In Part 1 of 2 our first Q&A session with Daniel Serghi, who leads Factory Operations at LeapGreat, we sat down to talk about what customers should start thinking about when it comes to redefining value creation and ROI ERP implementations. In Part 2, Daniel shares how and why LeapGreat is set to deliver maximum value and return for its customers. Daniel is unwavering in his dedication to maximizing value realization through integrated solutions. With over three decades of expertise, he specializes in optimizing customer journeys, multi-dimensional value management, ROI analysis, and business process optimization. His proficiency spans SAP implementation, controlling, business process improvement, and adept change management, reflecting his commitment to holistic value creation. Join us in this insightful Q&A discussion and check back for Part 2. Trust us, you will learn something valuable that you can employ immediately.
Q. Daniel, can you explain your role as the Leader of Factory Operations in the context of automating ERP implementation? How does it tie into your skills and expertise?
Daniel: The LeapGreat experience – what we believe is an evolutionary if not somewhat revolutionary way of implementing ERP – is based on considering the whole endeavor as a product that the customer must use with minimum disruption and maximum benefit to their business. The role of factory operations is to make sure that, when aggregated and deployed, the product has in place all the bits and pieces that product engineering had specified, that realization, always the daunting part, has all ingredients at hand. This involves handling a great deal of correlations, and the constant focus on the product as a whole. What helps quite a bit is knowing from direct experience most project moving parts, and an educated ability to switch quickly and often my perspective from aggregate level (project, team, process) to minute details (user fit, acceptance, etc.) and back.
Q. The holistic approach, where the knowledge around trade-offs and implications of a decision in one area of the solution will have trade-offs and implications to another part of the solution and therefore to the business, provides an opportunity for ongoing value across the enterprise. How is the LeapGreat way different in its approach to automating ERP implementations? How does our approach to process integration differ when it comes to maximizing the value realization of these types of projects?
Daniel: I want first to be clear that automation is not a goal in itself. Automating a suboptimal process is generally detrimental. What I have in mind when I’m thinking of maximizing the value realization is precisely exploiting the integration bits and pieces to eliminate process friction, to step up the business execution and business control as a whole. To start with, we rely on trusted best practice processes, that we automate once they are satisfactory to the customer. The holistic approach, however, takes matters further, using from the get-go more factors that affect the true cost-benefit equation than usually considered. The approach helps achieve a key, yet hard to define feature, internal solution consistency. This is maybe easily to convey as an example: if a warehouse employee wants or is required to work in purchasing, her adaptation to the new position should take minutes rather than hours or days, because things look and are aggregated the same way, the functional help is equally available, and because – not to forget – the system administrator can operate the authorization changes quickly.
Q. Could you elaborate on the concept of “Multi-Dimensional Value Management” and its significance in your work and to customers?
When correctly done, an ERP implementation unleashes dormant values in multiple areas of the business and of the enterprise. While the overall metric everyone is watching is the financial performance, in my experience a better utilization of people’s time and talents proved to be as important, if not more consequential than a better utilization of, say, inventory, or fixed assets. Stimulating horizontal and vertical collaboration is, in fact, the expression of this multidimensional value management that I have in mind. I will give you a case to contemplate, that some organizations I’ve consulted for, achieved with essentially zero effort: Imagine a corporate accounting and controlling department, interacting with a few (or a lot) of plant/locations accountants and controllers. In all – maybe 100 people. Now simplify and unify processes, automate, superbly reconcile all numbers. You achieved your sought benefit, i.e., reducing month-end closing from a painful 10 days (about 1 and a half weeks) to a breezing 2 or 3. This is NOT your best. Your best is that now you can ask – to give but one example – the same immensely knowledgeful people, that you freed form menial, no-value-added tasks to build multiple planning scenarios, calculating the risks, costs and best material coverages in each case, etc. What is now the true value of your ERP automation if or when another ship blocks the Suez Canal for a few days?
Q. How do you assess and measure ROI (Return on Investment) when implementing ERP automation, and what strategies do you employ to ensure profitability?
Daniel: Assuming any flavor of ROI calculation a customer would like to use, implementing ERP the LeapGreat way where risks, time, and cost are greatly reduced and value increased, will make it more profitable, and more predictable. What my experience has taught me is that ROI calculations do NOT usually consider negatives like the cost of changes and the cost of correcting initial operation errors. As a result, the actual ROI is often significantly less. Depending on where and when a change need is identified in the project, its cost can be 10x to 1000x of its initial implementation effort. Operation-wise, I cannot fathom the cost of say – one week of wrong sales orders, or of a production shortage due to an incomplete MRP run. As part of our solution development strategy, we identify the changes early, decide with the customer the best way to deal with them, test and approve the processes. The superior production testing, the ability to train business users early using data they are already familiar with, are examples of how we mitigate operation errors.
Q. How do you assess and measure ROI (Return on Investment) when implementing ERP, and what strategies do you employ to ensure profitability?
Oh, this is a rich topic in itself. I’ve been considering for many years a novel formula for measuring the ROI, for the case of an integrated solution. I am not going to say much more now, because I am working on a better mathematical formulation, but the basic idea is that when you implement an integrated solution, mutual influences are common, yet ignored. For instance, say the aim is to improve processes A by x% and B by y%. In fact, an improvement in A may already boost B by z% just because of internal dependencies. I call this a “systemic effect” that A has over B, that should now see a (y+z)% improvement.
In summary, the importance of considering the systemic effects within integration solutions when considering value creation and ROI cannot be underestimated. Soft costs and often hidden hard dollars must be part of the new impact equation for ERP implementations. So how does LeapGreat quicken time-to-value and increase ROI? Keep a look out for Part 2 of our Q&A with Daniel where he will share how and why the LeapGreat approach to automating ERP implementations lead to a whole new level of value for customers.
