Below is a great article from the October PMI eNews with great advice on how to overcome the issues involved in estimating projects.

What Causes Bad Estimates…and What You Can Do About It

by James T. Brown, PhD, PE, PMPi

Estimates are not created by machines. They are made by people with human foibles. Politics, pressure and optimism all come into play when it comes to estimating.

A study of 258 projects in 20 countries tallied an amazing nine out of 10 with cost overruns. Budget estimates can be off‐target by 100 percent or more, according to the Oxford Review of Economic Policy.

Two factors are major contributors to inaccurate project estimates. Factor one is insufficient time to deal with uncertainty in the estimating process. Factor two is the need of certain sponsors to create artificially low estimates in order to get a project initiated. Managing expectations and clear communications are a project manager’s keys to success.

Acknowledge Uncertainties

Project managers are very good at estimating…when they know about what they are estimating. But as you would expect, estimating when there is a lack of knowledge is problematic.

Time pressure can compromise the quality of estimates. Additionally, gathering estimating information can cost money, because it can involve everything from research and hiring consultants to prototyping.

When there is uncertainty, a logical course of Acton is to increase the estimate to deal with that uncertainty. Getting leaders to accept a larger estimate to account for uncertainty is where the challenge lies. Unlike project managers, stakeholders often do not look at the entre puzzle — they look for the piece that fits within their constraints. Sometimes they apply pressure to make the estimate fit.

Often leaders prefer to proceed with an optimistic number. From my experience, I have found that it is best to communicate the worst-case estimate first and then work from there.

To manage estimate expectations effectively, take every opportunity to communicate the uncertainty and assumptions associated with the estimate throughout the life cycle of the project. Try not to discuss the estimate without referencing these assumptions.

Stakeholders may acknowledge this uncertainty at the beginning. Once a number is in place and the project starts, they tend to forget the assumptions and uncertainty associated with the original estimate.

It is your job to always keep this information front‐of‐mind. Assertively communicate when an assumption proves to be invalid or there is a change in a factor that affects the uncertainty associated with an estimate.

Deal with the Pressures to Underestimate

What sells a project and what it costs to create the project deliverable can be two different things.

In my experience sponsors some‐times make the decision that the project is necessary but know it would never be approved by the organization or stakeholders at the project’s realistic cost. They then make a calculated decision for a lower project estimate.

Yes, most everyone knows it costs more — but it cannot be sold at that price, so the estimate for the project is essentially a political decision. Once approved, the project becomes difficult to kill because of what has been invested.

Although this can be a common situation, it is always contextually a complex one. Further, it forces the project manager to deal with unrealistic limits that have been placed on your estimates.

I believe in dealing with this kind of situation it is best to maintain your integrity and gracefully communicate what it really takes to make the project successful, so that decisions are made with the facts available. The decision might still be a political one that may put you and your project in a difficult position, but at least you have communicated all the facts.

Ideally, you would have time to generate the most accurate estimates possible and not be pressured to make the estimate conform to a target number of questionable origin.

In the real world, time pressure and target numbers are a fact of life as evidenced by the Oxford Study that showed nine out of 10 projects with overruns. Equally if not more important than how you estimate is managing stakeholders’ expectations throughout the project life cycle with regards to that estimate. Managing expectations is the human side of the estimating equation.

The most significant change to the ERP landscape we are facing is ‘the Cloud.’

Here are answers to the three most commonly asked questions:

• Why (should I consider the cloud)
• What (is the cloud opportunity)
• When (to use cloud)

Why Should I Consider the Cloud?

Microsoft Dynamics ERP Cloud solutions are intended to give customers CONTROL through visibility into their businesses, which could enable them to make smart decisions that IMPACT THEIR MARGINS and improve cash flow—ultimately driving business GROWTH.

GAIN CONTROL: Multiple insights into business performance, including mobility

INCREASE MARGINS: Shift from capital expense to annuitized operating expense

DRIVE GROWTH: Maximum server capacity is always available and the system offers flexibility & scalability that allows for growth.

What is the Cloud Opportunity?

The ERP market is shifting to the cloud. Here’s ‘what about the cloud’ that is manifesting this market change:

• Small and midsize business (SMB) prospects (10–250 PCs) and midmarket prospects (251–2,500 PCs) who are evaluating Microsoft Dynamics ERP want to realize the benefits at a decreased initial cost and minimal startup effort (“turn on & go”).
• Prospects who are seeking to consume enterprise resource planning (ERP) technology as a utility against their monthly operating budgets, which could allow them to reserve their IT capital budgets for other revenue-generating activities.
• Prospects who are interested in reducing or outsourcing their IT infrastructure to avoid the standard IT procurement process, eliminate the cost and effort of implementing regular data backups and software updates, and reduce large infrastructure investments.
• Prospects who need the flexibility to add users or locations quickly and easily.

When is the Cloud Best Utilitized?

Microsoft Dynamics ERP cloud-based solutions should be the first choice for organizations with the following characteristics:

1. Lack the hardware needed to upgrade
2. Lapsed fees that are insurmountable
3. Need to expand the user base and/or functionality, but have limited budgets
4. Limited or reduced IT staff
5. Compliance issues and multiple locations—need to get to one solution
6. Ease-of-use and quick ramp-up are top priorities
7. Have exhibited rapid growth

Stay tuned next month when I will answer the next three most commonly asked questions:

• Why should I select Microsoft ERP cloud-based solutions?
• What makes Microsoft different from its competitors?
• How do I handle objections from customers?

When it comes to taking action when things go wrong, Scott Berkun has some great suggestions for how to approach the situation. This article drawn from Making Things Happen by Scott Berkun.

Project Managers must be prepared to deal with difficult situations. It takes a certain kind of wisdom to realize that when bad things happen, they happen. Nothing can be done to change them after the fact. Instead, how the team responds to adversity may be a larger factor in project success than the team’s ability to avoid adversity in the first place. Both are important, but resiliency and recovery ability are the attributes that make dealing with the unexpected possible. Without them, a perfect team and a perfect plan can spiral out of control with the slightest nudge in the wrong direction.

Difficult times are learning opportunities. People respond to pressure in different ways. Be observant and open in how you deal with tough project situations. Here are some thoughts on what to do when things go wrong, and how to handle tricky project situations:

Calm down

Nothing makes a situation worse than basing your actions on fear, anger, or frustration. If something bad happens to you, try not to let these emotions influence your thinking or behavior. Do not flinch or overreact: be patient, keep breathing, and pay attention.

Evaluate the problem in relation to the project.

Just because someone else thinks the sky has fallen doesn’t mean it has. Is this really a problem at all? Whose problem is it? How much of the project or its goal is at risk or may need to change because of this situation: 5%? 20%? 90%? Put things in perspective. Help everyone frame the problem to the right emotional and intellectual scale. Ask tons of questions and get people thinking rather than reacting. Work to eliminate assumptions. Make sure you have a tangible understanding of the problem and its true impact, and then prioritize.

Calm down again.

Now that you know something about the problem, you might really get upset. Find a way to express emptions safely: scream at the sky, workout at the gym, or talk to a friend. Then return to the problem. Consider that you need to be calm to make good decisions, but you need your team to be calm as well. Pay attention to who is worried or upset and help them to calm down. Taking responsibility for the situation regardless of whose fault it was tends to accelerate a team’s recovery form a problem.

Get the right people in the room.

Any major problem won’t impact you alone. Identify who else is most responsible, knowledgeable and useful.

Explore alternatives.

Figure out what your options are. Clarify the situation, answer all questions, and be specific.

Make the simplest plan.

Weigh the options, pick the best choice, and make a simple plan. The best available choice is the best available choice, no matter how much it sucks. The bigger the hole you’re in, the more direct and bold your path out of it should be. Break the plan into as many simple steps as necessary to make sure no one gets confused.

Execute. Make it happen.

Have specific checkpoints to make sure the plan has the desired effect and new problems do not arise.

Debrief.

After the fire has been put out, get the right people in the room and generate a list of lessons learned. Ask the question: what can we do next time to avoid this? The bigger the issue, the more answers you will have, so work with the team to prioritize the list. Then share it with your colleagues and peers so others can learn as well.

Read more about Theory in Practice..

This excerpt from David Maister, author of True Professionalism, is a powerful reminder to remember what it means to be the customer. What exactly is their experience? How is their experience unique from our experience as service providers?

Maister says “Being a buyer of professional services is rarely a comfortable experience,” and offers this list of unpleasant emotions that are frequently felt by a customer engaging in a selection cycle or an on-going project with a services practice:

• I’m feeling insecure
• I’m feeling threatened
• I’m taking a personal risk
• I’m feeling impatient
• I’m feeling worried
• I’m feeling exposed
• I’m feeling ignorant
• I’m feeling skeptical
• I’m feeling concerned
• I’m feeling suspicious

Maister offers many off-sets for project managers, consultants and sales teams to help them build trust and earn a customer’s confidence. Here are a few of his recommendations:

Preparation.

There is nothing so off-putting as someone who begins the meeting by asking some basic facts about the company or situation that could have been found out in advance. It generally reveals laziness.

Give me an education.

Tell the customer about alternate ways the common problems of their industry might be dealt with. Help the customer understand the advantages and disadvantages of some of the things the customer has been reading about, ask them how are they doing things now, and tell them something they didn’t already know.

Show a sympathetic understanding of my role in the company.

Understand who that person reports to, how they are measured, what their budgets are. This shows that you are treating the customer as a person, not just a purchasing agent.

Ask me: ‘How valuable would it be if….?’

And complete the sentence by describing some future state of affairs that you can help get the customer to. This is the most productive tactic you can act on as you engage with a customer, getting the customer excited about possible benefits. If you get them excited, then they will want to know more about how you can help get them there.

Maister concludes that customers seek to hire the rare professional who has both the technical skill and a sincere desire to be helpful to work out their problem.

Want to read more?

Watch this short video Helpful Tips to modify Word Templates in Dynamics GP. You’ll learn how to work with Gridlines and Bookmarks.

Adding Gridlines allows you to see the tables and cells that are part of the Word Template documents. Gridlines also ensure that new fields added to the report are within a table or cell and not places within blank space on the document.

GP 2010 Word Template documents contain Bookmarks that are essentially the indicators of start and stop points of the data. Adding Bookmarks in Word Options insures they are not deleted by mistake. Missing Bookmarks will cause data to not populate on the document.

CRM, (Customer Relationship Management), xRM, and xyM may sound like alphabet soup to you now, however, the changes Microsoft is bringing to MS Dynamics CRM are more than just changes in letters. Microsoft Dynamics CRM is truly transforming the way we do business in extraordinary ways. As I mentioned in my previous article “CRM, xRM, MS Financing and more”, the business tool Microsoft Dynamics CRM is not restricted to just the Sales, Marketing and Customer Service departments anymore. And by the way, we are already using it for more than just customers. Microsoft Dynamics CRM has already expanded its reach to include all departments, as well as vendors, partners, suppliers, and anyone else you communicate with. This expansion replaced the C (customer) in CRM to an X (for anything) and brought us xRM, Microsoft’s new Anything Management System.

What is next for this powerful business management tool? You may have already guessed (I gave you a hint in the first paragraph). Microsoft’s seamless integration of Microsoft Dynamics CRM with the other MS Office products you already use allows us to move from mere “relationship” management, to all around “business” management. With simple one-click integration you can tie any conversation, document, spreadsheet, quote, bid, invoice, etc. to the appropriate contact/company. And since you are all connected via Outlook and CRM, it is immediately visible to the rest of your organization – if you want it to be. This allows you to track much more than just “relationship” in CRM. Now you can track any type of business process or entity. No more asking Joe to update you on how many of the vendor bids have come in for the pending contract, or asking Judy about how far along we are for the engineering change request. Now you have the business tool to get the information you need, when you need it.

From either MS Outlook, or MS Dynamics CRM, simply click the link on your supplier’s name and view all the documents, bids, quotes, invoices in one place without having to interrupt Joe to do it. Same goes for Judy – let her keep working, and in the meantime go into the system and bring up the engineering change process, and see how much of the project workflow has been completed. Going from Relationship to Business management or xRM to xyM streamlines all the information in your organization, allows visibility to information throughout the organization, and improves productivity.

If you are as intrigued as I am with the changes in just the first two letters from CRM to xyM I know you will want to find out what is in store for the “M” in CRM and xyM. You may have already guessed, it is not just for management, but what does that mean to you, your business, and your bottom line? I will be writing about the third transformation soon, I know you will not want to miss it.

It’s fun when I can find a real-life example to illustrate how important an effective enterprise resource planning (ERP) system is to a company’s bottom line. Here’s a great real-world example of a company in need of a new ERP solution.

Six months ago a colleague Tom and his wife Emily ordered three lamps from a local retailer. Because the items were out of stock the retailer placed them on back order from their drop shipper. Not willing to wait, Emily promptly canceled the order, was refunded, and bought the lamps elsewhere. Yesterday, six months later, an unmarked box arrived with three lamps. It’s the canceled order.

Here are the questions this order and shipment mix-up raised. Mind you, they are also some of the issues a good ERP system will help you solve.

• Where did these lamps come from?
• Why didn’t the retailer know the drop shipper was out of stock when they placed the order?
• Did the drop shipper get notified when the order was canceled?
• Does the retailer know the drop shipper fulfilled a canceled order?
• Will the retailer ever learn what happened to these lamps, or has this order disappeared into a black hole?
• Who will bear the costs created by this error, the retailer or the drop shipper?
• How much profit and inventory is lost to mistakes like this each month and year?
• How much money is wasted on unnecessary shipping and handling costs each month and year?
• Why wasn’t the retailer identified somewhere on the package or packing slip instead of only the name and address of the drop shipper?
• Why is there no contact information for the drop shipper or retailer on either the package or packing slip?
• How and to whom does my friend return the lamps?

This example illustrates the issues caused when the systems we order and fulfill from are not connected. Sometimes we call this ‘silos of information’, other times we just call it frustrating and costly.

Here are a few questions to help you determine if you need a new ERP system.

• Do your sales and customer service teams struggle to find up-to-date information on which products you have in stock?
• Do your sales and customer service teams lack visibility to the back order and fulfillment systems?
• How many times does an order (or canceled order) need to be entered for the order to be fulfilled?
  Hint: if the answer is more than one, you may need a new ERP system.
• Your business is growing and your system can’t keep up
• A lot of time is wasted hunting for information
• You’re losing clients and losing money

If you answered yes to the questions above it may be time to find a qualified ERP Consultant to help. Find out more about what to expect during an ERP Implementation.

An effective ERP Systems can help improve your bottom line by

• Eliminating the need for duplicate entries into multiple systems
• Reducing the opportunity for operator error
• Providing instant access to orders and inventory
• Improving supply chain management
• Improving efficiency
• Improving inventory management

Do you have a story to share? We’d love to hear your company or personal experience illustrating the ramifications of inadequate supply chain management or enterprise resource planning systems either from the customer or company perspective.

I recently read an article by H. Mackay titled Quality Is Not a Thing, It’s a Way where he illustrated the importance of quality and quality control (QC) systems. Mackay reminds us that the only goal worth attaining in your quality control system is 100%. The following research from Insight Syncrude Canada Ltd. shows us why trying to achieve 99.9% quality can mean failure. At 99.9% quality these things could happen:

• Two flights per day at O’Hare would be unsafe
• 12 babies would be given to the wrong parents each day
• 107 incorrect medical procedures would be performed each day
• 18,322 pieces of mail would be mishandled in the next hour
• 20,000 incorrect drug prescriptions would be written in the next year
• 880,000 credit cards in circulation would have incorrect cardholder information in their magnetic strips

In the food & beverage industry quality is not only one of the important factor to success, I’d say it is the most important factor. In the age of increasing food recall incidents, growing government regulation, and difficult economic times it is critical to have the right quality system in place. Food Processors need to ensure they can effectively track each ingredient from the moment it enters the facility, at each processing step, during storage and transportation, all the way through to the final product sale and delivery. The quality management and regulatory compliance program needs to enable companies in the food industry to perform a mock recall within four hours. It’s not to say we won’t have food recalls. As a food industry executive reminded me,

“when you run food, you’ll have recalls, it’s just a fact of the business.”

The important focus here is that we aim for 100% quality and we install the systems we need to quickly and effectively respond n the event it happens. The companies who are nimble enough to survive food recalls, economic downturns, and other business challenges will be those with fail-safe quality systems and comprehensive enterprise resource planning solutions in place. These systems shorten the time between problem identification and solution. Effective QC Systems and ERP Solutions enable companies to track product, make critical decisions, and implement solutions all in minutes – not days.

I’ll leave you with one final quote from H. Mackay, Mackay’s Moral on quality:

The difference between failure and success is the difference between doing a thing nearly right and doing it exactly right.

There is a lot of buzz around the benefits of cloud computing these days, but for most people their understanding of cloud computing in the ERP and CRM world is at best, well, cloudy.

Key factors to consider when making a choice between cloud computing and on-premise server solutions are initial cost, ongoing cost, IT staff, security, ramifications of downtime, and competitive advantage due to customizations.

Pros of Cloud Computing:

• A way to reduce initial costs and get in the game for large systems
• You don’t need your own server
• You don’t need your own IT staff

Cons of Cloud Computing:

• Dependent on internet connectivity – if internet is down, you are down
• Larger costs over the long term – similar to renting versus buying a car
• Harder or impossible to gain any advantage from customizations to the software because the customization model is generally not supported in cloud computing
• Bigger security risk as the data is stored with other companies’ data

Summary:

Cloud computing is great for smaller businesses with fewer resources that need out-of-the-box functionality and could still do things manually if the internet ever was down for a period of time. On-premise servers are great for larger businesses that use customized systems to gain market advantages beyond their competition, or for businesses with mission-critical applications that they cannot afford to be without for a period of time.

Ready to investigate more about how to solve your ERP challenges or customer relationship management requirements? Whether the solution is hosted on-premise or in the cloud, you can find more details to help you get a head start managing growth.

As ERP consultants, we often get asked about the difference between Microsoft Dynamics NAV and Microsoft Dynamics GP. They’re both from the same family and share genetics, but they’re not twins. One might be better for your business than the other and it’s important that you know the different features, so you can pick the best one for your needs.

Dynamics Nav or Dynamics GP?

Microsoft Dynamics NAV

Let’s cut through the software jargon and compare Dynamics NAV and GP to something everyone understands: Toys. You want to make your own castle – you want a moat, you want a drawbridge, and you want a tower for the Princess. You want the King to have his own special entrance and you want to  expand your castle as your kingdom grows.

Instead of going up and down the aisle trying to find a castle that fits all of your special criteria, it’s easier to customize it yourself. Legos it is! All the different pieces fit together to make one unique castle – the one you need – the one that meets the needs of your kingdom. With all of your Lego pieces, you’ll be able to expand your fortress when the time is right. Presto, just add a few more pieces.

Microsoft Dynamics GP

While Microsoft Dynamics NAV has more pieces, Microsoft Dynamics GP is the right-out-of-the-box castle. It’s not customizable to your specific niche from the get-go, but you can use add-ons to extend your functionality.  Implementations are quick and streamlined, making it easier to get up and running.

How do you know which one is for you?

Microsoft Dynamics NAV works on a broader scale and provides customization for all your specific niches. Microsoft GP is fast to implement and includes a strong suite of business analysis tools –it’s the thing to get if your company has grown beyond QuickBooks and you’re having trouble managing all your financial data.

Contact our ERP consultants and we’ll be happy to tell you more about our custom solutions.