Monday, June 24, 2013

ERP Implementation Questions and Concerns

“Companies that try to manage implementation on their own – like defendants who hire themselves for lawyers -- often end up with advisors ill equipped for the job. “


The above quote (author unknown) expresses so much in a few words.  Doctors have an ethical oath and do not practice on family members for the same reason.  Objectivity.  As a trusted advisor, I try to explain to prospects and clients alike the advantages of having an objective third party to manage the implementation of a new solution. 


Fact: Everyone and truly every organization is budget conscience today. 


When trying to cost justify the expense, or is it an investment, in a trusted advisor is often more difficult than the investment in an Enterprise Resource Planning (ERP) solution.   We know the solution costs X, but why do we need an advisor, we can save Y by doing the job ourselves. 


Why are they implementing a new ERP solution in the first place?  What was running so efficiently that they even considered a new approach?


 Sufficient internal capacity rarely exists even at the largest companies to handle the complexities of a full ERP implementation.  Medium and small companies are even more challenged.  The lack of an objective advisor invites additional risks which typically ends up extending the project, increases the budget overruns, lengthens the Return on Investment (ROI), and often causes bad feelings and in some cases loss of employment. 


The goal seems to be to save money, upfront money, by trying to handle the tasks internally.  This is difficult to do when that person is responsible for their regular duties and in addition the responsibility of transforming an entire organization. 


Implementing and ERP solution is not as simple as opening a box, inserting a disk, and following instructions or a quick install guide.  Errors multiply and so does the cost of unraveling them in a timely way.


Perhaps one of the ways a trusted advisor helps most is in setting metrics that an organization utilizes to measure their progress.


So what are some questions that you may want to consider with your advisor?


·         How well does the ERP solution provider understand your business?


It really does not matter how great a solution is, if it does not match your business operations, then it probably is not the right choice.  Is the software designed for a service business?  A manufacturer, distributor, retailer?  Does the supplier have success stories in your industry or similar industry that has similar challenges? 


If the solution is too far off, then it will require too many modifications which will tend to destabilize the solution you are paying for.  The software also has to match your company’s culture.  If there are too many screens or steps then your people will be lost.  If there are too few, you probably are not capturing enough information to prevent errors or drive efficiency.  There is a balance that must be met on both sides.  Availability and need.  Conversion help and the inevitable changes that occur must have a way to be resolved.  Late changes that are not addressed properly will tend to destroy time tables and deliverables.



·         Does the supplier have the resources necessary to deliver the solution and support your organization in the future?


A lot of technology providers have been purchased or have been the subject of mergers and acquisitions lately.  At some point these mega companies will prune off the less profitable solutions and force migration to another solution regardless if it is a good fit or not.  These companies have increased their market share, but have not necessarily increased the effectiveness of their solution.  Are they concerned about your privacy?  That small company that used to service your needs had an agreement with you organization.  What interest does the new supplier have?


Is the solution provider big enough to be able to invest in new solutions?  Are they too small that a bus accident leaves you stranded?  Remember the annual license fee is not for the software that has already been developed.  It is for the development of enhancements that address the constant change in technology.  This fee can be discouraging when considering a solution purchase, but is typically a lot less than hiring your own staff and maintaining the changes needed to stay competitive.



·         Few ERP solution providers have every application needed.  What third party solutions are available and fully integrated to help drive efficiency?


Electronic Data Interchange (EDI), Payroll and Human Resources, Shipment scheduling and billing, Document management solutions are some common examples of applications that are often third party solutions.  These and other applications are specialized industry solutions whose needs are typically better addressed by a firm that is dedicated to the tasks. 


It is not to say the some ERP solution providers do not have modules to address these needs or that this is meant to be a complete list.  It varies.  The point is, does your provider have a tight integration with any solution for which they did not write?  Do they have the interfaces built?  Who is responsible for problems?  How many phone calls will you need to make when problems or issues arise?  Who do you call for help in configuration or training?


Can the provider you select address all of your needs?  It is your responsibility to ask and understand. 


The more of your operations that are integrated and talking to each other, the more efficiency you can drive in your operations, thus increasing the opportunity for cost savings and increased profits.



·         How do I know when the time is right and the provider is the right one?


Is it a leap of faith?  Maybe, but I would suggest it is when the value delivered is greater than the investment.  This implies there is a positive Return on Investment (ROI).  Price factors heavily when considering an ERP solution.  Total Cost of Ownership (TCO) is another big factor.  Upfront costs and ongoing operational costs should be analyzed.  A supplier that brings up budget in the beginning is a good sign.  At the beginning they may just be ballpark or ranges until a thorough analysis is performed.  Would you like to be wowed by a fancy presentation only to find that you could never recoup the investment or would you like to see something less fancy that will improve your operations that is actually affordable? 


Can the solution provider support your organization geographically now or in the future as you expand?  Remote support is one thing, feet on ground is another.  Make sure that you have local support.  Time zones are an important consideration along with location.  If you are West Coast and your supplier is based in the East, do they have support hours that cover your business?  Can you wait three hours for them to show up?


Will this solution provider be around in a few years to help you with the next upgrade?  How often do they come out with release updates?  Do they have user conferences for education of the people using the software?  Do they education themselves on the needs of users?  Do they implement changes that they learn about from user conferences?  What kind of training is available?



The selection process is not really as hard as you might think.  This is where your trusted advisor helps and earns their pay.  The trusted advisor knows and learns about your organization and uses their industry contacts to help narrow the field of possible solutions down to three to five candidates.  Next a match from your internal analysis and solutions can be made to eliminate one or two choices.  From there you can review an executive overview of the solution to determine your final candidates. 


After you are down to two or three choices a concerted effort and departmental analysis needs to be made to determine fit and list needed modifications.  If your supplier (potential supplier) is not involved or does not want to be involved in this process, then you may want to consider another solution. 


One question you may need to address is how much consulting can you expect at no-charge from the solution provider without a commitment.  This time and effort is typically covered by the initial license fee.  Some is included in the sales and prospecting process.  Some is billable project management time.  There is a gray line that separates the two.  Be fair and understand that free ends up costing more in the long run and by sharing the costs the long term benefits are worth the investment.



The key to success is not so much in the goals.  The key is in the growth objectives and results that come from the new solution, capacity and integration.



I invite you to contact us.  We are here to help you implement the best solution available that meets your budget and objectives.  Let us help you concentrate on your business while we concentrate on delivery of a new solution.  Dolvin Consulting works with midsized Manufacturers, Distributors and Specialty Retailers to help them implement new solutions that drive efficiency, reduce costs and increase revenue. 

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