expandable

Project Lead

The project lead should be a person with broad knowledge of the company’s business, processes, have the ability to articulate the ERP solution vision, have respect of the executive sponsor/committee and the personality strength to work with and ability to communicate effectively across functional lines, the implementation team, and the Executive sponsor/committee.

The project lead should be a key operational stakeholder. The project lead, for manufacturing companies, typically comes from the manufacturing, finance, or IT organization. I strongly recommend an IT employee not lead the project for a few reasons including the greater likelihood the project will be viewed as a corporate IT project (which it is not). Even the best IT employees do not understand the working requirement nuances of manufacturing and finance well enough, and it places the accountability on a support function as opposed to the people who will reap the benefits for the project’s success.

Cross Functional Teams

Core Team: It is imperative that an adequate number of key personnel from all impacted functions be assigned to the core implementation project team led by the Project Lead. These core team members will be relied upon to make/communicate important workflow decisions, obtain input at the appropriate time, and communicate decisions and status to the functional working team (discussed below).

Functional Working Team: Best practices have a separate working team for each function, led by the function’s Core Team member. The Core Team member’s responsibility to:

The 5 most common reasons, in no particular order of frequency, I have encountered through the years for delaying the “go” decision to obtain an ERP are:

Some of the above reasons could be very valid. For instance, I can agree with “getting by” for companies in survival mode caused by an economic downturn or a short term business situation. However, an objective of “getting by” should not be acceptable for any company trying to grow and realize more profits in the long run.

On the other hand, I will never be able to understand/agree with accounting’s comfort level being a determining factor in deciding to upgrade the company’s core operational system. If the accounting team is not comfortable, it is certainly understandable as it will be a big change. However, this should not drive the decision to “Go”, because an ERP system skill set is something that will eventually be required by most people in the company and simply delaying the decision is deferring too many benefits.

The remaining reasons might be eliminated through proper education, analysis and open discussions. The education might take the form of discussions with ERP knowledge/expertise, internal meetings or researching ERP benefits Ultimately, the key question to answer is “are the benefits derived from having an ERP system (e.g., improved, efficiencies, leveraging information across the company, lowering cost, improving customer satisfaction) outweigh the cost of the ERP system?”

With regards to the above question, it is important to note, one thing many people fail to consider is an ERP system might pay for itself if it helps eliminate any one of the below situations.

Implementing an ERP is not an easy task, but it is not something to be feared if managed correctly. The implementation will impact many employees, but that impact cannot be avoided and is best accomplished when your team has more bandwidth and is able to devote more time to fix/optimize processes. In addition, the company will not only reap the benefits sooner, but employee morale will increase as their frustrations diminish when they stop using an inadequate system.

In essence, the best time to implement an ERP system is not when you are getting crushed by the waves of growth. It is far better to get slightly out in front of the waves in order for you to ride the waves to success.

The last blog focused on the top 5 critical elements that can only be determined by asking customers of the ERP system. The first element, Software Quality, was covered in depth in my prior post. The remaining four elements are discussed below.

Quality of the Vendor’s Customer Support Organization

Simple question; how much value-add can the ERP system deliver if you don’t know how to use it correctly?

In short, reference checking is the only source of truth in the ERP selection process for these other key elements that are often overlooked in ERP selection process. Not performing solid due diligence on these items will greatly increase the risk of a bad decision.

The quality of the vendor’s customer support organization will have a major impact on your company’s ability to obtain maximum value from the ERP system. In addition, a strong training culture and offering is a key component of a vendor’s overall product solution.

Access to knowledgeable customer support representatives is a significant benefit that can reduce the likelihood of critical delays due to user error. Imagine you’re trying to close the monthly financial records and the system is reporting huge manufacturing variances. Being able to call the support hotline and talk to an experienced professional who can calmly and logically walk through the most likely case scenarios, as well as more challenging situations, with you to resolve the issue is an insurance policy that holds tremendous value.

The key answers that you need to determine are:

Time, Pain and Cost of Implementation and Data Migration

Every ERP sales person will tell you their implementations will be done on time, with little pain and the professional service fees will be on-budget. Do you simply take them at their word or would you feel more secure if you asked some recently completed implementations about their experience?

The probability of a successful ERP system implementation is directly proportional to the vendor’s success rate on other implementations as well as the planning done before the implementation has even begun. Given this, does the vendor offer a structured implementation plan – will you know what, when and who will be responsible to execute each step of the implementation before you begin?

Some questions that might prove eye-opening:

While there is an abundance of white papers on “How to Select an Enterprise Resource Planning System,” most articles tend to focus on functionality requirements, technology issues and total cost of ownership. Though it’s obviously important to verify that the product features, platform and price of a system meet the requirements of your organization, it is extremely important to understand that functionality is the only thing that a demo can provide. There are other elements that are impossible to ascertain from a demo or in discussion with the ERP vendor.

Due diligence on the less tangible elements of a vendor’s total solution – such as software quality, ease of implementation and responsiveness of customer support – can only be accomplished by asking other companies that have used or are using the ERP systems being evaluated. Not performing the same level of due diligence in checking references that was performed in examining product functionality invites critical shortcomings to remain hidden until well into the implementation process. By then it may be too late to change.

In short, reference checking is the only source of truth in the ERP selection process for these other key elements that are often overlooked in ERP selection process. Not performing solid due diligence on these items will greatly increase the risk of a bad decision.

Top 5 Critical Factors

When checking references it’s important to ask the right questions. Product functionality questions are mostly resolved during the software demonstration process, so the objective of checking references is to measure the elements of a vendor’s total solution that cannot be reliably validated by the vendor through presentations and software demonstration. The Top 5 are:

  1. Quality of the ERP software
  2. Quality of the vendor’s customer support organization
  3. Time, pain and cost of implementation and data migration
  4. Scalability of the ERP software
  5. ERP vendor’s commitment to your success

Quality of the ERP Software

Obviously, high quality software is an essential requirement in an ERP system. The frequency and severity of software bugs is a critical issue that can impact a company on many levels, from the consistency of financial reporting to the reliability of serial number and lot tracking. Software quality is an issue that cannot be resolved during the sales cycle in a demo or sales presentation. A sales engineer won’t provide a true representation of a system’s quality if they are having problems with a particular release or new product. Product specialists carefully script their demos to work around known issues so they do not come into play.

It’s especially important to gauge the quality of ERP systems that are new to the market or promote the fact that they are built on the latest technology platform. Sales reps will maintain that having the latest technology is a key advantage over a competitor’s more established system, but in many instances new software systems and products developed on emerging technology are unproven and lack market support and real world validation.

Usability is a quality issue that most vendors will claim, but is hard to validate without sitting down and using the software for an extended period of time in a real-world environment. One person’s definition of “user-friendly” can vary wildly from another’s based on the level of experience and simple preferences. If the system has bugs or shortcomings that require “work-arounds,” users will be tasked with performing multiple steps to achieve a routine outcome and will quickly become frustrated with the software.

Investigate the genealogy of the software. Who authored it? How many owners or name changes has it undergone? Was the product developed by the vendor or acquired through a merger or buyout? If the vendor is a reseller, do they have a position of strength with the software developer if needed? Gauging the quality level of a software system is an important consideration, and is an issue that can only be resolved outside the controlled sales environment. Talking to and asking questions of a good cross-section of individuals who are already using the system at their companies will be a good indication of the quality level of a system.

Questions to ask:

I will continue the detailed discussion on the four remaining elements on my next post.

Tossing and turning at night is never fun, especially when the cause is concern over work related issues. There is an abundance of literature in medical journals regarding the negative impact on one’s health due stress or to a lack of sleep. Clearly, there would be a lot of demand for a product that could alleviate or even eliminate the stress and let you sleep at night. Even better if the cost of the product was reasonable and it actually allowed you to recoup your investment many times over.

I am sure you have heard the old axiom “if it sounds too good to be true, it usually is”. Well, in this case, I would say this doesn’t apply or at the very least it is worth your time to evaluate the product. What I am talking about is an alert system for your business, based on a set of self-defined rules waiting for an event to happen. The below are some examples of errors that could be prevented or actions that can occur with a proactive automated watch dog protecting your cash and profits while improving processes:

One can certainly make an argument that any one of the above examples where the prevention of an error, cost avoidance, and/or process improvement could very easily pay for the cost of an alerts module all by itself.

Another great example comes from one of our longtime customers. The owner was reviewing his records and was going back a few years to find something. By happenstance, he noticed that an invoice for a product shipment was sent that included a line item that had $0 for its list price. He couldn’t go back to the customer as the event was a few years in the past. This error literally cost him thousands of dollars. Right then and there he decided he didn’t want to even think about this happening again so “in order to sleep at night” he decided to purchase our alerts module.

The bottom line is the number of ways an alert system can help you and your business is almost limited by your imagination and creativity. How about a daily email alert that is sent at 6:00 every evening displaying the day’s bookings, shipments and cash collections amounts by customer?

A separate blog provides an overview regarding the five critical success factors needed to have a successful ERP implementation being:

  1. Executive sponsorship/committee and support
  2. Select a project manager
  3. Cross functional team assigned
  4. Training for all users
  5. Test prior to “go-live”

The number one critical success factor is listed first for a reason. Without the CEO’s or COO’s full support of the project, the probability of success is dramatically decreased. A culture of Accountability with Consequences must be created combined with direct communication from the Company Executives. If the ERP implementation team and the rest of the company does not feel nor understand the sense of urgency and criticality of having a successful ERP launch, full participation from all business functions will not happen for the following five reasons:

Resistance to change

It is a well-known fact that people resist change at the work place (and in life) for numerous reasons including a) fear of the unknown, b) job insecurity and c) if they don’t understand the reasons for as well as the benefits to be derived by the change. Without the proper executive sponsorship, the wall representing resistance to change will be an entrenched obstacle.

Insufficient Communication

Two way communication with the Executive Sponsor is crucial in order to a) keep morale high even when a particular battle appears lost, b) provide strategic guidance and tactical direction to ensure that everyone is on the same page c) keep accountability high throughout the project, and d) inform the rest of the company of the progress being made as well as showing continued executive support and of the project.

Prioritization

Undoubtedly, along the way, there will be challenges for the company that appear that will test the company’s resolve of keeping the project on track keep it from getting derailed by all urgent matters that surface. All the company employees, managers will need to know that the Executive Sponsor is available to “make the call” and therefore have clear direction on task priorities in both the short and long term.

Performance Reviews

In most instances, an ERP system was obtained because the company is growing rapidly or needs to get the operations under control. Either way, employees are feeling stretched and stressed just trying to “hold down the fort”. Without Accountability with Consequences, employees will remain focused on getting their day-to-day jobs done at the expense of the ERP implementation as that is what they will be measured on come performance review time.

Measurement Yields Improvement

The old business adage of what gets measured improves is very relevant in this instance. Just knowing executives care and communication with executives will result in better results.

About the Author

Bob Swedroe is President and CEO of Expandable Software, Inc., a leader in manufacturing software development since 1983. Bob has held executive management positions at both start-ups and Fortune 500 companies including XO Communications, Silicon Graphics and Concentric Networks.

About Expandable Software, Inc.

Expandable Software, Inc. develops, markets and supports and enterprise resource planning (ERP) software suite designed to help fast-growing manufacturing companies maximize business performance.

Expandable’s fully integrated enterprise solution achieves a low total cost of ownership by delivering long-term deployment of a single system implementation.

With its unique model of direct sales and support, Expandable minimizes implementation costs and assures expert ongoing customer support.

  1. Executive sponsorship, committee and support
  2. Select a project manager
  3. Cross functional team assigned
  4. Training for all users
  5. Test prior to “Go-Live”

Executive Sponsor

Without the CEO’s or COO’s full support of the project, the probability of success is dramatically decreased. A culture of accountability with consequences must be created combined with direct communication from the Company Executives. If the ERP implementation team and the rest of the company does not feel nor understand the sense of urgency and criticality of having a successful ERP launch, full participation from all business functions will not happen.

Project Lead

The project lead should be a person with broad knowledge of the company’s business, processes, have the ability to articulate the ERP solution vision, have respect of the executive sponsor/committee and the personality strength to work with and ability to communicate effectively across functional lines, the implementation team, and the Executive sponsor/committee. The project lead needs to be a strong communicator and have the ability to eliminate the resistance to change which will arise. The ability to communicate, coach and act decisively cannot be emphasized enough.

The project lead should be a key operational stakeholder. From my experience the project lead typically comes from the manufacturing, finance, or IT organization. I strongly recommend an IT employee not lead the project for a few reasons including the greater likelihood the project will be viewed as a corporate IT project (which it is not), even the best IT employees do not understand the working requirement nuances of manufacturing and finance well enough, and it places the accountability on a support function as opposed to the people who will be responsible for the project’s success.

Cross Functional Teams

Core Team: It is imperative that an adequate number of key personnel from all impacted functions be assigned to the core implementation project team led by the Project Lead. These core team members will be relied upon to make/communicate critical workflow decisions, obtain input at the appropriate time, and communicate decisions and status to the functional working team (discussed below).

Functional Working Team: Best practices have a separate working team for each function, led by the function’s Core Team member. The Core Team member’s responsibility to:

Training

Lack of proper training is one of the biggest reasons for failed deployments. Inevitably, users will be frustrated by their decreased productivity, inaccurate information and reports, and will ultimately blame the software for being too difficult to use.

The old British proverb penny-wise and pound-foolish is a perfect description for companies that invest a great of time and money to obtain an ERP system, but decide to save some money at the end by skimping on training. A few of the obvious benefits that will increase the probability of having a successful deployment by orders of magnitude, which proper training provides are:

Without proper training, the chances of having a smooth and successful launch will be greatly reduced. In addition, improper use of the system will rapidly spread throughout the company has new employees will be instructed on improper use.

Test Prior to Go-Live

Testing should occur during the period between training and system Go-Live. Sufficient testing serves many purposes including making sure the users know how to use the system properly, the work flow processes that are going to be implemented are efficient, and the results are accurate.

If an issue is surfaced during the testing period, then more training is required, a work flow process needs to be modified; which may require additional training or perhaps a system setting or configuration needs to be modified.

About the Author

Bob Swedroe is President and CEO of Expandable Software, Inc., a leader in manufacturing software development since 1983. Bob has held executive management positions at both start-ups and Fortune 500 companies including XO Communications, Silicon Graphics and Concentric Networks.

About Expandable Software, Inc.

Expandable Software, Inc. develops, markets and supports and enterprise resource planning (ERP) software suite designed to help fast-growing manufacturing companies maximize business performance.

Expandable’s fully integrated enterprise solution achieves a low total cost of ownership by delivering long-term deployment of a single system implementation.

With its unique model of direct sales and support, Expandable minimizes implementation costs and assures expert ongoing customer support.

One of the most important benefits of ERP systems vs off-the-shelf accounting packages is that information becomes available and leveraged across the enterprise as opposed to being stored in in stand-alone applications and made available only to a select few employees having access to the silo application. This benefit of shared/leveraged information is realized whether all the information resides in the ERP (e.g., informing the A/R department that a customer can be invoiced, because all product ordered has been shipped by manufacturing) or if the information resides in multiple applications that are effectively and efficiently integrated.

Integrations will be effective and efficient if the integration provides information in a timely manner and allows the user to use the application of their choice. For example, if a sales person uses the CRM system as their key tool, all the information they need to do their job should be viewable in the CRM application. Requiring a salesperson to log into the ERP system to view the information is by definition inefficient, will lead to frustration and will result in additional licensing costs for the ERP system.

The below narrative focuses on the benefits of having the ERP system integrated with the company’s Customer Relationship Management (CRM) system and with the Product Lifecycle Management (PLM) application.

ERP / CRM integration

The benefits of this integration are quite extensive, but a top level summary of the benefits include providing information or process improvements to Sales and Customer Support teams as listed below:

Sales Team

The above benefits can and usually do have a significant positive impact on the company’s Sales, Operations and Finance departments. By way of example:

Customer Support Team

The visibility to the above information will:

ERP / PLM Integration

The engineering department typically controls the Bill of Materials (BOM) for products the company manufactures by recording, tracking and releasing Engineering Change Orders (ECO) to existing BOMS and to enter BOMs for new products. If the engineers use the functionality embedded in the ERP system then this information is available immediately to all users of the ERP system. In addition, the engineers will have access to all the relevant information that is already stored in the ERP system to enable them to complete their tasks efficiently and cost effectively.

However, if an external PLM system is used without solid integration between the ERP and the PLM, this can lead to many inefficiencies and cost issues that could have been avoided had an integration existed.

The key benefits of having bi-directional integration between the ERP and PLM systems include:

These two examples serve to highlight the power and the importance of solid integrations between applications where the information in one of the applications is important to users of another application.