| WHAT IS ERP?ERP is a term that is widely used | | | | requirement times the vendor response, and then |
| yet probably not well understood. It stands for | | | | summing the results, you get a score that will |
| Enterprise Resource Planning and although it was | | | | give you an indication of closeness of fit for each |
| initially targeted to manufacturing companies, | | | | vendor.Attend demonstrationsThe vendors should |
| today it encompasses any product that can be | | | | now know your Critical Success Factors and key |
| used across an enterprise. When implemented | | | | requirements, and should be given an agenda so |
| effectively, ERP enables companies to break | | | | that time is allocated properly. You should attend |
| down traditional organizational silos, replacing them | | | | no more than 4 demonstrations, and limit the time |
| with a tightly integrated horizontal structure in | | | | to 2-3 hours. Ask each attendee to identify major |
| which strategy, organizational structure, process | | | | strengths and weaknesses, as well as score (-10 |
| and technology are closely aligned. Applications can | | | | to +10) how well they did for each topic on the |
| include financial, distribution, manufacturing, human | | | | agenda as well as indicate its importance (1 to |
| resources, payroll, and project costing.There is a | | | | 10).Call referencesYou will be amazed at how |
| lot of confusion between an accounting system | | | | much you learn and how little some of the |
| and ERP. In the past, an accounting system was | | | | vendors know their customers. Have a checklist |
| limited to just financials, but that has changed | | | | of questions to ask such as our checklist that can |
| over the last few years and it's now hard to | | | | be obtained by clicking here. Tell the reference a |
| distinguish between an accounting system and an | | | | little about yourself before asking any questions |
| ERP system. The difference between them is a | | | | so that they have a level of comfort with |
| matter of degree as can be seen in the following | | | | you.Prove that the system will work for |
| chart.CriteriaAccounting System | | | | youPrepare a script that contains sample |
| ERPEnterprise-wide Maybe YesScalable Partially | | | | transactions that should be processed through the |
| YesFees Low to Medium HighRatio of | | | | entire system. The script is a day in the life at |
| Implementation Fees : License < 1 > | | | | your company will contain the most important |
| 1Customization capabilities Depends | | | | business processes with sample documents and |
| ExtensiveFunctionality Depends | | | | reports. You could ask 1-2 vendors to prepare a |
| ExtensiveTechnology Platform Single | | | | proof of concept. This is a time consuming task |
| MultipleAnalysisStart with an understanding of | | | | for the vendors as well as for you in attending |
| Critical Success Factors (CSFs) | | | | the demonstration. But you are only focusing on |
| CSFs are defined as those things that you must | | | | the vendors most likely able to win your |
| do well in order to be successful. You can use | | | | business.Negotiate the price and the contractIt's a |
| CSFs as a way to determine whether a | | | | buyer's market. You will get a minimum of 10% |
| requirement is really critical. If a requirement can't | | | | off the first quote. Many of the vendors offer |
| be mapped directly to a CSF, then it's not | | | | competitive pricing when they know they could |
| critical.Define measurements of successBefore | | | | lose to a competitor who could offer a reasonable |
| starting any project, you should know how to | | | | solution at lower a price.Know the Total Cost of |
| measure success in terms of saving money by | | | | Ownership (TCO)You need to understand all the |
| streamlining operations, increasing revenues, | | | | costs including license fees, implementation, |
| increasing market share... Measurements of | | | | support, hardware, networks and communications |
| success act as a motivator for staff during the | | | | before making a decision. There should be no |
| implementation, help keep the project on track | | | | surprises later. Click here for more about TCO.Do |
| and focus effort on attaining important business | | | | a Boardroom PilotYou need to work with the |
| objectives.Understand existing business process | | | | system to understand the many options. You |
| and seek opportunities for business process | | | | may think that a customization is required until |
| improvementUntil you have understood the | | | | you better understand the various workarounds. |
| existing business process, you are not ready. | | | | The vendor has an idea of the customizations, |
| Employees may not know that what they are | | | | but has probably not created a specification or |
| doing is atypical. Roll up your sleeves and talk to | | | | given you a firm quote. Use the boardroom pilot |
| the people who do the work. Remember the devil | | | | as a way for the vendor to understand your |
| is in the details. Along the way, your value add | | | | requirements and for you to better understand |
| may be in identifying ways to improve business | | | | the system before signing a contract and |
| process.Don't be ambiguous in the definition of | | | | purchasing the software. You will need to pay the |
| requirementsThe more ambiguous the | | | | vendors for their time. You should get a fixed |
| requirement, the more interpretation in whether a | | | | price as one of the deliverables of the boardroom |
| particular vendor meets the requirement. You | | | | pilot.ImplementationBusiness Case FoundationDon't |
| need to be precise so that you can compare | | | | forget what you should have known during the |
| apples to apples.Don't waste time on basic | | | | selection process. You should have already |
| functionalitySystems have matured to the point | | | | understood Critical Success Factors (CSFs). CSFs |
| where the basics are done well. Focus only on the | | | | are defined as those things that you must do well |
| requirements that are unique or could vary by | | | | in order to be successful. As well, you should |
| vendor.Manage scope, budget and timingProject | | | | have defined measurements of success. Before |
| management is the key factor in predicting | | | | starting any project, you should know how to |
| success of any project. Project management | | | | measure success. Measurements of success act |
| includes management of scope, budget and timing. | | | | as a motivator for staff during the |
| Rather than using the school of hard knocks, you | | | | implementation, and help keep the project on |
| should consider working with a structured | | | | track and focused on CSF's. Even if you have not |
| methodology such as published by the Project | | | | done it for system selection, it's not too |
| Management Institute (PMI).Get employee | | | | late.Business Process ImprovementDon't assume |
| involvementRecognize the significant amount of | | | | that your existing business process is the best |
| employee knowledge and the potential contribution | | | | way to get the job done. Even worse, don't insist |
| of the employees. Unfortunately, the knowledge is | | | | on modifying the new system to do exactly what |
| typically in the heads of the employees and care | | | | was done before. First, ensure there is an |
| must be taken to include their input. At the same | | | | understanding of existing business process. Roll up |
| time, you are effectively including them in the | | | | your sleeves and talk to the people who do the |
| process and securing their buy-in for the | | | | work. Ask them to tell you how much time is |
| process.Assign an internal championAn internal | | | | spent on activities. It may not seem serious if 1 |
| champion should be allocated to the project. Even | | | | person wastes 15 minutes per day - but what |
| the most difficult projects can become successful | | | | does it cost if there are 10 people doing the same |
| when you have an internal champion who is ready | | | | thing throughout the year? Assuming a rate of |
| to do whatever it takes to get the job done. It is | | | | $25/hour and 1,800 hours or work per year, that |
| best to assign the internal champion at the | | | | little problem has cost the company $112,500 for |
| beginning of the system selection project to | | | | the year.Project ManagementProject |
| ensure their commitment and agreement with the | | | | management is a key factor in predicting success |
| system selected.Manage the risksSeek out | | | | of any project. Project management includes |
| potential risks, their impact, and their likelihood of | | | | management of scope, budget and timing. Rather |
| occurring. Encourage all interested parties to | | | | than using the school of hard knocks, you should |
| develop strategies to mitigate the risks. Every | | | | consider working with a structured methodology |
| organization has at least 1 naysayer, who can | | | | such as published by the Project Management |
| cause a lot of problems, but who is also very | | | | Institute (PMI). A good project manager has |
| knowledgeable. The naysayers must be included in | | | | support of upper management, and can be tough. |
| the risk management process. By getting their | | | | If the project manager wants to please |
| input early, you can avoid problems and you | | | | everyone, he/she is not the right person.Internal |
| effectively limit their negativity.Ensure | | | | ChampionAn internal champion must be allocated |
| management buy-inCommunicate scope of | | | | to the project. Even the most difficult projects |
| project and get sign off at critical steps along the | | | | can become successful when you have an internal |
| way. Management should develop or ratify the | | | | champion who is ready to do whatever it takes |
| measurements of success.Vendor | | | | to get the job done.Employee InvolvementYou |
| SelectionIdentify potential vendors | | | | need their involvement for many reasons. Without |
| You would be amazed at how many vendors | | | | it, you could risk missing critical business process |
| want your business. Start with a buyer's guide | | | | that only they know about. And just as important |
| such as the one published on the CAmagazine | | | | is the psychological component. People are often |
| web site which you can access from the menu | | | | threatened by change. By getting them involved, |
| on the left. You will notice in the buyer's guide | | | | they are more likely to be supportive.Best |
| that the vendors are split into Tiers. The largest | | | | PeopleYou want your best people involved in the |
| companies are usually best served by Tier One | | | | implementation. They have the confidence of their |
| and Tier Two vendors. Smaller companies are | | | | colleagues, know the business well, and usually |
| generally served better by the other vendors | | | | have the right attitude. The implementation is |
| partly because of smaller investment, but also | | | | going to take time. You must reduce their normal |
| because of less complexity. Tier One products | | | | workload.Risk ManagementSeek out potential |
| generally have a lot of flexibility but it takes more | | | | risks, their impact, and their likelihood of occurring. |
| time to set-up, train and operate. | | | | Encourage all interested parties to develop |
| There is typically more risk associated with | | | | strategies to mitigate the risks. Every organization |
| vertical and custom vendors. However, the | | | | has at least 1 naysayer, who can cause a lot of |
| benefits could outweigh the potential risks. To | | | | problems, but who is also very knowledgeable. |
| obtain lists of potential vendors:- use internet | | | | The naysayers must be included in the risk |
| searches- contact your accountant- contact | | | | management process. By getting their input early, |
| colleagues- contact consultants- contact industry | | | | you can avoid problems and you effectively limit |
| associations- look at trade journals for articles and | | | | their negativity.CommunicateDon't keep people in |
| advertisements- attend trade showsFind a good | | | | the dark. Communicate formally, informally and |
| resellerThe reseller or Value Added Reseller (VAR) | | | | frequently.Train the TrainerThis is a good way to |
| implementer can make a big difference. Often, | | | | cut training costs, and force employees to know |
| companies selecting new systems spend a lot of | | | | the system. The best way to learn a subject is |
| time analyzing the product and the vendor but | | | | to teach it.Extensive PrototypingThere are many |
| not enough time analyzing the capabilities of the | | | | options in the setup of a new system including |
| VAR. The VAR could have been assigned by the | | | | setup options, conversion, integration, and |
| vendor, and the VAR may not be the best | | | | customization. An iterative process is required until |
| choice. The vendors have a methodology for | | | | the prototype is completed. It may take a few |
| assigning leads to their partners/VARs that is not | | | | times before you get it right. Take a small, |
| well-understood. You could be getting the next | | | | representative sample of transactions through the |
| VAR on a list. Once a VAR is assigned, the | | | | system including reports and controls. Don't go live |
| vendors are reluctant to introduce another VAR, | | | | before everyone is ready.Beware of |
| as it can lead to VARs competing with each other | | | | CustomizationsCustomizations can bite. The first |
| for the same prospect. So do some pre-screening | | | | bite is that it slows down the implementation and |
| of the VAR. Better yet, get the VAR's name | | | | the costs soar. The second bite occurs when you |
| from someone you know.Issue a Request for | | | | want to upgrade to the newest release. This is |
| Proposal (RFP)An RFP is a good tool to | | | | not to say that some customizations are |
| communicate your needs uniformly to vendors | | | | warranted and have a compelling business |
| and to create a short list of vendors. Ask | | | | case.Phased in approachThere is also what is called |
| vendors to answer questions related to cost, | | | | the big bang theory, when you do it all at once. I |
| technology, customer base, developer and | | | | think it got its name because everyone shot each |
| implementer qualifications, and similar customers. | | | | other. Small and mid sized businesses especially |
| Have the vendors respond to each requirement | | | | don't have the manpower to do it all at once.Post |
| with a number such as "7" in current release and | | | | Implementation ReviewLearn from your mistakes |
| quoted in estimate, "6" in current release, "5" | | | | and there's always room for improvement.This |
| available in 6 months, "4" minor modification or | | | | article was prepared for these business |
| workaround, "3" third party, "2" available in a year, | | | | consultants |
| "1" major modification or workaround, "0" not | | | | , please visit them for more information. |
| available. By extending the priority of each | | | | |