Hello and welcome to Omnitas webinar on ERP systems. Do you really need one or just think you do? I'm Thomas Karlsson, I'm the CEO of founder of Omnitas Consulting, and I'll be guiding you through this. So I will be talking about what is in your system. We'll be talking about the core strengths of an ERP system, like the Sweet Spot, where it makes a lot of sense. I will also talk about all the problems and challenges that are related to your system, because that list is quite extensive as well, if I'm being honest. And then I'll share my experience being a super user and local implementation person of an ERP system in a really big organization. Okay, so super exciting. Let's go ask question in the chat for you guys in the chat, who's not present in a room or have someone that's going to help me read out the questions for you. So please ask them as we go and I will be interrupted at logical intervals. ERP. It stands for Enterprise Resource Planning. In Swedish just as a reference. It's called a file system business system, so it has nothing to do with resources or anything when you translate it over to Swedish, which is really interesting because we can actually see a morphing in the Nordic countries of what an ERP system is used for as well. Very interesting. But enterprise resource planning, what resources? Well, that's that's the key issue, right. Which resources do you actually put in an ERP system? If we fall back to the core of what of what we're trying to achieve, the key aspects of an ERP, we want to be able to plan, budget, predict and report. It's about reliability. Having the toll gates, having the checkpoints, getting flags with inventory stocks is running. You know, maybe we have automatic rules. So when component X is less than ten left in inventory, we can already place an order for new ones. And the system takes care of it. Those are like that's when we're talking about ERP as a core offering, a core strong point. And I really want to start by as materials and inventory management. Imagine the fictive company of I don't know, we call this the fictive company. We don't even need to give it the name. They do production, they produce this little product. It looks like a house with a chimney and a or whatever. This is the product, right? This product is made up of four modules. Those four modules together make the product. The modules, on the other hand, are made up by components. And this is again, now we're talking about where the core sweet spot for an ERP is, according to me, lots of inventory, logistics, heavy stuff, components, modules, products, inventory, lead time and such makes a huge difference because a lot of other software, there's no there's no hitting. The fact that we represent Monday.com, for example, doing inventory management in Monday, I wouldn't recommend it. So there are definitely a lot of advantages. So in this case we work with product models and components. So what can the ERP help us with. Well the ERP knows that we need three of the lines. We need two liters of the color. To create a triangle module. We need these components to produce the quadrant module. This is what we need to produce the circle module. And this is what we need to create the rectangle module. They together are put together in a product right. So each product then needs the following components. Meaning that once a product order is placed, we can already start deducting our inventory based on what we actually know we need. And if we have, let's say we're a company like turning sig who has 9 to 3 years queue to get your car. Then you also know in the coming nine months exactly what material you need when in order to finish the car. Right? And that's to me again, I want to say this is the sweet spot of an ERP system. When an ERP system helps us keep track of something that's too complex for the brain to even fathom this, right? So it gives us inventory stock management. We keep track. We know all the time exactly every component, how much we have. We don't need to scan every module or every component because just by placing the order of the product, we know what material is needed. We can do automatic flagging of this stock is getting low. Either we flag and you order or we can actually most of the time in most system you can integrate your suppliers to place orders automatically. But we can take that first step further as well. We know what the production time is, right? So we can then plan that so we know how long are we going to be busy with this product. It takes X amount of time to do to do each module. And then once each module has been produced we have assembly time. We can also become so complex in this and say, you know, the the square, it uses more resources, takes double the amount of time to do. And we know that it's a critical component in so many cases. So we can also allow ourselves to do over production of that module. So we always have it on the stock because then we can shorten the their complete assembly and production time with maybe half the time or something like that. And again, you're not going to hear me say this a lot, but I want to stress this again. This is where an ERP makes sense. It makes total sense in this situation, right? Tell me another category of software that will be able to solve this for you. I know people will claim to be able to do it in smart sheets. I know there's project management tools that also claim to be able to do it, but they don't really do it. It's dirty, hacked workarounds. This is what ERPs are built for. This is what we come from. It's a reason why ERP systems are considered something for legacy master companies, because those are usually the one with a lot of components, logistics and material. Okay, I want to take a pause and check in. Any questions from the chat so far? My questions. Thank you very much. Right falling into what I think is the problem with an ERP. The problem with any is there are resources, right? Let me explain what I mean. So again, you remember the use case. We talked about materials in an inventory management. So that's a nice little resource, right? Well. What about sales orders? Because we already have the production order. So why not just take the sales order and put that into the system? So we have all of those in the same system, right? Well, then the question becomes should we integrate or should we try and put CRM functionality in the system? Right. And then because we have the sales orders, we now want to track what goes in and out. Then we need to put all internal purchase orders in the system as well. Right? Creating them, approving them, tracking them. So all of a sudden we have a approval workflow in our CRM. And keep in mind that all CRMs are built for material, inventory logistics to begin with, but then they've been adding these on. So approval workflows is something that is very UX intensive, right? The user experience is very intense. You don't need to be a good person to do inventory management. So that's also one of the challenges of the ERP systems that you add capabilities that these kind of developers normally don't work with. So it's probably one of the clunkier approval processes out there because they don't work with approval processes, they don't work with those kind of things. Okay. We talked about material. Now money is a resource, right? Well, what what other resources do we have? We have time. Time is also resource. So now we put that in the ERP system as well. Production time. Assembly time. Right. Okay. Is that -a question? -Yeah we've had a question. Come in. Um, should ERP also manage the actual production process or is that kept independent? The actual production process, -or if that kept independent. -Wow. Good question. I would say it's very much depends on the production process. If it's business as usual, more line work, like let's say, a car, it could definitely monitor and make keep track of it. If it's knowledge based work. Ergo creative, legal or something like that. There are plenty of ERPs that are going to put pseudo functions in there, like project management. I would avoid staying away from that because as well, again, the UX of a project management solution is very different than managing resources and actually come to that later in this slide as well. But good question. All right. So we talked about production and assembly time. That means that now we have a full idea of what the product actually cost is nice. What else that means that we can start invoicing from the ERP system as well. Why? Why not? We automate. We build an invoicing module. We now have the sales order, the Po, the time, the invoice, and we can merge all together. And we can keep track of the total cost of a product and all the all the Tebas and all the things. Right. What's next? Because there's always a next because then the system is never fed. Well, now we already have all my production time. Why not put all my time, absence, vacation, flex, budget and so on in the system? So now it becomes a time reporting system for all time. And not only my production time, right? What does that mean? Well, now my ERP system also needs to take care of salary because that's where the data sets. So now it's become an HR suit sort of with salary, payroll, production. And since we do have payroll, why not just have all HR processes in here like the yearly salary review, peer reviews, performance reviews and just put all the data in here, right? Why not? We already have the rest. Let's see. I hope you see where I'm going with this. And it doesn't. It's never stops, really. It goes. And then after that we have the various pseudo functions and a pseudo function we all know. Right. It's a function that actually has no function. It mimics itself as a function, but it's actually just an argument that returns another function. Anyways, my point is that. When you start seeing project case management, ticketing and workflow elements in an ERP system, that sort of becomes the epiphany of bloatware. It's transformed into something else. It's no longer the core foundational idea of the system anymore. Now it's starting to become a one ring system to rule them. All right. And. These processes don't have much to do with each other other than they go in the umbrella resources. But I mean, what does sales sort of has to do with salaries? Nothing. So we end up having a bunch of disjointed business processes in a system built by people who are really good at doing inventory and logistics. And I don't want those people to be the people that. Develops my time reporting application, right. Because that is a big human interface. So that's what what I come down to. Right. This is an example. I'm using them because they had very good material out here. This is not only Oracle NetSuite, I just like their material. So you see this is how they describe themselves, right. An ERP is and they're dictating. They're defining the word ERP on their own page with ERP is a category of business software a category of business software. So they're recognizing that everything is disjointed, that automate business processes and provides insight and internal control. Drawing on a central database that collects input from departments including accounting, manufacturing, supply chain management, sales, marketing and human resources. And you see a nice little circle. This looks awesome on a surface. Why wouldn't I want this software? If it does all of this, why don't I want it? But the problem is in the implementation, in the execution, not the idea of an ERP. So without lingering too much on this slide. Like when you buy an ERP system, you expect one source of truth in one view. Always up to date. Pergola this Monday. Report this Monday. Dashboard for example. What you get is 200 plus different reports that don't speak to each other and in best case updates once a day. And we're expected to be agile leaders on that kind of data. And just as a added you, you'd you expect drill down functionality. Well you can pay 100 to 500 K more. And maybe it's possible. Maybe it's not even possible because of the how the data is structured. It's not even the drill down friendly. Making a pause there for questions. From the audience. So good. So now we went through. The core idea, what it fits well and what some of the challenges. Let me give you my own experience. So I've been working with an ERP system between 2008 and 2017. It was in the Swedish Armed Forces and the software as SAP. We were doing it for inventory management, logistics, HR and sell. Those were the three major brackets. I was a super user and part of the local implementation group, working very closely with the central implementation project as well. So very good insight, understanding stuff like master data and and all that fun stuff that you will learn. There's a lot of ERP exclusive taxonomy. So why did the Swedish Armed Forces buy SAP? And I wanted to purchase it. They bought SAP. It could have been any year system, right? They bought SAP. So what was the pitch? Why did they buy it? If the government would ask you to set up another mechanized battalion, would you know what it would cost, how long it would take, and what material would be needed? So they had zeroed in on the biggest pain point of the armed forces leadership. This was in a period where the armed forces were constantly over budget. They couldn't keep to budgets. Everything got bloated. So it felt like the armed forces didn't know what the hell they were doing. And then they came in with this pitch in the perfect storm of the perfect time. They'd probably prepped this for several years, just waiting for the right moment. This was the pitch. And the Swedish Air Force has bought in. So everything is not good and bad, right? There's a good mix. So inventory and logistics I would say it went rather smooth. But the main reason why it went smooth was that the Swedish Armed Forces was replacing a very old DOS based logistic and inventory management system. It was literally the function keys that they had to use to like log stuff in and out of the system. So this modernization was needed. It was a lot of hurdles. It was a lot of pain points. But it's still it was a well, welcome change. And it actually has benefits like the system has all the measurements. It knows if you're transporting carabiners, you know how many you can put in a box. It knows how big the box is, meaning you can easily understand how many liters of container you would need to ship 50 guns to Africa, for example. So again, falling back to where I said, where is the sweet spot? The sweet spot is with material, logistics and inventory. That's what ERP systems are golden. When? -Yes. Yeah. -We have another question there. Pop up in the chat for Aaron. In your opinion, is an ERP the best solution for a set of integrated best of breed programs? Wow. Good question. Obviously, there's a lot of software on the market that calls themselves ERPs, and they're trying to be encompass all, all encompassing. You could build on ERP by just attaching detached systems to, let's say, a data lake or something like that. That would be the same thing. That project will probably be a lot more costly, though, than buying a dedicated ERP, and it very much depends on what you want to do. We had one project where we used an expense software, we use Microsoft Dynamics, and we use Monday together with a data lake. We built what I would call an ERP light and it was consisted of five different softwares. Obviously most ERP systems like I showed on the slide, they integrate to something minimum your CRM, most likely your your accounting software or it becomes your accounting software, but it can integrate quite -well as well. -So would you say that ERP systems generally evolve in businesses to become an ERP, rather than businesses setting out to get any help initially? The it's the it's the latter, right? You don't accidentally wake up one day and realize that your IT stack has turned into an ERP system. Um, it's a very targeted, specific approach of implementing software and thinking about data. So it's a targeted, intentional journey that you go on. All right. So inventory logistics wise it was quite nice in the armed forces. Of course everybody hates change. But it was managed and the solution was pretty okay. Um, it helped that the software also looked like it was from windows 95, so at least it was an upgrade from DOS. One big thing I have to add here, and this is a funny one. I can't even believe that this is actually true. Regiment. So a regiment is a permanent unit of an army, typical, commanded by a lieutenant colonel and divided into several companies, squadrons, batteries and are often into two battalions. Right? This is what a Swedish armed force base was called. So we had a bunch of regiments scattered around Sweden. These are the bases, right? I was, for example, at P7 Regiment P7. Pat Panzer seven. In SAP, there's something called a unit. An organizational unit. Are functional units in an enterprise according to a task or divided up with an enterprise. These can be departments, group and project teams. For example, organizational units differ from other units in an enterprise, such as personnel areas. Company codes. -Business areas. -Since we. Got SAP. This is now what a base is called post SAP because it was too expensive and too difficult to change the object category name in SAP. So the armed forces changed their doctrines to reflect a unit name in SAP because it was too hard to change it and it would have cost too much. I mean, in most organizations it's fine. But keep in mind that the armed forces, the traditional it's a very traditional, heavy organization. The fact that our basis on the local regiment. But or units, it's a very big thing. It it was the single biggest thing that actually created the biggest hurdle for adoption or acceptance of this new SAP system. I mean auditing UI stuff and so on. But this was the single biggest one that's really rubbed everyone the wrong way. Why is it like this? Because of ERP system is a very specific set of data. Everything acts in a very preprogramed way. If you're used to something like Monday where it's flexible, you can configure everything. You can't configure everything because the data volumes and the scalability in the aggregation are so complex. So there's very little freedom allowed in an ERP. So it's very likely that you will in some capacity have to change your business processes around the ERP system. Keep that in mind. Okay. H.R. And salary. There was a lot of challenges. So instead of listing them all, I just want to show you what the life was for the for the grassroot level. So you have a soldier, right? This is a soldier. What? Their job. They were full time, employed 40 hours every week. Their job was to be better soldiers. Right? The soldier was expected to report all their time absence, flexible working as well as overtime daily. Keep in mind that the armed forces is on a closed network, so it's not just something you can do in your mobile. SAP was run on a closed circuit network in the whole national network of the armed forces. Typically, a platoon has two of these computers to share. That's 30 to 50 people that shares two of those computer, and they're expected to report daily. Yeah, that's not happening. They could even receive their pay slip in SSP if they had to travel anywhere with work. They have to book their travel through S&P. They manage their uniform inventory and everything like that for the system. And just to show how it took took a long time. But nowadays there's 1 or 2 admins per company that just helps the soldiers report everything that needs to go into the system. That's how we solved that. The system was bad for for the end user. And just to give you an idea. Each regiment we have around 2530 Regiment something like that has. Free to eight companies. So 3 to 8 times two. That's 16 times. Okay, I can't even do the math anymore. Basically, it's more than 200 new PhDs just to input data in for someone else. And then we take the platoon leader. So the platoon leader is leading 3 to 5 squads. They're responsible for training. They're responsible for scheduling. They're responsible for maintaining the curriculum and driving their platoon goals versus standards and everything. Okay. They need to go into shape and schedule every single soldier every single day with shift codes that was generated. So it was six six numbers in a row. And those different numbers meant that, oh, you're working between 8 to 12 and then from 1 to 6, that would be one shift code, for example. And there were so many combinations. We had, I think, 9000 shift codes in the armed forces. This was so complex to manage and maintain. So they actually built a spreadsheet to help the platoons with this. So they had a spreadsheet where they could insert the work times, and then they used Excel Vlookup functionality to generate the shift code for them, which they then had to copy paste into every single soldiers, every single day in the system. Sorry, it brings me back. I see a lot of heads nodding over like, oh my God. Yeah. They manage all the occasion and absence for their whole platoon in SAP. They do quarterly performance review in SAP. They manage the yearly salary review in SAP. Again, that was a process that was so complex. So we did it in spreadsheets. And then we just copy pasted the result into the SAP because it was not possible to do it in the system, at least not for the six year. I was there during SAP and where the yearly salary review was done. I don't know now if they're actually able to do 100% in SAP, but by then it is still due to the spreadsheets. And they approve all self-reported time. So if this if if someone has reported over time and it doesn't get approved, it doesn't go to the pink slip. Right? Or pay slip. Sorry. Um, platoon leader has no way of correcting wrongly inputted time, so they just need to decline the whole period and then the soldier needs to resubmit. And then monitors the flak cell and everything like that, and they approve the travel requests. How much time do you think this platoon leader is now spending on the field with his platoon, training and educating them? No, that has been left up to his first sergeants and sergeant majors, because the platoon leader is stuck at the desk doing SAP. We're getting to the conclusion. So bear with me, guys. We're not going to be much longer. So the sap in the in the armed forces concluded 2016 after eight years. The cost by that point was $304 million, and it was $100 million over budget. Was it done? No. The end of the project was just that. We are closing down the project organization, and we're moving all of these 200 people that's been working with SAP implementation for eight years, back to their organizational units, and then the work continues there in the line organization in a normal budget. I think low estimation, the SAP implementation in the Swedish Armed Forces has generated more than 500 full time employees. And like I said this, this is not done. It continues to cost maintenance and for development. It's just managed within the normal hierarchy organization and not as a project. -Are we doing with questions? -Yeah. Perfect. So the pitch, 15 years and 350 million later. If the government would ask you to set up another mechanized battalion, would you know what it would cost, how long it would take and what material would be needed? What do you think? Yes. No. Yes. No. No. Too much data quality issues to reliably use the information for this purpose. But they managed to transfer logistics and inventory over to SAP with. Hi. Let's call it CSat. They do do all the HR processes in SAP today, and they are constantly adding workarounds or new improvements to reduce administration. And now it's. It is the core foundation of the Swedish Armed Forces. If would stop working one day, nothing would work. So yeah, to summarize this in some kind of way with this next slide here. An ERP system is a master project. It is a big thing. And you need to make sure that you are in a sweet spot. I would argue that if your concern is material time, production, inventory, stock and you want to use it for things right, like a coffee mug or computer components, go for it. If you think that you can replace human interactions with an ERP system, you're more likely -doomed to fail. -Yes. What steps can a business take? To learn and understand if using an ERP system is correct for them, or if they need to, you know, have a hybrid solution with multiple products. Yeah, if they think they've got the correct system already. So the steps the organization can make to to understand if the ERP system would help them or not would be obviously self evaluating this. Like how many human interactions, how many software values am I trying to to replace? Um I would. Consult like Omni Consulting. We we help you in in understanding your challenges, help you find the perfect solution. And we rarely go with the solution that our client comes. They come and say we have this problem. We think this is a solution. We help them verify or validate if that is the correct solution or not, because it doesn't really matter to us. But you can also engage in with ERP consultants if if you feel like you will clearly see when the professional service part of the quote overweight the system licenses, you are probably subject of a bunch of workarounds and hacks of the ERP system to realize your capabilities, because that's something we see a lot as well, that an ERP system wants to be so much as a salesperson, as a vendor, as a supplier, I want to be your one source of truth. So I never turned down a use case. I just make you pay more to solve that problem as well. As an example, the implementation consultancy service of the armed forces was IBM. During 2015, they invoiced $70 million in professional services to the armed forces. That to me, is the indicator that we're trying to put a square peg through a round hole. And with that, I think I. I'm done. I need to do all the normal plugs. Right. Sign up for a newsletter like us on LinkedIn. Social media. Give Gustav the video guy a high five. Yeah. Thank you everyone for listening and thank you for showing up.