OK, so far we have covered…

Step 1 - You have Justified and Specified your ERP system - people are going to "have your back" if something goes wrong (and it will!).

Step 2 - You have Sourced, Qualified and Selected an ERP software package that is going to work for your business.

Now for Step 3 - Negotiating and Purchasing your ERP system…

I can say without reservation that negotiating and purchasing an ERP system is just about as complicated as a purchasing transaction can get. While you might have extensive experience buying capital equipment, few other purchases will have as many angles as an ERP system.

First, you have the software, OK, not a big surprise, then the hardware to run it … again not a shocker, then the network backbone upgrades, then come the consultants from perhaps 1, but more likely 2 or 3 different firms, then the maintenance and support, the internal personnel that you have to keep working on the project….

So there is a list of the major aspects to the purchase. Now negotiate the best price and terms for each one of them! This is not a cookie cutter deal. The sales people that you are working with, while they are probably ethical, are going to answer your questions, and you should be asking lots of them, are not going to volunteer everything that they know about the deal…

What do I mean by that, well let me give you an example… Let's say that you are buying the Quality module that is offered by the ERP supplier, and you know that the Quality module" consists of 15 key applications. However, the quoted package only includes "Quality module essentials", which means that you are only getting 5 out of the 15 apps. Don't laugh, this has happened to me and yes I did catch it before I bought a package… but this kind of stuff can happen all over the place.

So bottom line - Caveat Emptor (Buyer Beware). I think you get the idea. Next … Step 4, Installation and Configuration…

Until next time… Rick

So now on the Step 2 in the ERP Implementation Process.

Recall that in Step 1 you thoroughly Justified and Specified your new system. With that out of the way you are confident that you will have the support that you need and know what target you are aiming at.

In Step 2 of the implementation process - Sourcing the right ERP system, you are looking at as many packages as you can, narrowing the field and then qualifying and selecting a specific package from the narrowed field. Piece of cake right? …. Wrong! So many "experts" are out there, and every one of them has a bias towards one package or another…. Salesman, Consultant, it does not really matter, they have expertise in one or more specific products…

So you read the trade journals, you spend time in the forums, you Google "ERP", you read the propagan…. sorry "literature" and start making your list, checking it twice. Then once that list is made, you have to start eliminating those packages that don't meet your requirements and finally selecting one that comes as close to meeting them as possible.

So this is Step 2 and a VERY CRITICAL one in the successful implementation of an ERP system… Next - the 3rd Step in the implementation process …. Purchasing your system…If finding the right system sounds like fun… wait til you get my opionion on the Purchasing process…

Rick

 

Hi Folks … Rick here and sorry about the loooong delay in updating the blog…

Too many projects, not enough time - time flies….

So what are the 7 phases to implementing an ERP system?

Step 1 is Justifying the System and thoroughly Defining Requirements.

• Without buy off from top management, don't even think about moving forward with an implementation . With support you will be able to make it through the "rough spots".
• Then take the time to define system requirements. By this I mean clearly outlining every need and want that you have in a new system. Take a look at all of your existing processes and those processes that you have yet to implement. Which ones would you "integrate" in to your new system.

And don't think that this step only applies to a new system… it also is important when you are considering an upgrade.

While the emphasis on this site is ERP - this also applies to pretty much any major technology initiative - CRM, Supply Chain Management - even a new VoIP Phone System. So think about this long and hard - you will be glad that you did.

If you want to check out more of my thoughts and ruminations - go to www.implementerpfast.com and listen to my podcast on the subject of ERP implementation. I have multiple episodes that address Step 1 - Justifying and Defining Requirements on an ERP system…

Later….

I have just completed and released a free internet based "eCourse" that answers the question "What is ERP".

The reason that I did this is simple… I discovered that there are a lot of people out there that want to know! …

Further, if you are considering a new ERP system, are upgrading your existing ERP system or are somewhere in between - ERP Made Simple - an Introductory eCourse does not just define what ERP is, but goes further in explaining what ERP can do for your business, how it can add value, and how your older systems can prevent your company from accomplishing these goals.

If you want further clarification to the question "What is ERP?", you should check it out..

Enjoy

Rick

The ERP Roadmap blog is changing direction for a post or two…

We are going to be exploring the Success Strategies associated with a successful ERP implementation. A success strategy in is an approach and and intentional frame of mind that when followed will product a more desirable outcome …

Some of the areas that I intend to cover are…

• Leadership
• Communication
• Time Management… just to name a few.

These "soft skills"  are so important to the successful implementation of an ERP system that they really should be discussed and revisited throughout the life of your ERP project… It really does take constant review and reinforcement of the right way to approach leadership, communication, time management and other aspects of the success mindset to develop habits and ultimately instinct that will keep you and your team heading in a positive direction.

Let's take Leadership for example and specifically your approach in directing people and events on a large scale project to achieve desired results. You really want to provide an environment where your team as a unit can accomplish more that if all those involved attempted the their individual tasks on their own. While I tried to avoid using the word "Synergy", I just could not help myself!

One approach that I have found very successful, is giving people specific desired end products - or deliverables, and then giving them reign to exercise their skills and capabilities - then stay out of the way! This is easier said than done, but when you do it, you WILL KNOW IT.

So - Give them direction, give them goals and dates and then GET OUTTA THE WAY and see what they can do.

I recently released an Implement ERP Fast podcast episode on this subject - you might want to check it out…

Until next time… Rick

SYSTEM PERFORMANCE

Does your current system perform as well as a state of the art ERP system?

Does your software, hardware or system in general perform to levels that you would consider less than state of the art?

Let me give you a couple of comparisons between a legacy system and a new ERP system that I implemented a while ago:

• After moving to a new ERP system, where running my production planning module, MRP used to take 6 hours, the new system now takes between 30 to 45 minutes.
• Where a cost implosion (or roll up) used to take 2 hours, it now takes 30 minutes.

You can become complacent in performing our tasks and duties and at times might not realize that your systems performance is substandard.

I have learned over time that if I think that a particular system or module is not running as well as it should, it is either time for a tune up OR my systems performance might just be behind the curve.

Your system is “wound out” at 8,000 RPM’s on all 8 cylinders and other systems are just passin’ you by…

A little benchmarking might be in order. If you find that in fact your system is lagging in performance regardless of what you do, it might be that Performance is yet another “”driver” that will contribute to the justification of a new system…

SYSTEM DESIGN

Is your existing ERP system, the user interface, the database platform and other aspects of your system built on industry best practices?

In this day and age you might ask – isn’t everyone?…Not really…

You can see it at the systems level where an ERP provider produced a system built with a proprietary API - if you don’t think they are out there THINK AGAIN.

The user interface (UI) is another area where non standard design in common.

And as time moves on it is really inevitable that your system will become less and less standard:

• The older your system, the less likely that your hardware and software will be compatible with current technology.
• Standards change and as they do, manufacturers and publishers have no choice but to follow them.

Non standard or outdated software design can be a huge problem where the software still performs the needed task, but does so in an inefficient or unusual way. Put another way, the need for change is not strong, but bad habits are being built every day!

An example of this would be a non standard menuing or icon system where the menu items and icon graphics are not easily recognized … minor example in comparison to some…

I have seen current ERP systems that do exactly that. While I am all for creativity, this type of design is more for the programmers and graphic designers benefit and not the end user.

Proprietary design - what else could they do… in late 1970’s and the 80’s during what I call the Wild West of Manufacturing Systems prior to Local Area Network technology (LAN) and the Client / Server model. At that time, existing technology was such that companies had to build their systems on the old mainframe, distributed data or the dumb terminal model.

Looking for a new system? Look for systems that are built on standard hardware and with industry best practice software tools. In the long run you will be better off.

If your existing system is not up to standard, use your existing hardware and software situation to drive your justification for a new system.

With the release of the new Apple 3G iPhone on Friday 7/11/.08, came an iPhone meltdown across the globe where not only new subscribers but existing first generation iPhone subscribers where not able to activate or use their accounts… Bummer…

While I am sympathetic to people that have to go through this type of frustration, I really feel that they have no one to blame but themselves…

Which lead’s to Rick Nielsen's Number One Technology Axiom – Never Buy Bleeding Edge Technology – Software or Hardware – unless of course you have absolutely no choice.

The reason is obvious – I am not a genius (I am sure that you have figured that out by now!), but let OTHERS beta test the new stuff!

Give it a month or two to clean up the stupid things that no one ever thought about.

An iPhone is probably more complicated than any of us might think. It is really a well designed device, but it’s not THAT complicated… and look what happened!

Now think about a state of the art ERP system – ORDERS of magnitude more complicated than an iPhone. IF there was ever a reason to wait until the first service pack, the second release, buying a new ERP system would be it.

I completely understand that you dig software and really want the latest greatest version and features that maybe you have been waiting for, for a long time, but be patient…

Again – let someone else Beta Test the software – I mean really – you are spending hundreds of thousands, if not millions on a new Enterprise system.

You really don’t need the frustration - In the short term AND in the long run you will spend less time and money on your implementation…

Later…

SYSTEM COMPATIBILTY

If your ERP system was not compatible with current technology, how much more difficult would it be to find appropriate hardware and software components and expertise to assist you in getting it back up and running? Would you be limiting your options?

How compatible is your current hardware and software with existing technology and standards? Maybe there are certain system components that fall into this category.

This can be very important when third party developers are creating tools for other, more current ERP systems and have ceased to develop for your system or version.

Is your system built on outdated technology, proprietary or on a non standard hardware and / or software platform?

If this is the case, then you can’t take advantage of the same tools and functionality that your competitors can.

Perhaps this would be another opportunity to discuss a new ERP system or upgrading to a current version?

SYSTEM AVAILABILITY

Your system crashed this morning and you are having difficulty locating and acquiring hardware and software needed to get it back up…

It is no secret that as technology ages, production quantities are reduced and less frequently produced. Over years of working with aging legacy systems I have had power supplies, hard drives, disk controllers and mother boards among others fail without warning.

To compound the problem, one particular system that I was working with was not only old, it was built on proprietary technology and on more than one occasion, it took me more than 24 hours to locate the part and get my enterprise system back up and running!

Can you say “NO job security”…?

Hardware Availability

If key pieces of your system hardware are either no longer available or difficult to find and your system goes down, you are going to lose valuable production time. In extreme cases you might be forced to shut down operations for a prolonged period of time, you might have to send people home …

• Do you run hardware components that would be difficult to source and purchase quickly?
• How long would it take you get them in house?

Software Availability

While software does not usually pose the same challenge as hardware does, if your system is old enough, and you cannot put your hands on that special utilities disk, it can pose a real and present threat to your company.

The older the system is, the more difficult a particular application might be to locate.
• Do you have critical software components that if reinstallation were necessary you might find difficult to locate?

I have had the experience where as system administrator; I was not licensed to have certain utilities, so I would have to wait for a technician to arrive.

Here is another one…
• Have you ever lost the “dongle” or hardware key for a piece of critical, vertical market software?
• How long would it take to locate one?

While the days of the “serial port” dongle are gone, there are still USB based dongles.

If hardware and software are difficult to find for your existing system, it is not going to get any better…

Could the situations posed above start a conversation about system alternatives?

ERP - Enterprise Resource Planning

An integrated series of software modules and applications designed to run end to end business operations including: Financials, Sales Management, Production Execution and Planning, Purchasing, Human Resources and many others.

What Makes an Enterprise System Different?

What makes an Enterprise System different is the way that it handles the flow of information. From the database tables, to the way that each table is joined to the information in each table, a well designed ERP system is going to put the right information in the right users’ hands at the right time.

Enter it Once, Use it Many Times

Data is usually not entered twice, rather only once and retrievable wherever and whenever it is needed: A one - to - many (infinite) relationship. Data entered becomes information and moved instantaneously across and outside the enterprise to support your business, marketing and manufacturing efforts.

The classic analogy of the old school business system is that of a series of “silos” where data is generated in various areas of the organization, often redundant and not merged to efficiently generate the needed information everywhere that it might be needed. Where these islands of automation exist, different parts of the organization are making decisions inefficiently and often at cross purposes with one another.

Needless to say entering information once and making it available where needed is a far better approach.

Many Names

The name given to such a system has changed over the years too. From Closed Loop MRP (Material Resource Planning) to Enterprise Resource Planning (ERP) to what some refer to now as an Enterprise Business System (EBS), the concept remains the same. A system that will allow the front office, back office, the field, customers and suppliers to all trade information in a real time manner.

So that‘s it in a nutshell, a system that pretty much traverses the organization that minimizes data entry and utilizes that data where and when it is needed.

As most of you know, successfully implementing an ERP system is a long difficult process. Time management is a huge part of it and you have to make every minute of the day count.

I am always looking for someone better suited than myself to perform a particular task. And all ego aside, there are many times that someone else is better, smarter or faster at getting certain types of tasks done.

If you can find someone else to do something that you were going to do, and you are not best suited to do it anyway, it frees you to do something that you REALLY should be doing.

So where am I going with this?

ONLY do things that PLAY TO YOUR STRENGTHS. As the well know Internet marketer, Alex Mandossian puts it - Strengthen Your Strengths and Outsource Your Weaknesses.

Think about this for a minute - if you focus on doing things that you are GOOD at, a couple of things happen…

•  You are doing the things that you like to do.
• You are probably going to do a very good job and …
• If you are giving tasks to others that they are good at, they are going to take more pride in their work.
• And finally they are probably going to do a better job at those tasks than you would.

Bottom line, more stuff is going to get done and everyone is going to be enjoy their jobs just a bit more.

Good Morning fellow ERP Champions and all around Risk Takers …

Rick Nielsen here, the host of the ERP Roadmap blog …. I wanted to comment today on how important it is to do a thorough justification of an ERP software system as the first step in the process…

Are You Ready for a New ERP System? …

While you might know the answer to this question off the top of your head, I contend that most people need to give it a great deal more thought…

And even if you know that you need a new system (or upgrade for that matter), who else needs to know with certainty? The boss maybe? … all top management maybe? … those people that are neither but influence others behind the scenes?

We all know that the effort required to get an ERP implementation to Go Live requires a great deal of resources (HARD DOLLARS!) and time. If you don't have the commitment from top management, when the going gets tough, at least two things are going to happen … and maybe a third…

1. The software implementation is going to get put on the back burner and …. and no less important…
2. A dart board with your face on it will be used to explain why the companies financial position is not as favorable as it should be!
3. And …hopefully you still have a job! (I did say Risk Taker didn't I?

So spend the time to properly justify your system - the FIRST step in the ERP Roadmap*. It really has to be done before you do anything else. Here are a few pointers to get you started:

• Listen to your user base - what problems are they having? What capabilities do they require that they do not have in your current system?
• What aspects of your system are preventing you from providing the capabilities and solving the problems that your user base has articulated?
• Combine the list of problems and capabilities with the system issues - how do they relate?
• By doing the above you will start a conversation. As you discuss these issues, consensus and support will start to build

Do you need a new ERP system? By simply following the above 4 bullet points, you will start to think more deeply about the question and will involve others in the thought process …

Rock on … Until next time … this is Rick signing off…

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If you are interested in listening to an interview / discussion with a seasoned veteran of systems implementations, and specifically on the justification issue, check out my latest podcast episode at Implement ERP