Project Accounting – Amalfi Project Managament

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The short answer is “less risk and less expensive.” The slightly longer answer is “a lot less risk and quite a bit less expensive.” Especially considering the longevity of ERP software packages once they are installed. I usually compare the implementation process to assembling furniture from the popular furniture store IKEA®.  It sounds straight forward but…

I remember the first time I brought a piece of furniture home from IKEA, and then discovered that a basic book shelf contains more pieces than you would have thought possible. I opened the boxes and started pulling out a few pieces only to realize the available floor space might not be sufficient to accommodate the assembly process. I stopped pulling the big pieces out and instead reached forPortrait Of Contemplated Couple With Disassembled Furniture Parts In New Home the little bags with all the screws and what looked like a little handy lifesaving tool to make it all come together. The IKEA wrench! Little did I know that by the end of this process my fingers would be hurting profusely, and possibly bleeding, and I’d be wishing the whole thing had gotten lost in shipping. I eventually found the single sheet of paper with instructions, and finally, after moving the pieces around the room 2 or 3 times, asking for a helping hand to hold the contraption during the assembly process, re-doing a few steps, and probably raising my voice once or twice, I  finally declared victory and the book shelf was done! The whole process took way longer and was much more stressful than it should’ve been, just due to the fact that I was unfamiliar with it.

If you’ve ever bought IKEA furniture I am sure you recognize this pattern. You’ll also probably know that the second and third time around the experience is much different. First off you brought your electric screwdriver to the battle, because now you know that the little IKEA wrench is NOT your friend. He goes right in the trash. Second, you have cleared a good floor area for your assembly so that you can lay out all pieces flat and/or leaning against the walls in an orderly pattern. You have planned ahead and have a helping hand in the vicinity should the need for an extra set of hands arise. The process is smooth and almost enjoyable. You don’t start sweating and you don’t have to raise your voice. You planned for half an hour, and that is about what it took to put it together.a young woman has trouble with her laptop computer. photo icon for data crash, spam and computer viruses

So what does this have to do with ERP software? Well, I think that implementing an ERP product in principle can be compared to the furniture assembly process, only at a much larger scale of course. If the ERP package in question is not written specifically for your line of business and the software partner is not intimately familiar with your industry, it very quickly turns into a much more complex project than is necessary. You have a high risk of project overrun, and you may end up not getting all the benefits you had planned for. If, on top of this, you have substantial customization to the standard software, you may end up paying a premium for support and upgrades on an ongoing basis. It is really a high-risk project with unpredictable expenses in both the short and the long term.

If, on the other hand, you work with an ERP software package that has been developed specifically for your industry (a vertical solution), and you work with a partner that has implemented this package maybe a hundred times at businesses such as your own, you are much more likely to have a successful implementation. It is comparable to putting the same bookshelf together over and over again. You know exactly where the pieces fit together. You lower the risk dramatically. You have predictable costs and there is a high probability that your project will come in on time and on budget. Your ongoing cost of maintaining the system will also be much lower since there will be little to no custom components in your installation.

Cloud computing is an evolving paradigm and when you search around the internet you will find many explanations for cloud computing. I kind of like this definition that was formulated in a publication (800-145) from NIST (National Institute of Standards and Technology):

Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.

 

While this definition might sound slightly complex and boring for the non-technical reader, the key take-away is that cloud computing offers convenient, on-demand access to computing resources with minimal management effort. The plumbing in your house is a useful analogy. You don’t think too much about the technicalities of your plumbing. It’s there and it works, providing access to water resources, but you only pay for what you use.

So what are the considerations that need to be taken into account when deciding whether to deploy an ERP system on premise or in the cloud? Well it depends on the individual ERP package that you are deploying, and although most of them share many of the same deployment characteristics at a general level, this discussion is specific to Microsoft® DynamicsTM NAV.

On Premise Deployment

Servers:
Installing an ERP system on premise can be a daunting task to most businesses. Normally you will need to install a Microsoft SQL server as well as a Microsoft Dynamics NAV server. Both of these servers require a physical box with some substantial processing power and lots of RAM. On top of this, the SQL server will require a fast, reliable and redundant disk array to manage the actual data. For software licensing you will need the SQL Server license and you also need to get a windows server license for each box as well as sufficient windows user licenses, depending on the Windows license model you go with. Equally as important as getting the original servers up and running is to get a reliable and tested backup system in place, preferably one that allows you to store the backup off-site somewhere in case disaster strikes. For most business this can be a rather substantial initial expense, and to top it off, it may not be tax deductible right away, and you may have to depreciate the expense over several years.

 

After the initial install of the servers you will need to perform ongoing maintenance on the servers with software updates and tests of your backup routine. You will also be paying software maintenance fees to get access to support and future updates. Depending on your business needs you may also need to set up redundant servers to minimize downtime in case of a hardware failure in one of your servers. None of this is “set and forget.” You will have to monitor and maintain the system on a daily basis and be ready to take action as needed.

Network:
Having the servers on premise requires a fast and reliable network. You have to make sure the connection between the servers is optimized and that you have reliable connectivity to the individual clients as well. It is important that you have a clean network with fast switches and not too many hubs scattered all over the network. Security is important and you must make sure the network is secure. This is even more important if you want to give your users remote access to you system. In this case you must take extra steps to make sure your firewall is safe to avoid being hacked from the outside.

Workstations:
Depending on the software and deployment model, the requirements for the workstation is usually not the biggest issue. Any fairly new workstation with an up-to-date operating system can usually run the client software. This becomes even less of an issue if you decide to deploy a browser-based client, which requires little to no software install on the client PC.

Cloud Deploymentbutton with a cloud symbol in the center, metal background, blue color. the word cloud is written at the bottom

Servers:
In a typical cloud deployment, you do not need to worry about large up-front expenses. The servers will run in the cloud and be maintained by trained professionals, without you having to worry about getting them installed and maintained. There is no additional licensing and enhancement fees for software upgrades. You usually just pay a monthly per user fee that covers everything mentioned in the above on premise deployment. This typically also includes redundant hardware and database setup that will minimize any potential downtime in case any one component fails in the system. To the minute off-site backups can typically be included in the price as well.

Network:
Your network requirements are typically limited to a reliable internet connection for all work stations. And since the system is already deployed in the cloud, users can get access to the data from pretty much anywhere they have an internet connection. It does not have to be from the business office location. Security is still a concern, but cloud providers put a lot of effort into making the connections secure. They’ll also be able to do a better job on the security front than most average businesses, working with limited budgets, would be able to accomplish on their own.

Workstations:
Whether deploying on premise or in the cloud, the requirements for the individual work stations are pretty much the same, especially if you do a browser-based client deployment.

 

As you can see from the above, going with a cloud-based deployment puts the cloud provider in charge of all the heavy lifting. This is of course very nice for you as you can sit back and just enjoy having access to your system without having to worry about upfront costs, backups and other day-to-day maintenance requirements. But it also points out how important it is that you find a cloud provider that manages your system in a safe and reliable way.

Be sure your cloud provider:

  • Has controlled and restricted access to the physical servers in the cloud.
  • Has redundant systems in place to provide backup services and maintenance tasks.
  • Is financially sound. (If they go out of business and the servers are shut down, you can be left stranded without access to your critical systems.)

 

Make sure you are comfortable with your cloud provider before your rely on it to provide you with mission critical system operations. Remember, you own the data. Make sure you can get to it whenever you need to .