"Turning the tables on ERP"
A review of Microsoft Dynamics NAV version 5.0
Contents
Reconnecting users with the business
Customer relationship management (CRM)
When Microsoft first embarked on its foray into business systems there were obvious synergies between their platform technologies and the popular ERP packages of the day. After all, SQL Server had become the commercial database of choice for mid-range companies and most businesses used Microsoft Office and Outlook as their favoured office productivity tools. Many observers expected the business applications such as Dynamics NAV and Microsoft's enabling technology to develop in parallel, taking cross-over opportunities as and when they arose. Few could have predicted the extent of the synergy that would develop.
Rather than accept the status quo, Microsoft has used its experience of personal productivity tools, collaborative working and enabling technologies to shake the very foundations of ERP design. The result has been a seismic shift from a modular system design to a roles based paradigm and a completely inverted view of the way that ERP applications should be designed and delivered. It is as though accepted ERP design has imploded – applications previously on the outside of core functionality are now on the inside – with users accessing ERP functionality through Microsoft Outlook rather than the other way around. In so doing, Microsoft is reconnecting users with the business processes they are expected to operate, allowing them to share business insight from the thousands of transactions they process and providing a single platform for more efficient roles based processing. No longer will organisations be hidebound by an artificial separation between office productivity and business processes.
This is good news for mid-market businesses that seek to remain lean, competitive and responsive. They can benefit from the latest process innovations whilst maintaining a lid on training and development costs. Furthermore, as the Dynamics family increasingly shares common components and development environments, individual companies will benefit from a greater pool of skilled resources.
Microsoft's acquisition of Navision, Great Plains , Axapta and Solomon Software a few years ago marked its first venture into the ERP mid-market. With no formal track record in ERP development, but an unrivalled understanding of user interfaces, worker productivity, collaborative processes and workflow, Microsoft set about challenging every aspect of the market as it got to grips with its acquisitions. The result was a remarkably fresh perspective on how people should work with ERP systems.
Navision (now Dynamics NAV) was typical of the portfolio of products it acquired. It was a reputable and functionally rich software suite that provided comprehensive processing capability across the supply chain, distribution and financial management. But in common with many accounting products of its generation, its modular design and presentation reinforced a functional or departmental approach to processing and the "user experience", although competent, was workmanlike and uninspired.
Microsoft's early doubts about the user interface were confirmed by a massive research project in which it methodically followed the activities of several thousand mid-market users in an attempt to discover the way in which people really worked with business software and the tools that they needed to perform their role.
They discovered that although ERP systems were central to business activity they were difficult to use and required lots of specialised training and support. Furthermore, office workers were wary of the software and did not enjoy using it. Yet for years, ERP systems had supposedly been the cornerstone of office activity.
On reflection, the reasons that ERP systems enjoyed such prominence are easy to understand. They represent the most trustworthy source of corporate information about customers, suppliers, products and employees and their applications 'touch' virtually every functional area of the business. Furthermore, they are the organisation's primary transaction records from which management accounts are generated, statutory financial statements are produced and taxation liabilities are settled. So the idea that ERP systems should occupy the centre ground of business systems largely went unchallenged, even though its modular design confined workers to departmental silos and did not reflect their broader involvement across business processes.
In effect, ERP software of the day supported a limited set of tasks, with workers being left to fill in the gaps through informal communications, paper processes and walking the corridors to answer queries or handover responsibility to the next person in the process.
In fact the research goes a long way to explaining the rising popularity of Microsoft Outlook in a business setting because apart from the natural inclination of human beings to communicate, organisations are able to use Microsoft Outlook to 'paper over the cracks' in their business processes. For example, emails can be sent between successive workers in a business process to alert them to a transaction or event and email distribution lists can be used to reach out across interdepartmental boundaries or different functional areas. Meetings and conference calls convened in Outlook support the need to communicate through the organisation, collaborate on business transactions and to share information. Similarly, emails sent to customers and suppliers allow 'outsiders' to be brought into an informal workflow without the need for any complex IT provision or skills.
Whilst this heavy reliance on Microsoft Outlook has served businesses very well, it has some notable downsides. The informal processes supported through email are one-off exchanges which leave little in the way of an audit trail and do not form a suitable basis for repeatable and dependable processes. Furthermore, information sharing which usually accompanies an email exchange is often in the form of document and spreadsheet attachments which have to be individually crafted, cut and pasted into the email ready for despatch. Nevertheless, the ability of Microsoft Office to accelerate business transactions and shore up informal business processes has played an important part in extending the life and value of ERP systems.
Recognising the growing importance of Microsoft Office applications other software vendors have responded by strengthening the integration between Office and their ERP systems. Typically, they have promoted a 'hub and spoke' model where the ERP system remains the core of the architecture, connected radially to Microsoft Excel, Word and, more recently, Outlook and standalone CRM systems. However, if Outlook really is the preferred method of working and the common thread that weaves its way through business applications and processes, should it not be the focal point of a business system rather than the ERP system?
It is a challenging question with far-reaching consequences for systems design and business users, but undeterred by the enormity of the task, Microsoft has seized the opportunity to take the Dynamics family of ERP systems, (Dynamics GP, Dynamics NAV and Dynamics AX) in a radical new direction and place Outlook at the centre of its architecture.
The re-architecting of the Dynamics family, which also includes standardisation on the Microsoft technology platform right across the board for reporting, web services and integration capability, is happening in parallel, so that current releases of Dynamics GP, Dynamics NAV and Dynamics AX are largely in step. However, Dynamics NAV v 5.0, the subject of this review, marks the start of the next phase bringing all of the latest developments and thinking around a common interface and roles based processing together in one environment.
Reconnecting users with the business:
The idea that Microsoft Outlook should be the principal interface to an ERP system is more radical than it first appears, especially given the context that many software vendors are moving towards the web browser as the preferred user interface. In practice, Dynamics NAV 5 'borrows' ideas from both Outlook and web based environments to create a hybrid interface that bears the hallmarks of both technologies.
The central theme of the NAV interface is unmistakeably Outlook, with separate panes displaying a calendar view of appointments, a task list and inbox messages laid out prominently in the centre of the screen. Similarly the left hand pane displays shortcuts and ERP menus in familiar Outlook style.
The Interface 'borrows' ideas from the web and Outlook
An idea 'lifted' from browser technology is the ability to click on arrows at the top of the screen to move backwards and forwards chronologically through pages of information viewed earlier. A search box allows the user to undertake a free-text search of any information held within the ERP system and related documents in a similar way to a desktop search. (In fact, when Vista , Microsoft's new operating system, becomes available then users will be able to launch a search of any information held within the enterprise directly from their NAV interface.
It is this familiarity with the user interface which is all important. It means that even staff members who are unacquainted with an ERP system can get their bearings very quickly and start to navigate the ERP system with a higher level of confidence and very little instruction. This in turn has benefits for cross-training individuals from one area of the business to another.
But this approach also simplifies processing and improves productivity. The user only has to open a single application, searching across the entire ERP system can be done from within the same application and the ability to go back over recently used screens saves the effort in navigating complex menu structures.
Microsoft's initial research into the way people work involved more that 2,000 interviews in mid-market businesses and approximately 2,500 hours of video. From this early research, Microsoft identified 53 separate roles to which they have given chummy names such as Sara the CFO, Inga in purchasing, Kevin the account manager , Susan in sales ordering and so on. The idea is that, over time, these roles will be embedded within the software (whether you are using, for example, Dynamics NAV, Dynamics AX or Dynamics GP) as the next stage in a broader move towards convergence. Currently there are 30 roles delivered in NAV 5.
Roles-based processing brings together set pieces of user functionality "Infoparts" appropriate to a particular user's role in the business. Infoparts are re-usable objects which are displayed in separate panes in the user interface and can leverage the full panoply of Microsoft's technology platform and the ERP system itself.
For example, Infoparts can display a graphical report of performance using Reporting Services, a view of backlog statistics and performance using Business Scorecard Manager or perhaps text from commentaries attached to individual transactions. So the concept of roles-based processing in Dynamics NAV is essentially a complete environment, almost portal-like in construction, where information from different data sources can be brought together on the same page. This is considerably different from other vendors who purport to support roles-based processing but effectively just re-arrange their ERP menu structures.
As an example, the Infoparts displayed for "Susan" in sales order processing, pertain to her role in progressing the confirmation of sales orders to customers, the picking of the goods in the warehouse, their despatch and invoicing. Her Infoparts include; a "Notes" section which shows comments recorded against transactions in the NAV system, a graph of sales orders processed and completed each day together with a weekly average, a pick list of the top five customers and a process bar with a highly visual representation of order progress and backlog - for example, the value and number of sales quotes that have been processed, draft orders awaiting processing, orders that have been shipped and sales orders held pending resolution of a problem in fulfilment.
At a glance, Susan can take stock of her position and assess priorities for the day because all of the key information required to master her role is presented at her fingertips in a meaningful way in a single 'home page'.
Microsoft's shift to roles-based processing vitally recognises that Susan does not work in a vacuum. Whilst Infoparts equip her with vital business intelligence and actionable information, for example, KPIs, (Key Performance Indicators) alerts, emails and comments drawn in real time from the NAV database, the effectiveness of her role depends on her ability to interact with other workers involved in the same process.
For example, an alert on her 'home page' warns her of a 'stock-out' against an individual sales order and moving directly to the sales order enquiry screen (a common task always accessible from Susan's roles-based home page) she can view the status of the order and, say, an appended note from the warehouseman explaining that the stock that was due for delivery is damaged.
An Infopart on the sales order enquiry presents a snapshot of the stock item card showing substitute items which she can review and accept, or offer to the customer as an alternative. Suggested workflow prompted by the system allows Susan to send the specification of a substitute item by email to the customer. The system opens up Susan's email and deposits a formatted description and accompanying image of the item directly from NAV's stock file into Outlook.
An item specification is seamlessly transferred into email
It's a supreme example of the complete inversion of the traditional ERP model! Outlook is central to the process – an integral part of the NAV transaction engine rather than an afterthought or loosely coupled application on the outside of the process. Traditional ERP solutions would have Susan go into a separate menu structure to look at the inventory file, constantly watch her email to see if anyone could explain why there was a stock-out, find out if there were any realistic stock substitutes available, print off their description and probably fax them to the customer with a Microsoft Word generated cover page.
On the other hand Susan's comprehensive email is likely to generate a fast response from the customer directly to her in-tray. If the customer accepts the substitute items Susan has offered she can amend the sales order, update the back order, inform the warehouseman, organise picking and shipment – all from within her roles-based interface.
Using Outlook as the fulcrum for collaboration rather than the ERP, Susan is able to reach out across functional boundaries to the warehouse (and externally to the customer) without once having to leave her desk or make telephone calls to glean information or to explain her actions.
But more subtly, the Dynamics NAV system provides guided workflow which makes the process more intuitive and efficient. Microsoft's thinking about roles is definitely more than skin deep. It's not just about 're-arranging the deckchairs' and presenting common roles-based menus. Selecting the appropriate Infoparts to display as part of the role is research-based and designed to maximise efficiency, but the ability of the system to guide Susan to substitute stock items and to facilitate the accounting and customer interactions illustrates the way that workflow is gradually being embedded in the Dynamics family.
Embedded workflow guides the internal accounting and customer interactions
In the short term, the suggested work flow is 'hardwired' though it can of course be modified by Microsoft's authorised partners. Developers or end users can also take advantage of Microsoft "Infopath", part of the standard technology offering, to create user definable forms, around ad-hoc or specialised industry processes not routinely covered by the Dynamics NAV system. Longer term, Windows Workflow Foundation and BizTalk Server 2006 will allow more user definable workflow to be embedded in the NAV applications.
A significant benefit of the combination of a roles-based environment and embedded workflow is that the interface contains all of the information relating to a process cycle in one place. A particularly useful Infopart takes advantage of document types recorded in the NAV database to display the path of, say a sales transaction, from inception (quote) to completion (delivery note) with all stages in between. It means that a sales order clerk such as Susan, can deal with customer enquiries and disputed transactions quickly and efficiently by re-tracing events and dates, including notes of telephone calls, and drilling down into underlying documents where necessary.
An Infopart gives a unique process view
Since the early days of its development, Navision has enjoyed a good reputation for its level of business integration and the ease with which information can be retrieved from across the database whether one is working with supply chain functionality, or within financial management or distribution.
In a sense, the term "integration" is misleading since it gives undue emphasis to the boundaries between applications when in fact the exchange of information is relatively seamless. Users of NAV will not be overly conscious of interfaces between Outlook, Excel, Word and NAV, although technically speaking they are present. The same concept applies to the rest of the Microsoft's technology offerings, the so called "technology stack". In essence, NAV and the other Dynamics products have been infused with the underlying technologies so that report creation, scorecarding, business intelligence and portals form part of the same environment.
Infoparts, portals, processes and workflow may rely, for example, on Microsoft's SQL 2005 Reporting Services, Web Services, SharePoint and BizTalk. Nevertheless, the tight union of the technology stack and the business applications means that the business user is shielded from any technical complexity. For example, generating production reports, ad-hoc queries and user definable business reports or publishing them to the web using Microsoft SharePoint is a straightforward process that promotes collaboration and allows information to be shared immediately across the web.
Customer relationship management (CRM):
As time marches on, more applications are being brought into Microsoft's unique blend of technology and applications. Most notable amongst these is CRM, which for historic reasons has been seen by the market as a separate application area, encouraged by a plethora of standalone packages and outsourced solutions offered over the web.
To date, Microsoft's CRM software has been extremely popular as a separately marketed tool though tightly integrated to the Outlook, Word and Excel. However, as the CRM marketplace matures, there is growing recognition that CRM overlaps extensively with the sales functionality and workflow within Dynamics NAV. Again, leveraging the capability of Outlook, CRM functionality is folded into the NAV environment as though it had always been a part of the system.
For example, sales quotes raised in the CRM system, can take advantage of customer records held in Dynamics NAV where available, together with product/price matrices held within the sales order processing system. Furthermore, stock availability can be checked at the time that the quotation is generated and sent by email to the customer or prospect. As before, the CRM element of the extended sales workflow can take advantage of the same functionality described earlier to send product specifications by email. Unlike standalone solutions, the progress of a quote can be traced using Infoparts similar to the elements configured in Susan's homepage.
When quotations turn into orders, the information is already in the sales order processing system and can be progressed through stock picking, despatch and invoicing without any interruption to the workflow or delay to the customer.
Similar principles apply to the maintenance and service call functionality which become an indistinguishable part of the NAV solution. Finally, the value of outstanding quotations logged in the CRM together with the projected value of the pipeline could be surfaced in a financial forecast held within the NAV system.
With this latest version of Dynamics NAV, Microsoft is widening the gap between its ERP offerings and the rest of the ERP marketplace. Whilst other vendors will seek to emulate Microsoft's lead, (using many of the same freely available technology components) few will have the financial means and resources to re-engineer their applications in the same way.
Nevertheless, the way forward is not without its challenges. Microsoft is saying "We can make ERP systems work the way that you do" – which is profound and supported by this latest release of Dynamics NAV. No doubt, some mid-market businesses will understand the true significance of the shift right away but others will take time to appreciate its full value.
Microsoft may have to wait a while for the market to catch up – but then it is no stranger to taking the lead on technology.
About FSN Publishing Limited
FSN Publishing Limited is an independent research, news and publishing Organisation catering for the needs of the finance function. The report is written by Gary Simon, Group Publisher of FSN and Managing Editor of FSN Newswire. He is a graduate of London University , a Chartered Accountant and a Fellow of the British Computer Society with more than 23 years experience of implementing management and financial reporting systems. Formerly a partner in Deloitte for more than 16 years, he has led some of the most complex information management assignments for global enterprises in the private and public sector.
www.fsn.co.uk
Whilst every attempt has been made to ensure that the information in this document is accurate and complete some typographical errors or technical inaccuracies may exist. This report is of a general nature and not intended to be specific to a particular set of circumstances. FSN Publishing Limited and the author do not accept responsibility for any kind of loss resulting from the use of information contained in this document.
