehow simplify the process, the more you simplify, the less money you are going to be spending in your year of implementation, if you are going to be slightly more adamant in your in changing your processes, what is going to happen is once you will start utilizing that GRP then you are going to feel that, okay, this is not designed as per my process. So what you hear the guy, why don’t you change this, and if a person starts changing this, that’s when your development dollars are going to start burning, right? So So what is going to happen as they might develop a lot of bloated code that is going to create, let’s say the maintenance nightmare. Now going back to your question about you know, what is required in understanding this. So create a really good checklist of the requirement that you need in any RP system then you need what do you need to do is you need to talk to either a consultant who understand the business as well as the the systems I mean, that is the ideal case right now, but let’s say if you don’t have budget to hire a consultant, then you are going to be working directly with ddrb implementation partners and these eirp implementation partners typically don’t have the the cross functional expertise they might be expert only in one product. So they might be able to speak only one product they will not be able to speak from the business perspective from the from the agnostic perspective, many look at you know the cross industry functionality or when you look at the cross product functionality. So now when you are talking to these product people you still need to be aware that that business head and figure out okay, this is this is what I’m looking for this product is able to do requirement one requirement to requirement three, but it’s short on a specific requirement right. So now you might have bunch of add ons that might be available in case of any IP system or you may need to develop that you will solve that could be another possibility. So the whole process is going to be really designed the solution around the the earpiece system and then figure out okay, which solution is going to be ideal for you. Once you are satisfied, then you know, obviously, there is going to be a demo with your your EAP vendor. Once you are satisfied with a solution, then the next phase is going to be really the Esso W and the negotiation phase. There are going to be two variables in there. Number one is going to be your software contract number two is going to be your service contract or the implementation. implementation and training is going to be your one time expense. Okay, the software contract is going to be if you are let’s say the SAS or cloud, that’s going to be your record revenue that you are looking at that you are most likely going to pay per year. But let’s say if you are going for on prem, you are you are looking at the one time expense for that as well. Once you sign, then your implementation project is going to start. So as part of your implementation project, the processes are going to be number one, you have to do the basic configuration for your for your company. And again, to decide the basic configuration, you need to go through very deep discovery calls, you need to understand each of these configurations at a very deep level. So some of the things that you will be discussing, as part of those discovery calls are going to be how many bank accounts you need to be configured? What kind of payment terms do you use, from the customer perspective? from the from the from the vendor perspective? What kind of what kind of, you know, credit cards do you need to use that you need to set up? What kind of cash account do you need? What kind of Chart of Accounts do you need? What kind of currency do you need? What kind of vendors do you need? And what are the dependencies of these vendors and customers. So in case of any RP, each of the the master element that you are going to have, and the master data element is going to be your vendors, it’s going to be your customers, it’s also going to be your item. Now, each of these are going to have some dependency. Okay, so in case of an item item is going to be dependent upon, let’s say millions of settings, because what earpiece system is trying to do is rather than specifying those words, how many other settings Do you need for a product that you need to manufacture in case of NLP, they are trying to make the user experience easier. So the only thing you really, as a user, the only thing you really need to worry about is, Hey, this is my product, and this is my quantity, that’s it, I’m only worried about this. But in the backend, you know, my accounting needs to be automated, my costing needs to be automated. So all of that needs to needs to be done in the background, there is a you know, hierarchy of these business rules, that is going to be in the background. So to be able to configure this, you need to go through the discovery calls, you need to identify each of those, the foundational elements, and then you need to keep building the hierarchy until you get to your your vendors and customers and masters and that is going to be your master data. Once you do that, then there is going to be a testing phase. And then you are going to be testing your system against your processes, whether it is working or not, there might be a little bit of development in work, for example, the invoices, invoices that you are sending to your customers, you might need to look make them look pretty and align them with your your structure, the way you like to actually communicate with your your customer, there might be some other development activities, for example, the reports and compliance are very unique needs for majority of the businesses, it could be either distribution, or it could be manufacturing. So you need to figure out, Okay, what kind of reporting Do I need, and what kind of supports each of my functions each of my department each of the executives are going to need. So you need to go through your development phase, and that is going to be your pure software development, right. And you know, you need to go through the rounds of testing, you need to go through the deployment. And once that is done, then obviously, you need to put it in the wherever your earpiece system is deployed. So this all is going to come together, the final phase is going to be really the data upload, in which case you are really uploading the the production ready system, right. So you are going to have your actual vendor actual customer, and then you are going to be actually testing against them before you can go live. So the last phase is going to be some sort of cutover. And in case of E RP, the cut over is also going to be important because you need to, you know, sort of create the snapshot, wherever you close your last year p system. Now you need to get all of your account balances, you need to get the statement so that it can work in the newer system. And I assume that you are probably not doing the transactional data migration, if you do that, but process is going to be even more complex. And that is going to be slightly more involved development project. If everything goes well, you are going to have a well functioning e RP system, which is kind of a I mean, we always have fun with the projects.

Will Bachman 39:05
You mentioned earlier you alluded to, you know if your VRP implementation fails, what are some of the things that you’ve seen of the problems that people have after an ER implementation? What are some of the some of the problems that can come up?

Sam Gupta 39:26
Oh, millions of them. I mean, you know, and if somebody says that the E RP implementation went really smoothly, they must have done a lot of work. They must have done a lot of hard work and they must be super skilled. Okay, typically, it’s very hard to control and the reason why they typically fail is number one, the skill set of the team. So sometimes even if the consultant is involved, and let’s say if you have the steering committee, and the steering committee is not really receptive to listening or business Don’t get it, right, sometimes it might be difficult for even the consultants to even communicate or coach in case of any Rp. So, my change consultants like to define it as compliance culture that they are going to be compliant with how the flow is going. And after that, when the issues come, then we will figure it out. I mean, that’s how most people operate, right. So, the majority of the issues that we have seen, okay, it could be as bad as you are not able to process your sales orders, okay, it could be it could be as bad as you are not able to process your your invoices, you are not able to create a vendor, you are not able to create, you are not able to scan, it could be as small as that or you are not able to do the inventory. Sometimes the issues could be related cleaning, you know, some people are trained, the other people are not trained, so they might be entering really bad data. And that could be another problem that you might have in the system. So it could be related to training, it could be related to configuration, it can also be just investment from from the get go. So those are some of the issues. Again, there is going to be like millions of issues that you can probably face just because the RP system is fairly complex.

Will Bachman 41:10
Now, you hear the term change management, related to a system change like this. What does the change management professional do? In this scenario? What? How is that person involved? And what specific tasks are they doing? What Why is that important? But even what is what what do we mean when we say change management.

Sam Gupta 41:38
So typically, let’s take an example of a very, very small change that we can all face in our lives. So let’s say bill, I will give you an example, let’s see, if you’re wearing these transparent glasses at this point of time. And all of a sudden, you know, I give you a new set of glass, right? And I am going to promise you I’m a, I’m really a good sales guy. And I’m going to tell you that you know, well, I have done all the testing, you know, this class is going to be amazing. As soon as you wear them, you know, you will see, you know, clearly you are not going to face any issues. And as soon as you start wearing them, okay? You You bought it because you trusted me that I’m a trusted guy I sold to you. And you know, I close the deal. Now, once you start wearing them, there is going to be a face the transition phase of adoption, okay, in which you are going to feel some change. Because this glass is just new, there might not be any shoe as such, it could be very psychological, maybe you are not seeing it clearly. Because it’s in your hand, I don’t know, man, maybe it’s the color of the glasses or something else, it could be so many different things. So you have a face in bridge, you need to understand appreciate, embrace the change, okay. And if you don’t do that, then obviously, there are going to be a lot of problems. Now in case of any RP, there’s a very small example, typically, an E RP, is very cross functional, as we have been discussing so far, right? A lot of different departments are involved, a lot of handshake is there in the department. So when you change, and by the way, you see we were talking about your order to cash to procure to pay to, let’s say, designed to produce, right all these processes. These all processes are very complex, now very moved from one earpiece system to the next, even if they are from the same vendor, even if you’re moving just from one version to the next. Even if you make a tiny minut change in a field on your screen, that experience is going to be alarming for the users. Because once you get used to the process, for example, let’s say if I’m the warehouse worker, and I am used to coming to my shop floor, and I’m used to scanning you know, bunch of skews, and I move fast because my boss is asking, okay, by the evening, I should be scanning, let’s see if I any boxes. And if I don’t do that, then you know somebody is going to yell at me. Right? So they are used to that. And all of them, now you’re bringing their change, they Hey, you were, let’s say standing at 45 degree or whatever. Now you’re supposed to be staring at at 50 degree because I have seen very tiny weeny fees on my screen. So you need to change your process. So typically, the role of the change management consultant is to communicate the change, why that change is important, why that is important for an organization, why change in the first place. And typically organizations Miss to communicate that because, you know, it’s just harder to communicate when you have been working together for so long. And you don’t really have the external entity who’s really good at let’s say the marketing or communication right. So that is the number one number one thing that they communicate, and then they also communicate the each step of the change how the change is going to impact their own personal life. And finally, what they do is We are going to be Preen in both of these processes. So you have the you have been doing the process this way, my warehouse worker, now your processes going to be in this way. Now each of the processes that they might be touching on a daily basis, they might be performing, let’s say 10 different transactions, right, each of those might be impacted. So So these guys are going to be present on on those posters. Now. So far, we were talking only about the warehouse workers. Now, in a company, you have 50 different roles. And if those two different roles are doing 50 processes each, and those would be processes each have, let’s say, 20 different steps. Now you can talk about the complexity that the change management goes through and anytime even if you’re making a simple change, that impacts somebody and that typically has a very strong emotional response. Okay, so that’s why the change management is super important. And that’s why you sort of hear that DLP implementations will the reason why they feel is because anytime they are going to feel the change they are going to say you know what the EAP does don’t work and then everybody’s gonna say you know what, EMP failed and that’s going to be news everywhere. But it’s really the change I mean the BB be appreciate change the BB embrace change the way we feel change as human beings.

Will Bachman 46:19
Sam, this has been a fantastic overview of Emerald implementing and understanding what is an AARP we talked about HCM and we talked about your change management. Thanks so much for joining for folks that want to learn more about your firm or follow up with you. Give us some websites or some links and we can include these in the show notes.

Sam Gupta 46:43
Okay, amazing. So the best way to connect with me is going to be on social media. I’m very active on LinkedIn and Twitter. So you can find me as Sam s am the last name is Gupta, GPU PTA, the company name is elevate IQ. It’s elevate e l e v 80. There is no e at the end in the elevate word, and then IQ so it’s elevate IQ without an E and n. Or they can they can look me up on my podcast, which is going to be wb s dot rocks. It’s called wb s rocks, podcasts, wb s which is work breakdown structure, majority of the operations and finance people know about it, and auto CTS rocks.

Will Bachman 47:27
Fantastic. Well, we will include those links in the show notes. Sam, thank you so much for joining today. Really appreciate having you on the show. Thank you so much for having me. Really enjoyed talking to you.

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