“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.
