Friday, December 18, 2009

Hello readers!

As you may have noticed, we have not posted anything here in quite a while. We now have a new corporate blog, ERP Insights, as well as a new blog on Blogspot, which can be found at Frequent discussion topics include recent ERP industry news, software evaluation advice, ERP best practices, industry-specific software solutions, and more!



Wednesday, November 14, 2007

Breaking the Tie

Imagine yourself sitting at a football game. The two teams have battled hard for four quarters and the clock ticks down to 0:00, and in the end the score is tied.

Next, imagine that the game officials huddle at midfield knowing the game cannot end in a tie. However, there was no definition from the governing body prior to game time as to how a tie would be broken in the event one occurred.

The officials huddle for a while, and then start to throw out options. One says, “What if we let the mascots arm wrestle and the winning mascot’s team wins.” Another says, “What if we have the bands’ drum majors throw their batons as high into the air as possible, and the team of the one who throws it the highest while still catching it wins.” Yet a third says, “We’ll let each team's kicker kick one field goal from as far back as they want, with the one who successfully makes the longest kick winning.” Finally, a fourth says, “What’s wrong with the game ending in a tie anyway?”

You get the picture. Without a clear understanding prior to starting the game as to how ties will be broken, chaos reigns. So you might ask, “What does this have to do with selecting ERP software?”

Well, I get to participate in a lot of software selection processes. And in an alarming number of those selections, there is no plan as to how to structure the evaluation (i.e., no rules for the game) and in an even higher number of evaluations, there is no pre-defined method to come to a final decision as to the winning solution (i.e., no rules set up for breaking ties).

My recommendation, when you and your team set out to evaluate and select new ERP software for your business, have a pre-defined, analytical decision process paying particular attention to defining rules as to how the team will break ties. It is frequently the case where there is not a unanimous decision as to the preferred solution, or to use a boxing term, there is a “split-decision.” When organizing your team, have discussion up front as to the overall rules of engagement including how to break ties, and then stick to that decision.

And, if your team cannot come to a decision as to how to evaluate options, it is unlikely that you’re going to be able to reach a decision as to which solution to implement, and further, will not likely have good decision-making processes to keep an implementation moving along successfully. Defining the evaluation rules of engagement including tie breaking methodology should be a good litmus test as to whether or not your team is ready to proceed with software selection and implementation.

Thursday, June 28, 2007

Q&A from my "Software Selection" talk at START-IT magazine's M2M/Manufacturing Days Conference in Chicago

I had the opportunity to speak about "Software Selection" at START-IT magazine's M2M/Manufacturing Days conference in Chicago last week. The basis for my talk was the points I have been and will continue to highlight in this blog.

At the end of my talk, there was an opportunity for a Q&A. Here are some of the more interesting questions from that discussion.

1. Within the talk, I encouraged potential customers to be forthright in the process. I was asked how much it puts the potential customer at a disadvantage by being completely forthright.

There are several aspects to being forthright. First, if there is no project or a given vendor is not going to be given further consideration, it is in everyone's best interest to have this information disclosed. As a sales person for TGI's Enterprise 21 ERP software, if I am trying to follow up with a potential prospect, I would stop attempting to do so if I'm told that the project is dead or that TGI is no longer going to be considered (though I'd like to understand the rationale).

Second, in a previous experience, we've worked with a customer that was on a tight time frame for implementation. All interactions with the customer prior to signing contracts were off-site at their consulting organization's facilities. However, what the customer didn't inform us was that they had no internal operations, and that they were concurrently transitioning from an outsourced operation, hiring new staff and supervision in this functional area, and implementing our software concurrently. I assume the customer may have felt we and other potential ERP providers would have been scared off by this combination of circumstances. However, we certainly could have provided them with a more accurate expectation of the implementation process had there been a complete "truth-in-lending" discussion.

Third, relative to financial negotiations, I am involved in virtually all contract negotiations with new TGI customers. Some may feel that if they "play poker" during the process of preparing for and negotiating the contract, they will get a superior result. My negotiation style is one where I am much more willing to work with new customers who are open and honest - laying out what they need to make things work and achieve a win-win relationship, vs. ones attempting to play hardball while pulling all of the levers in the contract in their favor.

2. One participant in the crowd described how they had attempted to work with two very large, well-known ERP providers. The first organization suggested the given customer should sign a contract for a smaller number of users than they actually would implement in an attempt to have its software licensing fall in-line with the customer's budget. The customer informed that vendor they would not do this, as they were a business of high-integrity.

This customer then negotiated a contract with the second vendor. In this case, there was some functionality committed to by the vendor as included within their applications that in reality required a third-party solution to enable (which was not disclosed to the customer). When this was discovered, the vendor told the customer they would have to buy the additional third-party software, which was unacceptable to the customer. The customer asked me for advice in what they should do in this situation.

I encouraged the customer to attempt to work through things directly with the given vendor. Once this process was exhausted, if they were unable to reach an equitable solution with the vendor, then they would potentially need to seek legal counsel for potential resolution.

There was some further discussion about Cultural Fit. My point during the talk was that while a software vendor may have the ability and willingness to customize its software to more closely align with the customer's requirements, the likelihood that the vendor would change its corporate culture to more closely align with a new customer's culture was highly-unlikely.

Dan Miklovic, Vice President of Gartner Inc., who facilitated the session, further stressed that once customers get down to their short list and perform final on-site demos, while many continue to try to reach a purely quantitative conclusion, ultimately it comes down to Cultural Fit - deciding which of the vendors the customer feels most comfortable moving forward with.

I've had this same type of conversation with potential customers, and many continue to insist they will reach a purely quantitative conclusion. However, pretty much any of the potential vendors in the finals will reach roughly the same level of fit with the requirements (assuming a sound evaluation process). Ultimately, it comes down to which vendor the customer feels most comfortable doing business with for the long-term.

Monday, May 21, 2007

“If you don’t know where you’re going, any path will do”

Start with business strategy.

I was recently having a conversation with a business consultant friend of mine, who was describing a discussion he’d had with a friend of his. The friend was working on an ERP software evaluation for a large company, and was inquiring as to the company’s strategic direction for the next several years. This consultant was informed that he was to only focus on the requirements of the current business and not to be concerned with the company’s strategic direction. However, this consultant knew that with the implementation for this very large organization likely to take some 24 months, the business for which they would be implementing software would be two years outdated if future business direction wasn’t taken into consideration. He decided to move on as he didn’t want his fingerprints on this scenario.

I also find the words of hockey great, Wayne Gretzky, to fit this situation well. Gretzky said, “I skate to where the puck is going to be, not where it’s been.” From a business perspective relative to evaluating and implementing new ERP software, start with business strategy first. That way, one can enable the business that will be, not an outdated business model that will no longer be competitive in the future business setting. There should be an on-going process of continuous improvement, continuously seeking to enable new business models that sustain competitive advantage for the long haul.

Thursday, May 10, 2007

10 Common Pitfalls to Avoid in ERP Software Evaluation

Through my experiences of working with over 1,000 end companies in manufacturing and distribution and over 200+ consulting organizations over the past 3 ½ years, here is a list of what I’ve come to see as “10 Common Pitfalls to Avoid in ERP Software Evaluation.” I felt that if I came up with some snappy way to describe them, it would be both more entertaining (at least in my mind) and have more impact than by just writing a bunch of narrative.

I’ll list them now, and will take each one of these to describe what is meant by the situation and what is recommended to overcome each of these scenarios. So here are “10 Common Pitfalls to Avoid in ERP Software Evaluation”
  1. “If you don’t know where you’re going, any path will do”
  2. “It’s just an IT project”
  3. “I don’t know what I want, but I’ll know it when I see it”
  4. “Analysis Paralysis”
  5. “I want a new system that looks and acts exactly like the one we have”… AKA “‘Here’s how we do it in the old system’ syndrome”
  6. “The Beauty Contest”
  7. “If only I had known then what I know now, before we said, ‘I do’”
  8. “The World Tour”
  9. “Let’s just let ‘good ole Joe’ run the project”
  10. “Once selection is done, my job is over”

Tuesday, May 8, 2007

What Customers Want from ERP Software and What ERP Vendors Want

Next, we’ll examine what most customers want from new ERP software and what most ERP vendors want. While there are many layers to the topic of what customers want from new ERP software, the core answer of what businesses want from new ERP software is Business Results – business owners want to reduce costs, increase revenue, improve operational efficiencies, and make it easier for their customers to do business with them.

Beyond Business Results, companies also want the following from new ERP software:

  • Efficient software evaluation leading to a successful result – companies want to make excellent decisions in the most efficient manner possible (unfortunately, when businesses aren’t aware of how this process should work, it becomes very inefficient).
  • Efficient, successful implementation – companies want their new software to deliver the functionality they expect, and for the implementation process to be delivered on-time, on-budget, and on-scope.
  • Good long-term customer/vendor relationship (“win-win”) – companies want to be able to work with their software vendor, have continuity of relationships with personnel at that business, and be able to understand how best to utilize their software and to resolve issues as they arise.
  • Ability to grow with the solution – companies want a solution that will last them for an extended period of time, in many cases this is 10-15 years or more. To be able to do this, the software must be flexible, robust, and have sufficient functionality to be able to be leveraged as the customer’s business continues to grow and evolve.

So, what do ERP vendors want? Probably not surprising, they likewise first and foremost want Business Results.

Additionally, ERP vendors also want the same things the customers want:

  • Efficient software evaluation leading to a successful result – while ERP vendors would love to bat 1.000 by winning every deal they touch, they know that’s not practical. They want to compete in deals in an efficient manner where they can win and it is worthwhile to win.
  • Efficient, successful implementation – vendors want their customers to receive the business benefits they desire from their software, and want the implementations to be delivered on-time, on-budget, and on-scope.
  • Good long-term customer/vendor relationship (“win-win”) – vendors want to work with customers who are easy and fair to work with, have continuity of relationships of personnel, and are able to understand and internalize how best to use the software they’ve acquired.
  • Ability to grow with the solution – vendors want customers to continue to leverage more and more of their software’s capabilities over time. This helps vendors to continue to grow their solutions for existing and new customers as well.

While said somewhat under the covers above, I’ll also explicitly state the following which ERP vendors also want:

  • Efficient sales cycles (winnable deals, no “tire kickers”) – again, vendors want to focus their time on evaluations where decisions will be made and customers will move forward. There is no time to be spent with "perennial prospects" that go through the same evaluation once a year and never decide to move forward to do anything.
  • Happy, referencable customers – there is nothing better from a vendor’s perspective than having happy customers who are willing and able to act as references on their behalf.

You’ll note that to this point in time I’ve mentioned these things apply to most customers and most ERP software vendors. That is because there are still people, including those who set the cultural tones of their businesses, who believe that the only way for them to “win” is if the other party with whom they’re working is to “lose.” This “win-lose” mentality unfortunately still exists in the customer/ERP vendor intersection.

Speaking from an ERP software vendor’s perspective, when it is determined that a potential customer is focused on establishing a “win-lose” relationship, we walk away from those deals as rapidly as possible. Likewise, if potential customers determine that an ERP vendor is attempting to establish a “win-lose” relationship, those customers need to eliminate those vendors from further consideration as rapidly as possible.

The most prevalent situation where ERP vendors attempt to establish a “win-lose” relationship is where the functional and/or cultural fit between the vendor and potential customer are low, and the vendor is so hungry for new sales (i.e., Business Results are far more important than any of the other desires) that they continue to press on to close the sale. This will lead to an implementation where none of the other desired benefits from either party's perspective can be achieved.

Those who are unfamiliar with how to structure and perform an ERP Software Evaluation are more likely to be bitten by a vendor attempting a “win-lose” transaction. In these cases, those companies who are not experienced at performing these evaluations on their own are highly encouraged to find and engage experienced, independent assistance to help with the evaluation.

Wednesday, May 2, 2007

When Should I Replace My Existing ERP Software?

Let's examine when it's time to consider replacing existing ERP software. There can be a number of symptoms that will help point someone to realize it's time to evaluate and implement new ERP software. Some examples include:
  • Current software can’t match existing business processes - this may have existed from day 1 of new software, and the gap may have continued to widen over time with the new solution.
  • The business is changing and software can’t enable this change - as the business changes, new processes can get introduced which help enable that business to be competitive in new markets with new customers.
  • Lots of off-line processing (i.e., spreadsheets, manual processes, re-keying of data multiple times) - if the existing system doesn't allow someone to get their job done, they tend to find ways around the system to do so. Unfortunately, these inefficiencies can eat substantial amounts of time and can create data inaccuracies as the "same" information is entered multiple times in disparate systems.
  • Have lots of “data” but can’t get “information” out of the system - analyzing information is critical to continuous improvement and attracting / maintaining good customer relationships. One can get handcuffed by have a data rich, information poor environment.
  • Can’t easily implement new functionality or technology (i.e., RF/barcode, EDI, warehouse management, CRM) - there may be improved efficiencies to gain and/or new customers to attract by making it easy for them to do business with you. Many times, technology is a key enabler to making it easy for your customers to interact and transact business with you.
  • Existing software and/or underlying infrastructure is no longer supported by the associated vendors - as there have been massive amounts of acquisition in the ERP market, there are lots of ERP solutions which were thought of as "flagship" solutions that are no longer receiving an adequate level of investment to keep existing and attract new customers. One's vendor may have "dropped support" for its software without doing so in a formal way with its customers.
  • Can’t keep up with business demands by writing custom software vs. using packaged software solutions - for those who continue to write their own custom software, there are so many "commodity" processes that one could enable via packaged software while still gaining the benefits of customized software in those "competitive advantage" processes. Unfortunately, most companies who have a "build" vs. "buy" approach to software do so across all business processes, and either pay a lot for "commodity" processes or can't get resources focused on the "competitive advantage" processes due to keeping day-to-day operations running.

As a means to help businesses evaluate whether or not it is time to replace their existing ERP software, Technology Group International has published a White Paper entitled, "How to Tell If You Have Outgrown Your Existing Business Software" which is available from TGI's Web site at