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Level the Playing Field

Software today is much more sophisticated that in the early days.  Back then, your choices were accounting systems that allowed manual creation of AP Invoices and Payments, Manual AR Invoices and Payment Receipts and all of that would create General Ledger transactions.  You could create Bills-of-Materials and Bills-of-Operations; you had physical inventory management; and you had Production Management software offerings.  Options and features were few and so were the offerings.  Companies understood this and took delights in watching the demonstrations of the new bells and whistles that each software company created. 

Today there are hundreds of ERP offerings.  Users are more sophisticated that in the previous decades.  Bells and whistles do little to help companies understand whether an offering is a good fit for their business.  Today, companies must make a concerted effort to take control of the ERP selection process.  How does a company do that?   

“Today companies must carefully create a scenario for software vendors to follow.  The scenario needs to be one that details to the software vendor what the most critical business functions are”, says Mike Roman, Business Capabilities Architect and founder of Manufacturing PracticesMike began advising small and midsized manufacturing and distribution organizations in ERP selection and implementation more than 20 years ago and performed more than 60 successful ERP implementations on three continents.  Today, Manufacturing Practices continues to work with the same types of organizations to help select and implement ERP System to move them from good to great. 

Today, ERP Software vendors expect the customer to lead the selection process.  So, how does a company prepare for a successful selection process? 

The steps to follow are few but few companies have the bandwidth to perform the needed activities.  Today, companies need guidance.  That guidance can come from outside the ranks of the organization and using a consultant is the answer. While many people claim that expertise, few can demonstrate it.  The right consultant is the consultant that performs these activities as their company directive.

Here are the steps that successful companies have used to select ERP Software to support their business and is the one that Mike recommends:

  1. Educate the organization about what an ERP System is and what it will do for and to the business.  APICS – the Association for Operations Management is a good place to start that education.  Do not overlook an offering from the consultant you choose to help lead the selection effort.   The education for Top Management occurs differently that the education for other employees of the firm.
  2. Streamline the business processes and fully document them.  This will help the organization to remove the non-value added activities and will improve the flow of information between the departments.
  3. Top Management creates the definition of what differentiates their organization from other organizations that provide similar products and services.  The management team then identifies a list of the top requirements that support the business.  The company uses this list to find the best ERP Software for their business activities.
  4. Create a business scenario to use as a template for software vendors to follow when demonstrating this software.
  5. Create user scorecards to use to evaluate the various vendor offerings.
  6. Have the vendors demonstrate their offerings using the business scenario created in step 4.
  7. Have users score the demonstrations using the scorecards created in step 5.
  8. Visit customers from the leading software vendors (without the presence of the software vendor and
    1. verify your understanding of software use
    2. get an unbiased assessment of the software vendor’s implementation methods and abilities
    3. if the software implementation is to be performed by a third party, visit their customers that of similar size and industry type and learn about their implementation methods and abilities
  9. Score these visits as you did the software review process
  10. Total the scores from the score sheets.  In most cases, there is a clear winner.  In the unlikely event that two or more vendor reviews generate the same scores, use that to your advantage to get additional service considerations from the vendors during the contract negotiations.
  11. Negotiate the contract with the vendor.
  12. Sign the contract and begin the journey toward improved company functionality.

There is no magic bullet to guarantee a successful ERP selection and implementation.  Reasons for success and failure vary between companies because all companies manage themselves and their projects differently.  The process outlined above has shown to reduce the risks associated with changing the business that always accompanies using business management software.

For additional information about software selection and implementation Read about “Putting the Chart Before the Horse”.

 

To begin a dialogue, contact us. Call us at 770-772-6894, Skype: michael.a..roman, email: operations@manufacturingpractices.com. We look forward to earning your business.