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Before we get into how to evaluate the myriad ERP systems on the market, I want to challenge you with a couple of questions about ERP.

1. What are you using to run your business now?

• A homegrown system;
• Big Chief tablet & crayons;
• a mix of Quickbooks + Excel + downloading info from vendor websites?

2. What does your existing system not do that you are hoping to get from an ERP system? Some of the primary reasons for replacing an existing system include, better visibility of the financial health of the company. Make your own list.

• greater control over inventory,
• shortening order lead times,
• better reporting for inventory, cash management & financials

3. Do you need to replace what you have or can it be improved? Cost is a huge driver of technology adoption. ERP can be expensive and disruptive. Change management is a big component of a successful ERP implementation. The big question here is are the benefits of change worth the cost of implementation?

Making the change

So, you’ve looked at what you’re currently using and have decided that it’s time to make a change. It’s worth having a Trusted Consultant involved to help direct the ERP Selection Process. A Trusted Consultant that has lead ERP implementations can save you many frustrating hours of research, false starts and point out pitfalls and benefits that you may not think of.

Developing the Requirements List

The list you created in answering question 1-3 above is the beginning of your Requirements List. Expand this list to include a list of all the inputs to those systems.

We don’t have a ‘system’ you might think. Yes you do. It may be manual and involve many moving parts, but you definitely have a system of ordering products or raw material and then selling that product. You order things, track inventory and dollars, you pay for things, you make deposits. You have a system. Determining the entirety of the systems used may require that you start at the beginning and write down your entire process. This is a great exercise even if you aren’t looking to implement an ERP system. Knowing what your staff does and seeing where you can improve will make everyone’s life easier and potentially add to the bottom line.

Determining your Process:

Quite simply, you determine you Processes by walking through each step that your business goes through to conduct business.

Purchasing Process: 

• Whenever Purchasing orders new inventory, they emails Accounting to see if there are funds available and to have a PO issued,
• Purchasing calls or go to Vendor A website and places an order.
• Purchasing emails Accounting an order confirmation to be entered against the PO.
• Purchasing emails Inventory that they have ordered X quantity of Y product from Vendor A.
• Purchasing emails Shipping to expect a shipment from vendor A next Tuesday.
• Purchasing manually updates the Purchasing Excel file to show that product is on order.

Accounting Process (related to Purchasing):

• Accounting generates a PO in the Accounting System.
• Accounting updates the PO with Vendor Order information.

Inventory & Receiving Process (related to Purchasing):

• Inventory updates an Inventory Spreadsheet with X quantity of Y product on order.
• Receiving empties truck and stores the product in the warehouse.
• Receiving delivers the Bill Of Lading (BOL) to Inventory.
• Inventory updates an Inventory Spreadsheet of the Receipt and deducts the amount received from the amount ordered.
• Inventory files the BOL in the proper vendor filing cabinet.

You get the idea… Do this for your entire order process from beginning to end. Yes, it’s tedious but it is absolutely necessary. Simply by doing this process you may find several steps that could be eliminated or that are duplicated by different departments to make the cost of ERP Selection, Implementation and Customization worthwhile.

The Selection Process:

In general the steps to narrow the field of ERP options and help drive the selection of the right ERP System for your business are as follows.

Step 1: Appoint an ERP Champion. This person will be tasked with gathering the requirements and narrowing the choice of ERP systems. Depending on your business this may be the CFO/Controller, the IT Director, Head of Sales, CEO or whoever is best for your business. It helps if whomever is chosen is well thought of across the business and has the ability to listen to users of all levels as they will be interacting with people from all aspects of the business.

Step 2: Grant your Champion with enough authority to pull people out of circulation for the time required to help create the complete Requirements List and evaluate different systems.

Step 3: ERP Champion convenes a Requirements Committee from department across the business. This should include a representative from each major department that will interact with the new system. Make sure to include CxO, Legal, HR, Inventory, Sales (Inside & Outside), Warehouse, Information Technology, Purchasing, Accounting and any others who will use the system regularly.

This group meets a few times 2-4 over the course of 1-2 months to determine the Requirements of the potential replacement system(s).

Step 4: ERP Champion convenes a Selection Committee. This group may be a subset of the Requirements Committee, but should include the input of actual end users of the system and not just Management.

Step 5: ERP Champion creates a Request For Proposal for the ERP system. As part of the RFP process the ERP Champion should research ERP systems and their feature set to have an idea on what systems will be suggested in response to the RFP.

Step 6: Publish the RFP to the manufacturers of the ERP systems that the ERP Champion has determined meet the majority of the Requirements. In most cases, the manufacturer will re-direct the RFP to their trusted partners that are familiar with your industry and size of business.

Step 7: Reconvene the Selection Committee and review the responses to the RFP. Evaluate the responses to your RFP. How much customization will it take meet all your Requirement? Don’t kid yourself, EVERY system requires customization, its all a matter of how expensive is that customization?

Step 8: Call the references of each of the ERP vendors that meet your requirements. Talk to the Accounting, IT, and Executive Management staff to see how the implementation went. Be sure to ask about their experience working with the vendor. Ask if they are still using the ERP system and the vendor.

Step 8a: Depending on your needs, it may be wise to go on a site visit to one or more of the referenced accounts.

Step 9: ERP Champion stack ranks the ERP systems based on the Requirements List, ease & cost of customization, and other factors that will business specific.

Step 10: Reconvene the Selection Committee and have them review the Stack Rank List of ERP Systems. The Selection Committee makes a recommendation of which ERP systems to demo by which vendor. You may want to have multiple vendors demo the same ERP system. I highly recommend being up front with everyone by letting them know who is playing at the table.

Step 11: ERP Champion sets up demo’s.

Step 12: Requirements & Selection Committees attend the Demo’s of the ERP systems. During each demo, the ERP Champion should be taking notes of likes/dislikes and reaction to the various ERP systems.

Step 13: ERP Champion evaluates the results of the demo’s and makes decision on which ERP to purchase and which vendor to purchase from. This step may include conducting a Proof Of Concept (POC) with actual business data to get a clear sense of understanding of how the new system will work in your environment. Expect to pay the vendor for their time during the POC. If the POC is done correctly, most if not all of the work done for the POC can be used during the implementation phase, which makes paying for a POC easier since the effort is not unique to the POC.

Step 14: The ERP Champion and Selection Committee make a recommendation to the Executive Team on which ERP system to purchase and which vendor to perform the implementation.

That’s if for the Selection Phase. This is followed by an effort of the vendor and internal or consulting staff to begin the actual implementation of the new system. Implementation may include purchasing new hardware, segmenting your LAN, purchasing new SSL certificates, and other things not originally thought of during the Evaluation and POC process.

 

-- this post originally appeared on LinkedIn --

 

Do you have a division or line of business that is being prepped for spin-off, IPO or sale? Are you in charge of IT at the group being spun off? If so, are you finding your counterpart at the remaining company being uncooperative?

Unfortunately this is a common situation that IT Directors and similar level professionals find themselves in during interesting economic times. The goal of the business should be to make the split as cost effective and quickly as possible. To meet that goal, both sides should expect their respective IT Departments to work together to complete the split or integration timely. Do this happen? Nope. Not always.

As a consultant, I have witnessed too many antagonistic divestitures. It’s disappointing to watch as people who used to be friendly with each other, put roadblocks in place and try to cause the other to fail.

Some thoughts why this happens:

Some see it as a threat to their fiefdom or a sign that they have somehow failed because they will have a smaller garden when the process is finished. Or, maybe they’re jealous that you get a small group and essentially get to start from scratch and build everything new with little to no legacy systems to support. Right, no legacy systems – we all wish for that, don’t we?

How to survive the process:

You may decide to have a 3rd party involved to act as a mediator during contentious times. The primary benefit to this is that the 3rd party can act as the ‘bad guy’ when insisting on certain changes or cooperations between the two groups.

It’s important to choose the right person or group to act on your behalf and in concert with you. The chosen 3rd party needs to have a solid understanding of the technologies in use by the business so as to know when the one group or the other is attempting to buffalo them or otherwise throw up roadblocks.

The 3rd party should also have a clear understanding of your business. Having experts that have worked in your industry, using the same or similar apps as your current group allows for a smoother migration and less stress on users of IT systems.

Both groups within the business need a clear understanding of who is doing what as well as which group will retain which assets and systems.

Communication is key:

Communicate with your users. They know you are splitting, but do they know why, when or how? Keep everyone informed to the level that the split affects them directly. Part of this process may require the use of a Change Management consultant. They specialize in helping business manage and roll out disruptive changes to processes.

Do you have to use 3rd parties to help with a Divestiture or other business breakup? Of course not, but it can make life easier and less stressful for all concerned.

-- this post originally appeared on LinkedIn --

 

 

 

 

 

 

 

 

Has your company put the brakes on spending? You are not alone, it’s a common condition.

If you have recently been told to cut spending you should take steps to ensure that your organization does not fall into the habit of thinking that your IT Projects are all a one time spend and that just because everything is working today, that it will continue to work for an indefinite period of time. It is very easy to be penny wise and pound stupid during financially challenging times. Make sure you are doing right by your employer during any joint venture or acquisition made during this time by educating your Management Team to the value of IT and its support of the business.

All IT Professionals know that maintaining a solid infrastructure requires continuing capital. Quality infrastructure and personnel are not inexpensive, and often Management doesn’t seem to understand. This is more the case at small and mid-size companies, especially those that have never had to stick to a budget because business was always booming. Now that the industry has contracted, they are faced with the reality of cost containment and OMG! sticking to a budget.

The first thing some companies do is place freeze on spending and hiring. Frustration soon follows as Department heads who are used to having signature authority for large purchases find themselves being micromanaged at a myopic fiscal level. You signed contracts for many 10s of thousands of dollars for the last several years and now you have to seek Executive Management approval for $1000 SaaS agreement. It’s a hard pill to swallow, I know, I was faced with this very reality in 2008 during the housing crash in Houston. All ongoing projects cut short, future projects on indefinite hold and no spending unless absolutely necessary. And oh yeah, I was told to cut headcount by 10% by the end of the week.

My team had already been reduced by 25% the previous year, mainly by attrition and Executive Management enforcing ‘Do more with less’. It’s tough but you make do, right? I didn’t see how I could cut any more staff and maintain current SLA’s.

How to cut 10% payroll without laying anyone off? My solution was to have everyone including me, take a 20% temporary pay cut and work a reduced 4 day work week with staggered schedules to cover all shifts. After individual and group team discussion, I went to the Executive Team and they accepted my proposed solution. Not all of my colleagues were happy that I figured out a way to keep all of my staff and reduce payroll by more than the 10% mandate. In hindsight I should have suggested this be implemented across the board in departments where it made sense.

What to do with that extra time? Some of my team saw it as an opportunity to go camping, study for new certification tests, or simply catch up on long lost sleep. I focused on boosting my then part-time consulting business and used the opportunity to more than replace the reduced income at my full-time job. I have since moved on and now am a full-time consultant helping others in similar situations find creative solutions to similar challenging problems.

Getting projects funded in tough financial climates is tough but not impossible, I have found it be a matter of perspective and sometimes, a lack of business knowledge. Before blaming Management for their lack of understanding, you should take a step back and understand who your audience is.

Your Executive Management Team are not IT folks, they don’t care about the latest whizbang feature or whozit of whatever hardware/software you want to buy. All they hear is “Hey, give me a wheelbarrow full of money so I can buy new toys.” They’re thinking, “Don’t you get it? We’re in dire straits and can only spend on what really matters.”

It’s your job to help your Executive Team understand why this project needs the go-ahead from a business perspective.

Have a Data Protection Project? It’s not about 3DES or 2048bit encryption or other technical jargon, Executive eyes glaze over about 30 seconds into this type of presentation. No, it’s about protecting customer data in case of a Security Breach and protecting the company from potential legal liability.

Other business tacks to take; Cost Containment (pay now or pay later – which costs more), Compliance Issues (potential fines), Business Continuity (potential lost revenue per day; customer retention), Information Security (protecting customer data to avoid potential lawsuits and fines)

Try a more creative approach to Project Authorization and I’m sure you will have greater success and bring more business acumen to the table and may even find yourself being asked to provide input to how IT can help the business in the future. But that’s a topic for another article.

-- this post originally appeared on LinkedIn --