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Stuck With Legacy Software?

Episode 20

Stuck With Legacy Software?

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Before we start, why don't you briefly introduce yourself?

Sure. My name is Dan. I have about 25 years of experience, dating way back to about 96, where I've been in the enterprise resource planning, or ERP, software and enterprise software business. 

I have worked for three ERP software companies. One called Bond, back in the nineties, then Global Solutions in the early 2000s, until 2016, when I sold my consulting business to a company called Priority, which is Israeli-based, and I built their North American presence.

Importance of Digital Solutions in the Manufacturing Industry

As someone who has worked with ERP and digital solutions in the manufacturing business for nearly three decades, what is the importance of digital solutions, ERPs, and generally digital solutions within the manufacturing industry? 

You can think of ERP as a backbone or a back office type product that handles everything from sales or entering leads, opportunities, sales orders, purchase orders, production planning, and all kinds of things like that, all in one hub, if you will. 

I'm going to use an analogy of an airline here - The ERP is the hub, like an O'Hare Airport, and all the airports are spokes of that. So the ERP is the backbone, and then all the other addon solutions such as ecommerce, WooCommerce, Shopify, or something like that would fit as a spoke and feed in orders from the web. 

Another example is MES (Manufacturing Extension Systems), which would talk to machines, gather machine data, actual usage, downtime the efficiency of the machines, and pass it back into the ERP system.

The ERP system, in turn, would pass through jobs or production orders and gather data because it has data about the routings and the operations. And so those two marry up. So you got spoke feeding the hub and vice versa. 

Value of ERP Systems

And in terms of value, what can ERP and other systems and solutions you mentioned provide? The first one is the speed of communication, gathering data, and going paperless as much as possible - anything else you can think of?

It becomes a huge storehouse of data - the Hub and the spokes gathering tons of data and enabling you to analyze all of those parts of the entire system. It is becoming one source of the truth, as we call it. All the data is contained mostly in the hub, and you can do predictive analysis. That's the Holy Grail of the entire footprint of these ecosystems.

The Start of ERP Systems

ERP systems like these started in the 90s, or maybe even the 80s, with systems used for planning. Then they got more into all the other functions within the organization, and they grew each time with an add-on solution.

There are a lot of on-premise systems that, even though they are big storehouses of data and big hubs, You get a bunch of these legacy applications and multiple servers that don't talk to each other, and they become very siloed. So, the vision, or that holy grail, of being able to do predictive analytics across the system is chopped off in that construction. 

And that's not just silos of data or transactional and historical information. It's also a silo of your people. You got different parts of your IT devoted to different systems, creating an HR or a change management issue within your people.

We're gathering all this data, whether it regards your resources, process data, or quality data, so that you can predict outcomes in the near future and make better decisions. Discover some insights you would otherwise be unaware of because there are too many different variables that we can now process in a much more curated way, make better decisions, and move to data-driven organizations instead of intuition-based or experience-based.

Getting Trapped in Legacy Solutions

You mentioned the companies that adopted these kinds of solutions in the 80s and 90s - the early adopters. Some of them are now stuck in legacy solutions. You mentioned the problems of legacy solutions - data siloing and HR problems - so can you expand on the trappings and how they get out of these situations? 

The trappings are obvious. You've got all these different on-premise hubs. It's like having Chicago O'Hare for the United hub, and then you've got Atlanta Hartsfield or Heathrow to give a more European example. 

These become splintered hubs. You get multiple hubs, and they have their spokes. So it's only possible to integrate if you come up with single or multiple solutions on the cloud to tie all these things together. 

But they're stuck on different versions, right? Because what happens over time is these systems, an SAP, R3, and Oracle EBS, become very heavily customized for that particular division or operation on it. 

Planning System Integration and Digital Transformation

And what happens is that the System Integrators just want to get the systems up and running without any kind of digital transformation plan that draws the big picture and allows them to work towards that big picture. 

Instead, their incentive is - Boom, you're doing Oracle. Okay, let's build that and try to roll out as many modules as possible. But it still sits in its own silo. And a company that did that early on was an early adopter. What they tend to do is they get all of these splintered, siloed situations where they have to take a step back. That's what you have to do. 

You have to take a step back, inventory all the hubs and all the folks, and determine the current situation. These are the current business metrics KPIs and everything we want to achieve with the ecosystem. And then, you start with the change management plan. 

Frequently, if you just went ahead with a legacy system, you didn't have a change management plan - dealing with the people, training, documentation, testing, and all those things didn't exist. 

For example, they may have existed for the Oracle EBS system but not the SAP R3 system.



Real-World Examples

There are two organizations that I like for doing this kind of pre-assessment or doing a new “as is” and a new future state, including change management, including all those sorts of preparation steps that you have to make for an entire digital transformation. 

The first is called Third Stage Consulting Group. They're in the US and based in Colorado. They have a European subsidiary and Africa and Asia. The CEO, Eric Kimberly, and the company are taking a tech-agnostic viewpoint - this is the system you should be on and on the cloud. 

You'll see many videos of all the things, and they have digital stratosphere conferences and all kinds of things like that. And they're a really good organization. A bit cheaper, so there is less incentive to drive up the consulting cost or whatever or have huge teams.

The other one is called PEMECO. They're in Toronto, Canada, and their CEO is Jonathan Gross. So, if you choose any of those, just say that Dan sent you.

One of the things that you've mentioned is avoiding vendor locking when choosing a solution. It takes away a lot of your agency in getting new add-ons and modules, one different provider, or once you choose to cut ties with this one, you want to keep your data and integrate it easier into other solutions. 

Advantage of the Cloud over On-premise Systems

You seem to be a huge cloud proponent throughout the conversation and your content. Yeah. Could you tell us why?

The on-premise systems are an unsustainable model in the end, and there are many reasons for that. One is that human resources are dying because you've got younger generations coming in. They're not going to want to enter a sales order, directly into an ERP system, for instance, on a laptop. 

They want to do something totally in the cloud. All the data is in the cloud. All the applications are in the cloud. They're going to consume it with mobile devices. The only way you're going to do that is to get away from the on-premise model.

I mean, you got dinosaurs like me who understand and who want to learn an older version of an SAP Oracle or whatever. Who's going to learn that? It's an unsustainable model. But the biggest thing with the cloud is that all those pieces I talked about can all be on and frequently are already on the cloud.

You don’t get eCommerce or Business Intelligence solutions that can pull from the cloud from on-premise systems. That is why I am a huge proponent of the cloud. 

Let’s say you are performing a lift and shift type process to get up to take an on-premise older version of an ERP package and bring it up to the cloud. And when you do that, you have an opportunity to rationalize things. You can rationalize customization, for instance.

So you have to rationalize those customizations and look at new functionality and say, hey, but the new functionality does it. Or there's a report that does it, or there's a report writer that goes with the ERP system that does it. So why redo that customization when I bring it up to the cloud?

The On-premise Band-aid

Another thing that I've been formulating lately, and in some of my interactions with Third Stage Consulting Group, they came up with a company that I'm getting anointed with - it is called Palantir. 

They take the data in from all these different sources and leave the legacy Apple application structure in place, pulling all the data into one repository and allowing data analysis. While you've got all these legacy applications and you're working towards getting everything onto the cloud, it can be a band-aid or even has some things that could stay permanently. 

There's another system that I've been using, which is a data warehouse solution that can pull data from legacy applications. So it brings it all up into one data warehouse, and then it has all kinds of KPIs and dashboards and things like that. 

Most importantly, it has AI, and predictive data analytics all built in. So that can also be an interim process and one that's already in place while you're working on a cloud project to take all your ERP systems and standardize on one, you're still getting all the data, historical data, so you don't have to do a data migration, for instance. 

I can have seven years of general ledger history, and that's all sitting where it sits. So if that's on SAP, it sits there, no problem. You run a routine at night that loads all that data into the data warehouse. And it crosses the systems and allows you to do the KPIs, analytics, and predictive modeling, which is, again, the Holy Grail. 

Addressing the Cybersecurity Concerns of the Cloud

On the related subject, how do you address the concerns that sometimes proponents of the cloud have, particularly in terms of cybersecurity?

Frequently cloud systems, any systems, ERPs, or whatever are on Amazon web servers, for instance. It has its own Microsoft Azure or a similar sort of thing. You have a single sign-on, multifactor authentication. You got databases, applications, and everything is backed up constantly, hot backups, cold backups, redundancies, and all of this stuff. 

But the way in with single sign-on and multi-factor authentication is highly secure. So that's what I would say to somebody who says, you want to put it on-premise? Well, that's even more dangerous because you have multiple potential failure points or ways in for hackers.

They hack into a server, and there you go, which could be easier because there's only one way in or one procedure with a single sign-on. That is the key to having everything on the cloud and providing cybersecurity. 

So you take advantage of the platform, the AWS, Azure, or whatever it is, and you don't have to worry about a proprietary database or something like that. So not only is it harder to maintain in general in terms of database and operating system and all that, you've got these multiple failure points where cyber security is at risk, or hackers can come in. 

Future in Tech Innovation

And last but not least, anything cool you recently witnessed regarding new tech software, whether it be an industry or otherwise?

I found the EV charging industry very interesting. My former colleague was with me at Priority this year and left to join this company. It's called Drivez, and he explained it to me because he knows how to pique my interest.

He said this is essentially the ERP software of the EV industry. It's a very cool software and tool to manage EV fleets, rental cars, buses, and personal EV charging stations in people's homes. And it monitors the grid. So this car would be low on charge or not getting charged or whatever. It can say this is a node that needs to be replenished from a bus fleet or something like that.