Let’s face it; ERP evaluations, if done correctly, are extremely time consuming and often quite tedious. Hopefully, you have narrowed your ERP vendor list to a manageable few before you engage in a full blown demo with your extended team. Experience has taught me the time required for an overview demo is typically one hour. However, to complete a robust ERP demo is typically going to take a minimum of 4 hours and can, depending on the particular situation, easily take another 2-3 hours. Given this, I recommend that your full demo schedule should be limited to no more than the three ERP systems that made your shortlist.
Given the time commitment and importance of having a solid demo, clearly communicating your objectives for the demo to the vendor and the company’s attendees, in order for you and your team to be focused and can evaluate each finalist consistently. While there may be other objectives to consider, the final list really needs to include all the below items.
There is an adage regarding the three most important things to consider for successful real estate investing and opening a retail store or restaurant being location, location, and location. If the location is wrong, then the rest doesn’t matter. For ERP systems the three most important things for an ERP system selection are functionality, functionality and functionality. If the system cannot demo your required functionality in a manner that will work for your company, then the vendor needs to be eliminated from further consideration.
Therefore, the number one objective for any ERP demo is to determine if the functionality that you require to run your business exists can be demonstrated.
Functionality matching your ERP requirements: There are many things you cannot determine from a demo, including the quality of the application, the quality of the vendor’s customer support organization, and the scalability of the ERP system. However, you can clearly determine if the functionality that you require exists. All you have to do is ask to see it. The remaining objectives of the demo are all about understanding as much as you can about the company that will be supporting you during and after the go-live event. In some cases, it will be the ERP system company itself. Alternatively if might be an ERP system reseller that will be providing supporting. While the benefits of having direct support from the ERP system company itself are important, that topic is for another discussion as the remaining two objectives for the demo are almost the same.
Understanding your business: Does the ERP system company understand your specific business requirements, business model and your industry? Can they provide insights into your known issues as well as insights into issues with which you are not even aware that you have or will encounter in the near future? In essence, the ERP system vendor should know enough about your business to provide a very relevant demo and act as a catalyst for thought provoking discussions. If the ERP system company doesn’t “get it” when they are in the sales cycle trying to win your business, how likely are they to spend the effort after they win your business? Without understanding your business, they will have a tough time fully grasping the issues that you &/or your industry encounter. This will severely limit their ability to be an effective business partner and recommend best practices. In addition, if the industry knowledge is lacking, the likelihood their R&D product roadmap covering features and functionality important to your company and your industry will be greatly reduced. If you are considering using a reseller, the one difference to consider is that if the reseller does not understand your business well enough, will they be strong enough advocates to the ERP system company to champion roadmap features and functionality that are important to you?
Problem Solving/Listening: During the demo it is important to try to see evidence that a problem solving culture exists in the ERP company presenting. Are they really listening and are willing and able to discuss unique functionality or processes that are, will or might become problematic in the near future? Can they provide answers during the demo or even after the demo (once they have had a chance to discuss the issue more back at the office)? Do they quickly respond to all follow-up questions? The discovery objective is to try to determine if the ERP company has the DNA to make your problems their problems; i.e.be a strong business partners that won’t disappear once the sale is made. This objective should be followed up by reference checking for validation, but first-hand evidence might be a good indicator as well.
Wouldn’t it be nice if there was one managerial style that you can use for your staff as well as your supervisor? Well, there is; it is called flexibility or adapting to the particular person for a particular assignment.
There is a widely accepted theory based on a learning process model that has four stages (along with my very simplistic definition for each stage) that is listed below:
Unconsciously Incompetent (Stage 1): Do not know what you do not know
Consciously Incompetent (Stage 2): Know what you don’t know
Consciously Competent (Stage 3): Know how do it, but you have to think about it
Unconsciously Competent (Stage 4): Know how to do it without thinking about it and can see a few steps ahead
While these stages are very interesting, the real value is around using these stages to adjust one’s managerial style for each individual on your staff and which Stage they are in while working on their current assignment(s). For instance, if you had a newly hired employee that had minimal or no relevant experience in the area required for their current tasks (Stage 1 of the learning cycle), the best managerial approach would always be directive with minimal coaching. In essence, since the employee does not know what they don’t know regarding the assignment or with the company’s appropriate policies and procedures, it will be necessary to tell the employee what to do, how to do it, why they are doing it, and why they are doing it this particular way. This approach will facilitate the job to be completed correctly, on time, and teach the employee to enable their progression to Stage 2 for this task.
On the other side of the spectrum, let’s assume the employee assigned to the task has been with the company for a long period of time as well as having previously completed the same assignment numerous times; i.e. in Stage 4 of the learning cycle. In this instance, the managerial approach applied has to be completely different if you want to avoid undesirable outcomes least of which are being labeled a micro-manager and running the risk of completely demoralizing the employee as they easily can reach a conclusion that you don’t trust them to do the job by themselves.
Given the two extreme examples above, always consider the particular situation before deciding which managerial approach to use whether it is Directive (Stage 1), Coaching (Stage 2), Supporting (Stage 3) or Delegation (Stage 4). This thought process should be used for each assignment, because an employee might be in Stage 4 for one assignment, but in Stage 2 for a different assignment. The ability to be flexible and adjust your managerial style for each specific situation will make you a more effective manager and your staff’s productivity and morale will be the beneficiary.
On another level, you should use the same approach to manage your supervisor, if you feel they are “playing in your sandbox” too often. If you had a discussion with your manager on this subject, they might be willing to take a step back and change their approach. If however, they continue to micro-manage you, I suggest asking your manager why they don’t trust you to do the job as you believe that you are in Stage 3 or 4 of the learning cycle. If the answer is not satisfactory, then you most likely have a manager who only has a single managerial approach called micro-managing. In this instance you have to decide whether to “tough it out” until you change managers, try to find another position in the company or at a different company.
Wikipedia: http://en.wikipedia.org/wiki/Four_stages_of_competence Purchasing: By providing the ERP system with approved ECOs and new product design BOMs, the Purchasing department will be in position to modify their inventory purchases to account for the change in the BOM. In fact, the ERP system itself should be able to provide a purchasing employee with a warning if they are entering a purchase order for an inventory part that has a ECO that has been approved. 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.
While there is no hard and fast rule on what is acceptable or required, most companies categorize their inventory into three classifications; 1) “A” items which typically represent 15-20% of the quantity and 75-80% of the total inventory value, 2) “B” items which usually comprise 15-25% and 10-20% of the quantity and value respectively and 3) “C” items comprising the balance and therefore having about 65-70% of the quantity, but only around 5% of the value.
This inventory value distribution is used primarily for inventory control purposes. Inventory control can include various forms including how tightly a particular inventory item is secured and the accuracy of purchase quantities and cycle counting. In essence, the main purpose is to focus a company’s inventory control on mainly the “A” items, less so on the “B’ items and even less on the “C” items. For example, a company may decide to cycle count their “A” inventory once a week or once a month, the “B” inventory once a quarter or twice a year and the “C” items once a year. Similarly, the “A” inventory items will get the most review and analysis of the purchasing recommendation provided by the MRP.
The benefit of focus is the reason why most companies do categorize their inventory in this manner. Without this tool manufacturing, purchasing and finance personnel will end up spending an inappropriate amount of time reviewing purchases and cycle counts on parts that do not warrant such attention.
The “D” category (which I chose to define it for this blog) mentioned in the title is a bit of a misnomer as it really is not a category, because it represents items of such little value they should be expensed upon receipt; i.e. not classified as inventory for financial reporting purposes. A good example of such “inventory” would be any inexpensive nuts, bolts or washers. Obviously, for “D” parts there would be no need to cycle count nor spend a lot of time analyzing the inventory as the decision was already made by management to expense it.
With the above as context, a reasonable question that finance and manufacturing should ask is should we reclassify some of our existing “C” inventory to a more appropriate expense item. By definition, there will be a one-time charge to the P&L when the existing inventory is expensed, but the charge should be immaterial given the low-value of the parts being reclassified.
Bottom-line: at a minimum, a once a year review of all your inventory items should be done so that all parts are classified appropriately in order maintain the appropriate level of management and control of the inventory. This review should also include analyzing “C” items to determine if certain items should be expensed upon receipt.
Executive sponsorship, committee and support
Select a project manager
Cross functional team assigned
Training for all users
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:
Be the project manager for the function
Uncover any “gotchas” that need to be addressed prior to the ERP system go-live event
Communicate appropriate issues raised by the functional working team to the Core team
Drive tasks and open issues to closure
Ensure adequate resources are being assigned to the project within the function
Motivator and cheerleader for the functional working team members and across the function company wide.
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:
Educate users how to use the system in their functional area. This will accelerate the learning curve on the proper and optimum way to use the system which leads to increase productivity
Provide users knowledge so they understand the impact of any errors they make on other users and the company
Reduce the level of frustration and angst in learning the new system
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 more common axioms in the manufacturing world is “Inventory is Evil”, because too much inventory can only lead to problems. The most common problems often sited are the cash consumed purchasing the inventory, increased warehouse costs to store excess inventory, higher obsolescence write-offs when a particular part is classified as obsolete or inactive, and extra manpower to count, review and manage the inventory.
So, how does a company, even a well-managed one, get into inventory trouble in the first place? Two obvious reasons include poor forecasting by sales and unexpected inventory obsolescence due to a technology change. However, to list all the potential reasons for high inventory levels is beyond the scope of this narrative as the intent is to help you to discover ways to reduce your inventory levels without making overhauling your current basic processes; in other words quick fixes that can have dramatic results.
One of operations’ key responsibilities is to ensure the appropriate level of inventory is on-hand to support sales. With this in mind there are four important points to consider:
The main tool that operations use to recommend inventory purchases is Material Requirements Planning (MRP).
The basic assumptions that drive purchase recommendations by the MRP are forecasted total sales, sales orders already in backlog, bill-of-materials (BOM), vendor and in-house lead times, and safety stock levels.
The basic stereotypical trait of most manufacturing people is risk avoidance
The general philosophy of most companies, particularly companies experiencing high growth (e.g. start-ups), is to not lose a sale due to lack of inventory. In addition, it is my experience from working for manufacturing companies in fast paced Silicon Valley, a manufacturing manager or purchasing employee is much more likely to get fired for missing a sale than ending up with excess inventory. Playing it safe thereby becomes a basic survival strategy.
Since the BOM, including yield percentages, always needs be accurate as possible and backlog is a known quantity, operations have only a few remaining ways to insert some conservatism (i.e., playing it safe) into the MRP output. They can increase the demand side of the calculation by nudging the Sales forecast up a bit or increase the supply requirements by ratcheting up either the lead times or safety stock levels of all purchased and manufactured inventory.
The analysis and impact of safety stock is pretty straightforward so I won’t spend much time here, but lead time is a bit more challenging and therefore probably warrants a more frequent review than safety stock levels. In fact, Supply Chain Digest published an article on May 4, 2006 titled ‘The Impact of Lead Time Variability’ highlighting “Preliminary Research out of Georgia Tech finds there’s a lot more variability on inbound deliveries than many companies may realize” and as Georgia Tech’s Dr. Donald Ratliff noted that “not only does lead time variability impact a variety of supply chain cost and performance metrics, the impact of variability is actually greater the more efficient a company’s supply chain is.”
That is a rather thought provoking mouthful. In essence, even though lead time variability impact is more prevalent than believed, the impact is greater on well-run supply chains.
Given that a very common way to be conservative in inventory planning is to increase lead times and the implications on lead time variability per the Georgia Tech study, it warrants a more frequent review than it probably is receiving today. To complicate matters just a bit, there are numerous places where lead times can be used or “hidden”. However, a great place to start is the lead time for the receiving department to receive inventory and then place the item into its appropriate stock location in the warehouse. Depending on your particular situation, this particular lead time might even be considered superfluous, because if there is an urgent need for specific material, manufacturing will not only be aware of its arrival at the dock, they will find a way to expedite the material out of receiving and onto the production floor.
Coming from my finance background, conservatism does have its place. However, the impact of being conservative should at the very least be understood by all so that any conservatism becomes a conscious decision by the executive team. For example, let’s assume that the annual COGS for a company is $10,000,000 and the inventory level is $2,500,000. This equates to an inventory turn of 4.0 or having 91.25 days of inventory on hand. If the company has a 1 day lead time for material receipts, then by eliminating this lead time, will by definition, reduce inventory to 90.25 days in inventory. This reduction will result in an inventory being reduced by 1.1% / $110,000 as the company’s MRP will now calculate the inventory purchase requirements based on a shorter lead time.
Bottom line: both lead times and safety stock are typically set and reviewed infrequently. However, as their impact can be a significant drain on cash and a cause of an increase in inventory obsolescence expenses when parts are classified as inactive, they both should be reviewed and analyzed for appropriateness and accuracy at least once a year to ensure that all inventory conservatism is known and understood by all so that appropriate action can be taken.
The three main benefits of lean manufacturing, if implemented correctly, are 1) a reduction in inventory levels 2) it exposes inefficiencies on the production floor and 3) it reduces waste. One of the key elements of lean manufacturing is the deployment of a Kanban system.
While there different types of Kanban systems, a simplistic definition is it represents a Demand-Pull production approach where customer orders dictate what is manufactured as opposed to the more traditional Demand-Push where the manufacturing organization is tasked with producing specific quantities for specific parts to meet an approved sales forecast for a given period. One of the critical keys to success of a Kanban system is to have an efficient/effective Just-in-Time inventory system so that inventory can be delivered to the factory quickly to satisfy inventory requirements for an order received.
Technically, a Kanban inventory system uses a Kanban (a graphic or visual signal; e.g. color coded cards or lights) that indicate to manufacturing to produce another unit or to replenish inventory on-the-manufacturing-line. Its intent is to minimize inventory levels on the manufacturing floor and to control the quantity of production for a particular product.
A simple example is described below in Scenario 1:
An order is received for 10 units of Part A
Part A’s top level Bill-of-Material is sub-assemblies B plus one Part C
The manufacturing floor is comprised one line with a 3 step process:
Process 1: Build sub-assembly B
Line 2: Build Part A (Part B + Part C)
Test
Scenario 1
The manufacturing process would be:
Issue a Green card to Line 1 to build 10 units
In-line inventory actions:
If all inventory levels were sufficient at the time the green card was received, use in-line inventory to assemble 10 of Part B and 10 of Part A
If after manufacturing the order, additional in-line inventory is required the impacted manufacturing location(s) will post a Red card.
In comparison, if a Work Order system is used (Scenario 2) then the below manufacturing process would be used. The important element in this scenario is the 10 units for Part A were considered part of the 100 unit forecast that manufacturing used in their production planning.
Scenario 2
The two biggest risks that often are associated with Kanban are 1) if a large order quantity is received, the Kanban system may find it difficult to produce the required quantity in time for the requested delivery date to the customer and 2) If the manufacturing production cycles are long the manufacturing floor space required to keep the production flowing might become extensive.
The value of presenting properly cannot be understated. This is your chance to be viewed as a significant value added member of the team and demonstrate your level of expertise.
Over the years, the below practices have worked extremely well for me. In addition, my observations of other presentations where the presenter did not fare very well was due to not following one or more of these practices.
1. Know your audience
As with any presentation, this is extremely important. Your entire presentation material and presentation style depends on your audience. For instance, a presentation to the Board of Directors would be vastly different in terms of slides, detail, preparation and context than a presentation given to a large group of other finance people.
In addition, a smaller group presentation will be subject to more interactions and therefore knowing each individual attendee can be just as critical. Using the Board of Directors presentation example again; knowing each board members tendencies, mannerism (indications of silent clues of agreement or disagreement), and overall knowledge or bias on a particular topic will help make a presentation go smoothly. The key is to avoid being blindsided by an objection, question or being forced to go down an unexpected path which can abruptly turn a smooth meeting into a very contentious meeting.
2. Know the material backwards and forwards
The presenter needs fully understand the material, any numbers and all the key trends, metrics and variances vs the plan or forecast. You do not want to be just reading the information off the slide. The audience wants to know the story behind the material or numbers. You need to provide the proper narrative as to any important events/milestone and the cause of any material issues or variances (both positive and negative). Are the issues or variances one-time events or will they be recurring?
The ramifications of the issues, depending on their importance, might very well be a topic of discussion By highlighting the possible consequences of not addressing the issue, will at a minimum, ensure the issues are discussed, monitored, resolved or optimally mitigated. Given this, you should be prepared to address the issue in some detail.
One last very important point for this section, if you don’t know the answer to a question, it is better to respond ”I don’t know; let me get back to you” or “I don’t know all the nuances to provide a proper answer, so let me get back to you” than it is to respond with an answer that is not correct. An incorrect answer will cause a hit to your credibility and everything you say after that as well as before that will become subject to suspicion with regards to its accuracy. Of course, you don’t want to be using the “I don’t know” response too often as that as its own negative implications as well.
3. Have answers to questions before they are asked
During preparation of the material, you need to be able to review the slides and ask yourself what questions are likely to be asked during the presentation. This is where knowing your audience and understanding the material and numbers come into play.
By reflecting on the slides, knowing the audience and the details well enough you should be in good position to review the slides and determine what questions are obvious and as well as what questions might surface. This will put you in position to present with confidence and to respond quickly. The better you are able to do this, the higher your credibility to the audience will be.
4. Issue Handling
Undoubtedly you will be in position to have to be the messenger of bad news. Depending on the situation (e.g., presenting to the Board of Directors), it is usually very wise to provide a heads-up prior to the meeting to the board members individually. This accomplishes two things: a) nobody likes negative surprises. By providing advanced notice, it will help control emotional responses during the meeting and b) It will give each Board Member to reflect on possible solutions or provide guidance during the meeting.
While presenting bad news cannot and should not be avoided, it is far better to present the problem, but then follow-up with action plans or possible solutions to solve the problem. In other words, don’t simply announce and give the problem to the attendees. Instead, demonstrate your leadership by owning the problem, whether as a team or individually, as appropriate.
5. Practice, Practice, Practice
This presentation adage has been around for a long time, because it is so valuable. The more important the presentation, the more practice is recommended. The benefits that practice provides include:
Cutting or rearranging slides if the material does not flow smoothly or does not paint the picture you are trying to convey
Provides the opportunity to deliver the presentation until you feel comfortable with the material, script and the message so you don’t have to read the slides. You want to face the audience and talk to the slides with confidence
Allows you to time your presentation assuming there are no questions. This will give you a sense if the number of slides or talking points for each slide needs to be modified so that your presentation can be completed in the time allotted
The CFO at any company is challenging in both its depth and breadth of responsibilities. At a start-up company, the most precious resource known is CASH. For technology and many other companies, Cash tends to first be allocated to R&D as they are the creators of the product. Once the product gets ready for production, the Sales and Operations organizations begin to grow to support growth in the ultimate chase for more cash.
Having spent about 30 years in Finance with multiple of those years at start-ups including being a CFO for 5 of those years, I have always understood and agreed (but not liked) that administrative functions, especially those at a technology driven company, are the last to get funded as product development and revenue generating activities will always get the lion’s share of the budget dollars.
Given this, since the CFO is typically responsible for administrative functions, the breadth of their responsibilities is typically quite wide. Expert knowledge in Finance is obviously mandatory, but strong working knowledge in the company’s business, Human Resources and Legal is often required.
The role of the CFO
The two primary roles of any CFO are 1) to control and protect the assets of the company, and 2) accurately and report timely the results and financial position of the company. After those two objectives are satisfied the CFO typically strives to be the key business partner to the CEO by providing insightful analysis and financial perspective to various aspects of the business.
A CFO in a start-up has the added burden of needing to obtain an exceptional solid working knowledge of HR and Legal in order to satisfy the first objective of protecting the assets of the company, because they may be the very person performing the day to day tasks given that many start-up companies cannot afford a lawyer or even a part time HR employee. With the knowledge that one mistake in either the handling (or lack thereof) of a personnel issue or in a contract negotiation with a customer can be so devastating it can break a company, one can quickly understand the importance of knowing when to call “time out” in order to seek expert advice from a professional in the field, before it is too late.
The importance of knowing what you do not know
Often, the most dangerous position that anyone can be in is when they do not know what they do not know. In that state, a person is not even aware of the potential landmines that need to be avoided and therefore will not seek critical advice at the right time. By way of example, a CFO without some strong legal experience, from which to draw upon, would very likely underestimate the significance of seemingly innocuous contract boilerplate items such as “warranties and representations” or the term “best efforts” when negotiating a supply agreement with a customer. However, these two legal definitions can have such significant and expensive obligations to ensure compliance and/or onerous remedies to correct a non-compliance condition that they should be avoided at best or fully understood before proceeding. Seeking the advice of a good lawyer at this point may be warranted, but you have to at least understand the situation to realize the criticality.
Tasks are the industry standard term for activities / follow-up items that are assigned to a CRM user and it is one of the most important features of a CRM system. Tasks are “must haves” for someone using or evaluating a CRM system. If properly used, Tasks will be how salespeople and customer support people manage and complete their daily To-Do list. In addition, it is a great tool for communication between Sales, Customer Support employees and company management.
The main purpose of CRM Tasks is to facilitate and monitor items needing a follow-up at the appropriate time. Proper use of Tasks will greatly improve the value of the CRM as well as productivity of the CRM users. Listed below are some of the best practices of using Tasks.
Task critical Information
All tasks that are created in the CRM should have the following information:
Account which is linked to the Task
Title/Subject of the Task to provide a quick description
Sufficient descriptive Task body such that any CRM user can properly interpret the objective or actions of the task
Person assigned to the Task; i.e., person responsible for completing the Task
Date the Task is due for completion
Priority of the task (minimal options should be Low, Normal, High)
Task Notifications
If a user is assigned a Task, that user should be automatically notified by email to ensure the assignment was communicated in a timely manner. This capability may not be important for active users of CRM as these users should be reviewing the Tasks assigned to them on a regular basis.
Any task not been completed by its schedule completion date should be highlighted (e.g. Red Bold font) in the CRM system in some manner so that the Task assignee and their management quickly can see the situation and decide on the proper course of action. A more comprehensive system would have an Alert/Notification capability that will send an email or report to the appropriate people indicating Tasks:
That are Overdue
That have had the schedule due date modified
Tasks completed
Using Tasks
The most cost common users of are either the sales team or the customer support team. A sales representative might assign themselves a Task to follow-up with an Account by a certain date per their last communication with the Account. Similarly, a Sales Manager or the Lead Generation team might assign a Task to a sales representative, so that timely action is scheduled.
The customer support team will use a task so a representative can act immediately on a customer support ticket categorized as High Priority.
Salespeople and Customer Support personnel should be using the Task page to plan their activities for the day and the near future. The Task page should be the most viewed page by sales and customer support CRM users as it is their guide for beginning their day and checking for updated priorities during the day. If not checked frequently, a new High Priority item might not completed in a timely manner which could have significant repercussions.
Tasks should be able to be sorted by either due date or priority in order for the user to quickly determine what and when activities need to be accomplished.
Salespeople before visiting or communicating with a customer should always take a quick look at the CRM to see if there are any Customer Support Tickets open, especially Tickets with a high priority status. There are plenty of horror stories about a sales representative arriving at a customer site unaware that a major issue has been brewing. Needless to say, this is not a good situation.
Best practices are for CRM Notes and Tasks to be used in conjunction with each other. For instance, a Task may be triggered from a discussion with a customer or prospect. In this situation, the Task should reference the Note (which should have all important information regarding the discussion) so that proper context can be provided.
If you are new to CRM systems, I highly recommend that you work closely with the implementation company to make sure you understand the pros, cons and consequences of decisions regarding all the processes that need to be considered before you go-live. You can save yourself and the rest of the company at lot of frustration and false starts by leaning on the experience of others so that you can avoid common pitfalls and by reinventing the wheel.
One thing to remember is that while there are definitely wrong ways to use a CRM, there is no single right way to use a CRM. There has to be meeting of the minds where the company and the sales organization agree on the processes so the information in the CRM can be interpreted as accurately as possible. I say as accurately as possible, because unlike accounting, where an entry can be clearly determined just by looking at the debits and credits, information in the CRM will be subject to every user’s interpretation. For instance one salesperson’s view of the status of a particular account could very well be different than the status of a different salesperson’s view if the exact same situation and set of facts existed for that salesperson. To add to the complexity, each reviewer’s interpretation of any notes in the CRM could very well be different than other reviewer’s interpretation.
One of the most important processes that needs be finalized is defining the sales cycle that will be used by every CRM user. The objective of clearly defining the stages is to make sure that all salespeople understand what the various stages mean and how management will interpret each stage. With this knowledge, the salespeople can categorize each account appropriately and therefore communicate the account’s progress in the sales cycle in accordance with the company’s agreed upon definitions.
Sales Cycle Stages
With specific regards to sales cycles, it is important to define the stages in the CRM so that the stages are not too few nor too many as each condition has its own set of problems.
Too few stages will result in information that is not all that useful
Not enough information to obtain a good sense of the progress, or lack thereof, for a particular deal. For example, by taking this to the extreme, a sales cycle in the CRM could be as simple as 1) Contacted Prospect and 2) Won/Lost illustrates this point rather nicely. Someone reviewing the account stage would not be able to get a good feel for how the deal was progressing as there are not enough stages to discern anything other than the opportunity is either open or closed.
Too many stages: Are the costs worth the information and how accurate will the information be?
Will bog down the salesperson by increasing the number of times the salesperson will be forced to update the stage in the CRM; hint: salespeople hate bureaucracy.
The delineation between the different stages could very well be subject to a large amount of interpretation by each salesperson as they try to classify each account’s proper stage.
Now to really throw a wrench into the whole discussion, many people use two sales cycles. Depending on your particular situation, this might very well be best practices. To clarify the two stages:
Initial Sales Cycle: This includes the stages required to get the account into a position where it has a reasonable chance to close. An example is:
Lead: Have very little information on account (perhaps purchased a list of companies); Need to do some research.
Qualifying: Have basic information, but lack enough information to determine if the account is worth pursuing; i.e. is it a fit for our product/services, but do they have enough budget?
Development: Solid account to target, but they are not quite ready to make a purchase decision within the next 6 months.
Working: Solid account to target and they are ready to make a purchase decision within the next 6 months
Opportunity: Ready to make a purchase decision with the next 3 months.
Subsequent Sales Cycle: Once the account has become an Opportunity in the first sales cycle, this sales cycle defines the stages to close the deal as a win, a loss or a no decision. An example is:
Discovery: meeting to understand the requirements of the account
First Demo
Second Demo
Checking References
Win, Lose, No Decision
It is best practices to assign all accounts that have reached the second sales cycle to not only assign a stage to the Opportunity, but also to input into the CRM at least the dollar value, the percent probability to win the deal and the time frame for the decision.
Management Review
Closing note; one of the toughest parts, but a critical key in properly interpreting the CRM information is to know the tendencies of each salesperson. For example, one particular salesperson will be very reluctant to put a high win probability on a deal, for fear of disappointing management while another salesperson may always be overly optimistic. In addition, the notes they enter into the CRM may reflect their conservative or optimistic tendencies. In any case, you will most likely need to adjust your analysis of the raw data based on the person who input the information to properly interpret the situation.
One approach that some companies use to help mitigate individual bias or tendencies is to assign a fixed probability to each sales cycle stage. For instance, a prospect that likes the first demo could be assigned a 10% win probability. If they make the shortlist of vendors, then it the probability will be increased to 30% and so on. I personally do not particularly like this approach as there are too many nuances to each deal including how many short listed vendors were selected or does a key decision maker have a pre-disposed bias to your or one of your competitors product.
