Tuesday, July 3, 2012

Henry Ford, SAP, & the Cloud

Henry Ford was famous for a great many things, especially the first truly mass-produced car called the Model T.  He also had a very famous quote that came from a question someone posed about customizing the Model T they had just ordered.  Apparently they wanted some changes made to the body and paint color.  Henry Ford, upon hearing the customer ask about color options, had this to say: "Sir, you can order your Model T in any color you'd like just as long as it's black."

What most people don't immediately realize is that Henry Ford and his auto company were in business right at the beginning of the "mass production era" of the Industrial Revolution.  Previously, everything - clothes, shoes, machines, ships, locomotives - was made by artisans.  In a very real sense, everything made up until that point had been a unique item.  Today we label that kind of work "hand crafted" and laud it for being something great.  Each time you order a coffee drink at Starbucks, for example, it's hand crafted.  It may all taste the same but each drink is unique.  But you pay a premium for that uniqueness to the tune of about $4/cup versus 89 cents at McDonalds.

Henry Ford had to standardize everything in order to make an affordable and hence acceptable price point for American consumers.  And not only did he need to make a car that was as cheap as possible,  it had to radiate quality.  He needed to convince consumers that it was far superior to the horse-and-buggy standard of the day.  You could imagine what people would have said back then if the Model Ts broke down all the time.  (Imagine an older voice like Grandpa Simpson: "Well, I may be old fashioned but I never had to change no dearned spark plugs on ol' Betsy the horse out there!")

Fast forwarding about 100 years, we can see some parallels between the construction of Model Ts and the implementation of ERP systems, especially SAP.  From the 1980s to about 2010, SAP implementations had mostly been conducted with an artisan approach.  Once the decision was made to go with the system, the next 12-18 months would be spent in the "blueprinting" process.  Anyone who has been involved with a large implementation knows that "requirements gathering" is a nasty phrase, easily on par with your average R-rated four letter word. 

In truth, through about 2010 each implementation, even if labeled "vanilla" or "out-of-the-box", had been an exercise in hand-crafting. 

Yes, some will argue that there have been multiple approaches to standardizing an SAP implementation and I'll list some of them here:
  • ASAP (accelerated SAP)
  • Rapid Deployment
  • Big 4 (each of the big firms has their own "recipe" for these projects)
  • Agile
  • Scrum 
But while the actual work approach is standardized, the requirements gathering has always a free-form exercise.

So now we're in 2012 - how much can change in just two years?  The answer is everything. SAP and its partners are moving towards delivering pre-packaged, cloud based versions of their product.  They have taken the art out of the implementations by doing the requirements gathering and configuration beforehand.  You might ask how they do the requirements gathering before they even enter a sales cycle with your business?  The answer is that based on about 30 years of industry knowledge, they have been able to come up with configurations for each sector that meet about 75-90% of business need.  Of course you won't get the perfect artisan solution, but that's an easy tradeoff when you can get most of what you want at about 30% of the cost and a full lifecycle implementation time of 6-12 months.

Don't forget that by entering into a cloud-based solution, you are also bypassing the need to stand up any infrastructure.  That means no servers, no on-premise software, and no data center footprint.  (Just make sure that your network and Internet bandwidth are up to par or you'll be in trouble!)

Right now I'm referencing SAP because that's my current experience.  In particular, I'm working with one of their partners called Sparta Consulting who has developed the cloud based SUNAS SAP solution.  I never endorse products on this blog but a couple of quick Google searches will give you more context to the above.

It's not just SAP who is embracing the cloud and the "Henry Ford" pre-configured approach.  You can find many different providers doing the same thing including heavyweights like Oracle and Microsoft and up-and-comers like Workday. 

It's taken a hundred years, but the approach to building the Model T has now caught up to the ERP world.  Expect many different options when it comes to your future implementation(s) just as long as you choose the color black.

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