Following the launch a fortnight ago of Eli Goldratt’s (the management guru and ‘father’ of Theory of Constraints (TOC) IT and methodologies) powerful ‘Necessary and Sufficient’ no risk offer to revolutionise manufacturers’ and their IT’s profitability, the Goldratt Institute has now revealed that it’s looking initially for 10 companies to pilot projects on an even better deal. Brian Tinham reports
Following the launch a fortnight ago of Eli Goldratt’s (the management guru and ‘father’ of Theory of Constraints (TOC) IT and methodologies) powerful ‘Necessary and Sufficient’ no risk offer to revolutionise manufacturers’ and their IT’s profitability, the Goldratt Institute has now revealed that it’s looking initially for 10 companies to pilot projects on an even better deal.
The offer – named after his latest book which examines the assumptions and mistakes of IT vendors, consultants, integrators and users in manufacturing businesses – is backed by ERP and e-business software and services big guns SAP, IBM and Mapics, plus Lilly Software, Ashridge Consulting, Gartner eMetrix and the Goldratt Institute.
Briefly, the original offer involves Goldratt-accredited facilitators investigating and recommending radical but achievable change using TOC rules and metrics – for a fixed (and much reduced) fee. Then, so confident is the consortium that implementation and running are free until agreed goals are exceeded, when payment as a percentage of improvement falls due.
But the first 10 pilots will get very special treatment. Eli Goldratt himself takes charge with personal supervision. And consulting, change management, training, education and implementation will be essentially free – charges of just 1% of turnover kick in when agreed (and serious) improvements that drive much greater profitability have been achieved.
According to Goldratt Institute managing director Oded Cohen, SAP has already allocated $150 million to fund the project, and others in the consortium in the US have likewise put substantial (undisclosed) sums aside. These firms will bear all the initial costs, whether it takes three months or two years to get the results of which it is so confident.
Analysts are cautiously impressed. Says ARC’s senior enterprise solutions researcher Simon Bragg: “It’s certainly worth a look: it’s a good offer and it ought to get a lot of attention. The other great advantage is it brings Tier One consulting to the mid-market.”
Bragg is concerned that mid-market manufacturers have largely lost out on ‘new’ methodologies and best practice not least because The Big Six consultants and system integrators can’t get the fees they need from them – and users themselves don’t trust them. So they’ve been left to their own devices.
“The whole area has fallen behind, and there’s a general lack of preparedness to do the essential process review and education job properly. It’s a bit difficult to do TOC training on the job! It’s always the case that you don’t know what you don’t know.”
And he adds, “The deeply frustrating thing is that companies like STG have been flogging Goldratt’s TOC technology for years and really getting nowhere.” The difference now is that it’s being driven by the seriously powerful marketing machines – and they’re not just offering the IT: there’s the crucial education element as well.
Goldratt’s Cohen expects most of the first takers to be in the US, where, he says, the mentality of manufacturers’ boards is less conservative. And he says TOC teaching is already happening in readiness, with IBM Global Services in particular gearing up its consultants right now.
Cohen insists Goldratt’s offer and methodologies will work – and stay working in the long term. Part of the deal, he says, will be a maintenance agreement which also covers the TOC knowledge side, to ensure that the benefits continue and grow, not getting lost over time.
And it’s clear that whereas Goldratt himself and the Goldratt Institute may be content to remain small and cosy, SAP, IBM and the rest are going to milk this for all they can. And that means aggressive marketing and considerable investment – both to cover the up-front costs and to deliver enough TOC consultants and facilitators.
If you do nothing else, it’s worth looking at the Goldratt books, training CDs and self-learning packages. And go to the web at www.mcsolutions.co.uk or www.goldratt.com for more.
Author: Brian Tinham