7 Ways To Fail In An Erp Selection

The best way to fail at an Enterprise Resource Planning (ERP) implementation is to choose the wrong software up front. Choosing software without following some basic guidelines is a sure-fire method for disaster. Probably the worst thing that someone has done (that we know of), was to buy their ERP software at a tradeshow, thinking it would be the cheap and easy way to solve their problems. They ended up spending more than they expected in finding ways to force the software into their business.

Below are some ways that will set you on the path to fail at your choice. In other words, they are ways that you can insure that you will choose the wrong system for your company.

1. Choose ERP software without understanding your requirements. - First, you should ensure that you are getting the best fit for your company by documenting your requirements. The requirements should cover the strategic, reporting, functional, and technical aspects of what your company requires to run the business. Choosing software without these documented and without using them as a benchmark to compare the software against is a strategy for problems.

2. Select ERP software without paying attention to business processes. - There are certain ways that you run your business. Not all of them are rocket science, but there are certain things that make your company unique and successful. Choosing software without understanding how things flow in your company will create big problems in the implementation when the software processes information contrary to how you run your business.

3. Choose ERP software because your Friend/Neighbor/Relative is using it successfully at their firm. - Another nightmare scenario that has actually occurred is that decision makers have purchased software because their ____ (fill in the blank) has used it and it worked great at that company. That company is not your company. On the surface they may seem similar, but just because one company is running well on the ERP system does not mean that yours will. You may have a special process for getting your goods out the door. The software may not support that method. Perhaps there is some information that you must have because of financial, regulatory, or supply chain requirements. The other company may not have that issue. Perhaps you need to track lot numbers and the _____'s company does not. There are too many business issues that can create havoc in an information system, if the system is not carefully matched to the requirements (see #1).

4. Not having the ERP vendor prove that it will support your business processes. - ERP vendors have one goal. Sell you software. Do they care if it fits, can successfully operate your business, or even if it will be a huge burden on your staff? Not really. In fact, if you buy software that requires a lot of care and feeding because it is not a good fit, then the vendor is the one who supports it and makes a handsome flow of income off your company. Get the vendor to demonstrate that it meets your requirements and can transact information in a method that is aligned with your business processes.

5. Choosing ERP software because it looks cool. - You may laugh at this one, but the user interface is a sexy selling point of many systems. Is a plain old green-screen as nice to work in as a really colorful Windows ™ screen? Probably not, but does the Windows™-based system really address your issues? Your goal should be aligning a perspective system with your business needs. If it comes with a cool interface great, if not, can you live with it?

6. Let the ERP vendor tell you what you need to be doing. - Related to number 4 above, having the ERP vendor guide you in your selection is a roadmap to hell. You need to guide them. Tell them what you want and expect. Too many times has a single vendor gained the trust and confidence of a decision maker and guided them to a particular system, without any concern for how close a match is it to the business requirements and processes.

7. Take the ERP vendor's first offer without negotiating. - You can generally negotiate with a vendor several times and get a more than fair price. But the key is to follow good negotiation tactics. Don't forget that most everything is negotiable. The software, the services, the maintenance, the timing, etc. In the ERP industry, the best time to buy software is at the quarter or year end according to the vendor's financial calendar.

The key thing to understand is that there is a path that can lead you to success and many routes to failure. Know thyself first. Understand your business and document it. It is not enough to think you know it. Talk to all levels of users and managers. Ensure that everyone's needs are defined and a priority is placed upon those needs. If you are not sure of selecting a major investment such as an ERP, then get outside help from a consultant who is non-biased towards systems and can guide you. Be careful of assistance from a company that has an SAP practice, or an Oracle practice, etc. They have internal motivation to help you choose their flavor of software.

Most importantly, understand that you need to drive the process. It is your selection and you need to live with the results. As any good project manager will tell you, start with the end in mind. What do you want the system to do for your company now and in seven years from now? Understand this and go forward in selecting your system.

Author: Chris Shaul

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Discrete Vs. Process In Erp

One of the saddest things is a manufacturer who chooses an ERP software system that does not a fit with what they do. For example, a chemical producer who selects and implements software designed for a type of company which manufactures solid objects such as furniture. There once was a company that provided consumer packaged goods to the convenience marketplace who selected fish disassembly software. These are obvious mismatches. But the specifics may not be clear.

There are two types of manufacturing. There is discrete manufacturing, or a company that assembles products from widgets. There is also process manufacturing, or companies that blend liquids. Process manufacturing companies process formulas or recipes. While the majority of manufacturing is discrete (automotive, aerospace, or anyone else who builds component parts), there are a select group of manufacturers who are process manufacturers. These include food processors, cosmetics, chemical producers, paints and coatings manufacturers, and anyone else who deal with liquid or batch produced products.

What makes process manufacturing different from discrete? Process manufacturing uses formulations or recipes. A discrete manufacturer uses Bills of Materials (BOMs). A discrete manufacturer assembles along a routing, whereas a process manufacturer blends in a batch.

There are companies who operate in both environments and are often called mixed mode manufacturers. These manufacturers need both a process and discrete manufacturing system.

So what sort of ERP system works with these types of manufacturing modes? This can only be answered by looking at the markets these software companies serve. There are certain products which are clearly process, such as BatchMaster Software or Ross Software. These software deal with formulations, batching, and the other specific issues around process manufacturing. There are other software systems that are clearly discrete such as DBA Software, Intuitive, or Made2manage. These handle Bills of Materials, Routings, and specific discrete requirements. These are all systems that serve their niche.

When you get into larger systems, there is not a clear cut solution as they operate in Mixed-Mode. For example QAD software can handle both discrete and process requirements. Others that can do the same are MS Dynamics AX, Deacom, Ramco, and of course the Tier 1 players SAP and Oracle.

So the real lesson is to understand what you do first before looking at software. Are you a processor of liquids, or do you assemble individual items to create an assembled product? Knowing this will go a long way to help you properly choose software that fits you like a glove.

Author: Chris Shaul

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ERP Software

ERP Software (Enterprise Resource Planning) often leads people to a lot of confusion. Which software is best and which ERP software will be the easiest to implement. The key to selecting ERP software systems is to understand your own requirements first. Document your specific requirements of what the ERP software should do for you. Do not only make a wish list, but include the things your current software does right. Many times people make the mistakes of selecting systems on what their system doesn't do currently, but then come to find out, all the things that the old system did well, the new ERP software does not do. Be comprehensive.

Next look at your business and determine the broader category of what you do. Are you a discrete manufacturer, a process manufacturer (using formulas or recipes), or are you a service based company? Is your company heavily retail with Point of Sale needs? ERP software is segmented by the various niches that a company can fall into. This makes it easier to narrow down the field of software to look at. Be sure to look at the size in sales and see what Tier of ERP software you might fit into. Tier 1 is for larger multinationals or companies with many diverse business units. Tier 2 is for the companies with one to many branches doing similar things. Tier 3 looks at smaller single site companies that do not have very complex processes.

For example. If you are work for a company with four manufacturing facilities, all making roughly the same sort of products, and your revenues are are under $250 million dollars, then you are a good candidate for a Tier 2 ERP software. The following is a sample list of some main ERP software vendors: (There is a more comprehensive list at http://www.erpandmore.com/erp-vendors.)

Tier 1 ERP Software

* SAP * Oracle * JD Edwards

Tier 2 ERP Software

* SSA ERP LN * Epicor Vantage * QAD * IFS * IBS * Microsoft Dynamics AX (or NV)

Tier 3 ERP Software

* Made-2-Manage * Microsoft Dynamics GP * Intuitive Software * Global Shop * DBA Software * Epicor Vista

Once you have narrowed down your criteria to which tier you fit into and then you can start investigating the focus niches of each of these systems. From that you can then compare your specific requirements to the functionality of each of the targeted the ERP systems. The selection process should be deliberate and there are many pitfalls.

Once you have a few ERP vendors that you are working with, you can then narrow it down to the 2 or 3 based on requirements to have them show you the system in detail. This detailed system review should be done completely based on the requirements and should show the daily processing of your business processes. Don't forget too that you are also looking at a vendor with whom you can work for the next few years. It is like a marriage and so you want to make sure that the partner you are selecting is one you can live with.

When you finally select the system, ensure that you do reference checks. The ERP software vendors will always give you favorable clients to contact. But remember that often what is unsaid is more important than what is said. If you visit the references, be sure to watch transactions being entered. Try to see how the people are using the system. Learn from their mistakes too! Find out what went right and wrong during their implementations. Often these lessons learned will help you in your implementation.

In summary, ERP Software is very complex and requires more time and diligence than people realize. When selecting, it can be overwhelming. As such, a third party may be able to assist you. Take a look at consultants who are unbiased and specialize in helping companies select systems. But if you choose to do it on your own, make sure that you have your baseline of requirements to lead you through. Focus on the business process and the business needs, not only on the look and feel of the software. If you keep coming back to the requirements, you will ultimately see which ERP Software works for you.

Author: Chris Shaul

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