I decided to write this short article because I see too often that companies (large, medium and small) buy IT tools that they do not use later. Example? A large dairy from Mazovia bought a few years ago 90 licenses for Oracle software, uses 43. A maintenance pays for all. Certainly at the time of making this decision the cost was fully justified, but in retrospect it looks different.
That’s why I always advise clients to buy as many user licenses as needed at any given time. Licenses are easy to buy if necessary, and unfortunately they are not a commodity, the excess of which could be sold on the market. But this is an obvious cliché, and I wanted to bring in something more valuable.
Managers of production often buy software (because how to work without it?) Based on their own experience. But to a large extent also “on the watch”. Great functionalities during trade presentations seem to fit perfectly into their situations and solve problems. Good road. Let’s go even further.
What would you say if the supplier of the tool took responsibility for how the key KPIs of the company or department would change thanks to the implementation? Plus precisely defined when it will happen. Sometimes I have the impression that we are the only company that works.
Take, for example, a MES / MRP class tool with an APS module for production planning and settlement. There is a gap between the two following approaches:
Supplier 1 (popular market approach):
The implementation will result in:
tightening control over production employees
increase in production efficiency
reduction of operating costs
minimization of machine failures (because machines report to MES)
Supplier 2 (common sense approach):
After a thorough analysis of your company and meetings with the Management Board, it declares that the effect of the implementation will be:
Increase in throughput by 10% (+ PLN 12 million profit / year)
Eliminating paper (-12 000 PLN costs / year – paper, maintenance printers)
Supplier 1 – platter steak true? In sum, such a combination of benefits can also be attached to the employment of a new production director or the purchase of a camera system.
Supplier 2 sounds a lot better, right? It is obvious that everything that was declared by the Supplier 1, Supplier 2 will also have to be met in order to achieve the KPI, and hence the ROI. But the key is that Supplier 2 knows what he wants to achieve through implementation and with these business effects he can settle it.
Which supplier would you like to cooperate with? I am with the one who gives particulars and which of these particulars I can settle.
The Supplier 2 offer very easily enables the Management Board to convert the ROI and make a decision. And that’s the point, because measuring ROI is particularly difficult for IT implementations. It turns out that even such an enigmatic field can have hardly defined KPIs.
P. S. I will never understand the sense of the investment in increasing the “control of production workers”. It is much better to invest in increasing their productivity. Example? Hanging drills on gums, so that the employee would only move upside down, and not several hundred times a day, he took the drill from the table and put it away (it moves a few tons!). I will describe more in another entry.