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Jul 13, 2013

How can you provide Consulting Value Add (CVA) in ERP Implementation...

The other day I was talking to Ravi, a friend of mine. Both me and Ravi are working for IT Companies in the area of ERP. Once a while we meet at a nearby restaurant to talk shop.

"Nowadays, you rarely find a consultant who can provide Consulting Value Add (CVA)", Ravi opined.

"Please elaborate", I said

"For a customer who implements ERP, it is a big deal. They spent a lot of money and time in search for the right product to fit their requirements as well as in identifying the right implementation partner. This means that even before the contract is signed, a lot of effort is already expended by the customer." He paused.

"So when the implementation partner starts the implementation, there is a lot of expectations that the consultant on the ground will help change the business. However, sometimes there is an expectation mismatch between the consultant and the customer", Ravi said.

"Such as?" queried I

"Consultant usually comes armed with Product Knowledge. In his mind that knowledge is sufficient to meet the customer expectation. However, from the perspective of customer, product knowledge of consultant is a given. That is what (s)he is getting paid for. Customer expects the consultant to bring in Consultant Value Add (CVA)." Ravi stopped to take a sip of water.

"Can you elaborate on the concept of CVA?", I asked.

"What do many people in India do when someone falls sick?" Ravi asked

"Normally they go to the pharmacist and the pharmacist recommends some medicine.", I replied.

"Precisely. But the question is does pharmacist has the requisite knowledge to evaluate the issue and suggest a detailed diagnosis?", Ravi probed further.

I knew where he was going by now.

"So you are saying that just as a pharmacist is supposed to deliver medicines, a consultant delivers output based on the Product Knowledge. However, just as a good doctor can cure his current illness, he can also recommend value added lifestyle change, a consultant should have knowledge of business to not only implement the product, but also suggest Value Added changes that will help the company benefit from its IT Investment. That is a CVA. Am I correct?" I ventured.

"Absolutely. That is what is CVA all about", he responded.

"How can a consultant provide a consulting value add?" queried I, taking a sip of the soft drink that the waiter had unobtrusively placed in front of me.

"There are many ways in which a consultant can provide CVA." he continued. "The first method of providing CVA is by providing customer with multiple options to handle their key requirements in ERP. ERP Applications are feature intensive and offer multiple approaches to design the solution for a specific requirement. A good consultant can provide multiple options for many of the customer's requirements and suggest the best option."

"The second method of providing CVA is to help the customer design the best naming conventions. Naming conventions are the guiding posts in ERP. The naming convention should be intuitive and names should not be very long. A good consultant will consider two aspects while designing the naming convention. One is performance. A numeric naming convention enable better system performance than an Alphanumeric one. However an Alphanumeric naming convention is suitable if you have to design better reports", Ravi said.

I was rapt in attention, absent-mindedly munching the potato sticks.

"The third method to provide CVA is by focusing on the flow. A good consultant will eat and breathe flows. A solution designed based on flow approach has a much better chance of being accepted than a solution designed through a process approach.", he paused to take a sip of coffee

I was thoughtful. "There are so many ways by which a good consultant can add value in ERP Implementation. This is so useful to know", I mentioned.

"Very true", he replied, "The fourth method to provide CVA is by asking the right questions. Most of these questions will include 'What' and 'Why'. These questions help to clarify the requirements." he continued.

"Do you have some examples?" I asked.

"Plenty", he replied, "For instance in my first implementation the customer started off by demanding 'Depot wise Trial Balance'. Trial Balance is a big deal in ERP and it expects that assets are maintained at each depot. On detailed probing, it was clarified that one, the customer do not track assets at each depot and two, what they wanted was depot wise profitability. A bad consultant will complicate the implementation by providing 'depot wise trial balance' since ERP has complex features that will help them meet any requirements of the customer. This ties in with the first point that mentioned earlier".

"As you can see, a 'Depot wise trial balance' is a far cry from 'Depot wise Profitability'. Identifying that what the customer actually wanted was the latter and provide simplified solutions is CVA.", he explained.

"What are the other CVAs that the consultant can provide?", I was hooked by now.

"The fifth method to provide CVA is in the area of reporting. Any ERP will provide two kinds of reports. One type provides information, mostly operational and transactional in nature. These information usually lead to better decision making. The other types of reports are those which help some of the regular processes. Example of the former is an Open Purchase Orders Report. This helps the business to identify and expedite the Purchase Orders. A Receivable reconciliation report is an example of the latter. It helps the finance team to complete the reconciliation. During the implementation a good consultant will continuously illustrate his points with the information available in the standard reports. And she should also educate the customer on the use of Standard Reports to expedite business processes like Reconciliation and Financial Reporting. The use of standard reports is an area often neglected by the consultant, mostly due to lack of knowledge", he stopped to see if there were any questions. There were none. He continued.

"The sixth method to provide CVA is by focusing on Exception Reporting. Senior management of a company do not have the time and do not need to see the complete operational data. However, they will be keenly interested in report which show exceptions to the normal flow. That is where management can intervene and take action to bring the situation back to normal. Most of the ERP applications out there have good exception reporting capability and can be used to add significant value to the customer", he explained.

"Anything else?", by now I was full to the brim. 

"The last and the most important CVA that the consultant can provide is to understand the business of the customer. Since this is a new terrain for the consultant she has to put in effort to understand the business. The consultant should know all the products of the customer, the processes used to make the. They should know the various flows of the organization. They should know how the cosh comes in and how the cash goes out. She should know the issues that keep CEO awake at night. They should also know the legal and statutory requirements and challenges of the business as also the industry and the competitors. There is lots more..."

"An ERP is never implemented in Vacuum. There is always a context to the ERP. There is a reason why the customer chose this product and chose you to help him implement ERP. A consultant who understands this context is the one who can provide maximum CVA to the customer." Ravi concluded.

1 comment:

Richard Weinberger said...

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