A Guide to Overcoming the Common Pitfalls ... - ERP Software · 5) Vendor Selection – relationship trust These five areas will govern most of your time as you navigate your way

ERP Software Starting Point

White Paper by:

JOBSCOPE Software

www.jobscope.com

© 2014 Jobscope Corporation

A Guide to Overcoming the

Common Pitfalls and Fears

Facing Decision Makers in

the ERP Selection Process

White Paper

1 ERP Software Starting Point

© 2014 Jobscope Corporation. All rights protected and reserved.

Executive Summary

Today, many manufacturers are facing

the very real threat of financial loss and

stagnant growth during an increasingly

unsteady economy. Instead of taking

action to combat the very real economic

threats they face, businesses are

completely paralyzed with the fear of purchasing and implementing an enterprise-wide resource

planning software system. Maybe they have been “bitten” in the past by poor software and bad

implementations, or simply too scared to change the way work is done.

Choosing the right ERP software for your company is a serious, lengthy, and essential business

decision for all executives in today’s fast-paced marketplace. Having the right system in place

can lead to business growth and economic success, while selecting the wrong solution could

wreak financial disaster.

This guide covers many of the common pitfalls

and fears that decision makers face during the

ERP software selection cycle, and is broken

down into five main categories:

1) Cost – understanding the true ROI

2) Time – facts and myths

3) Implementation – a plan to succeed

4) Support – a plan for the future

5) Vendor Selection – relationship trust

These five areas will govern most of your time as you navigate your way through the ERP

selection process. Understanding the business value to each of these key areas will help you

create a more informed decision for your business, and your company’s future.

This white paper will provide several questions that your small to mid-size business should ask

itself and the ERP software vendors, as you navigate your way through the selection process.

With the right ERP software

in place, businesses can

experience significant

revenue growth; 300% or

more over a 5-10 year period.



Contents Executive Summary .................................................... 1

Contents ........................................................................ 2

Cost ................................................................................ 3

Time ............................................................................... 5

Implementation ............................................................. 6

Support .......................................................................... 8

Vendor Selection .......................................................... 9

Additional Resources ................................................ 11



Cost

Arguably the most prominent fear of

purchasing ERP software is cost. This is

of course very understandable considering

the price tag (ranging from tens of

thousands to millions), and the unknowns

that go into such a purchase. After all, why

should your business spend so much money for new software, when it has been operating

without it for years? To overcome your fear of ERP software cost you must:

Consider ERP Software as Capital. This may seem like a small difference, but it is very

important for the way that you will psychologically approach ERP software. Since control

of capital is the primary means of creating wealth for your company, this is a very

important distinction to make. But this

isn’t just a mind game; even the United

States government recognizes ERP

software as capital in their updated

Section 179 Tax Deductions (which could

save you up to 35% off of your ERP

software purchase). To learn more, visit

http://www.section179.org/.

Do Your Research. Now that you’re considering ERP software as capital, it’s important

to treat the potential purchase like you would any other capital investment for your

business. Identify the factors that you would consider for such a purchase - what will the

ROI be, what are the upfront costs, how will this improve my day to day operations, etc.,

to determine if the purchase is necessary.

No vendor or RFP sheet will be able to tell you where your economic benefit will be better

than you can. If you have not first identified the specific areas that you are looking to

improve, then you will not be able to determine how much an area has improved

afterwards.

Understand the ROI. It is easy to get lost in all the percentages, numbers, and dollar

signs that you will hear and read about when considering purchasing ERP

software. While these numbers might serve to give you guidelines for what you can

expect in return from your investment, the biggest ROI of any ERP system is the one

form of capital that you can never create more of - time.

United States government

Section 179 Tax Deductions

can save as much as 35% off

your ERP software purchase.



If you own a bicycle and upgrade to a car, the car won’t put $50K-$200K worth of cash in

your pocket after owning it for 8 months, but it will certainly allow you to get from NYC to

LA a whole lot faster - 28 days to be exact. ERP software ROI works the same way - it

doesn’t place thousands of dollars in your pocket after 8 months, but it will enable your

business to execute operations significantly faster - performing year end financials in 1

day instead of 2 weeks, cut labor costs by 75%, and increase company revenue by 300%

over 8 years. Speed kills, and your newfound speed of business will help kill stagnant

growth.

Examine the Results. Before you make any major purchase, you typically want to know

what other users of the product have to say about it. What was their experience

like? What did they really love about the product? What did they really hate about the

product? The fastest way to cut through all the case studies, whitepapers, and other

criteria that vendors will throw at you is to find out what their customer retention rate is.

If a customer is happy, they will continue to use a product through multiple life-cycles

because they have developed a trust for the brand that they’re using. Take Apple for

example. How many people do you know that bought an iPhone 3, iPhone 4, that

haven’t bought the iPhone 5 (or planning on buying it?). For the consumer, that’s called

customer satisfaction, for Apple, it’s called customer retention.

If the vendor that you’re talking with doesn’t

have any idea what their customer retention

rates are, they probably aren’t very

good. This should tip you off immediately

that customer satisfaction is probably not

very high, and that you should steer clear of

this particular vendor.

Conversely, if customer retention rates are above 90-95% over a 15+ year period, you

know that you are dealing with a well-respected vendor that should be capable of

handling your business’ needs. Most businesses purchase new ERP or significantly

upgrade their ERP every 4-6 years. Having retention rates above 90-95% over a 15 year

period shows that customers have gone through several life cycles of the software and

remained satisfied with the vendor and the results.

Trusted ERP vendors have

customer retention rates that

are at or above 90-95%, over

a 15+ year period.



Time

For years, businesses have been

increasing the speed at which they do

business through computers, cell phones,

internet, laptops, tablets, email, web

conferences, ERP software, etc.

While most businesses utilize all of the above to save them time, some are still very fearful of the

time that it takes to select and implement an ERP software solution for their business. Below are

the top fears and myths of time and how to overcome them.

Our business is too busy to evaluate ERP software. This is a very common objection to

beginning an ERP evaluation, we simply don’t have the time to begin. Truthfully, there is

never a great time to begin evaluating ERP software – either your business is too busy

and resources are thin, or your business is too slow and resources are forced to be

thin. Rarely does that happy medium of success and timing present itself. Instead we try

to convince ourselves that we simply don’t have the time, but consider this:

If you were on a rapidly sinking ship in the middle of the ocean, would you look at the

lifeboats on deck and say, “We know these boats would dramatically increase our

chances of survival, but we don’t have the time to untie the ropes.”

To overcome your fear of time, you must approach ERP software with a sense of

urgency. If you don’t, your business, like the ship, might be headed for an unfortunate

fate. Make the time, do the work, and untie the ropes.

ERP implementations take years to complete. Unless you have hundreds or thousands

of locations, most small to mid-size ERP implementations are completed in less than 4-6

months. This obviously is a far cry from the 3-4 years that you hear from multi-billion

dollar companies.

Panorama Consulting‘s independent 2013

ERP Software Report shows that

implementation times have decreased by

13% over a 3 year period. This trend

proves that ERP software implementations

are getting faster, not slower.

Nationally, implementation

times have decreased by 13%

over a 3 year period.



So, what size is your business? Take the time to evaluate the scope of the project

yourself, don’t let the project just be dictated to you by your vendor. ERP

implementations should always be performed as a cooperative initiative to achieve

optimal results.

It’s not the right time of year to purchase ERP software. While it’s true that businesses

do typically ramp up ERP initiatives near the winter and spring, this does not mean that

they are the best times to conduct them. These simply happen to be the times that

companies realize that they should start an ERP initiative, because after peaking at their

Q3 books they want to start saving more money.

Remember the first point? The same applies here. Instead of waiting until the end or

beginning of the year, consider starting your ERP software initiative in the summer and

fall. Doing so will prevent your project from getting consumed with the other Q4 and Q1

projects that will be starting up around that time.

While it’s true that ERP implementations do take time, the benefits cannot be

denied. Don’t let the opportunity to own a life-boat pass you by because your business

was ‘too busy’ to cut the ropes. Make the time, approach it with a sense of urgency, do

the work, and experience the benefits.

Implementation

We’ve all heard the stories and read

the headlines - ‘Massive ERP Company

Sued by ABC Manufacturing after ERP

Implementation Went from 7 Months to

27 Months’. The reality is, this is not

the norm. However, that doesn’t mean

that you should ignore these horrible cases when they arise, but should instead study them to

ensure that you don’t suffer the same fate. Here are some helpful ways to avoid the pitfall of ERP

software implementation failures:

Ask for references to establish realistic expectations. In order to set up realistic

expectations for how long an ERP implementation can take, ask for as many references

as you can - before you purchase. The more information you can gather about

businesses that are in the same industry, revenue size, and resource capability, the more

accurate project time estimation you can receive. Don’t listen to the ERP vendor’s



estimate, listen to their customers. If the clients consistently tell you that implementation

times take 4-6 months, then you know what to realistically expect from them.

Participate in the implementation plan. One of the worst things to do during the

purchasing cycle is to simply sit back, take a hands off approach, and let the ERP vendor

dictate to you what your implementation plan should be. Yes, the vendors are experts at

implementing, but, they are not yet experts at your business, your resources, and your

capabilities.

Before you establish an ERP implementation plan with your vendor, ask them to walk the

floor with you to help identify pain points and formulate your plan together. When both

parties have worked on the plan, then everyone knows what the expectations are going

forward, which is critical to keep the project on track.

Count your resources, carefully. Before the project even starts, you must ask yourself;

do I really have the internal resources available to devote to a 4-6 month

implementation? If you do not set up a plan to continue to execute everyday work, in

addition to the work of the implementation project, then one of two things will

happen. Either your everyday work will slide, or the implementation work will slide. This

is one of the biggest culprits of ERP

implementation project creep. However, if

you have planned ahead of time and counted

your resources, then you should have no

problem finishing your implementation with

the plan that you have both established.

Have a backup plan. Even if you have established a realistic implementation time

estimate though references, worked together to establish a project plan, and properly

counted and assigned your resources, delays can still happen. What happens when the

ERP implementation project manager gets the flu, gets hurt, or is otherwise unable to

participate? Have you accounted for vacation, holidays, etc.? Creating a backup plan for

these circumstances is critical to keeping the implementation on schedule.

Make sure that as part of counting your resources, you have also established a backup

plan internally, and with your vendor.

Industry specialized ERP

vendors implement 2-4

months faster on average.



Support

In addition to Cost, Time, and

Implementation, another common pitfall

of purchasing new ERP software is the

on-going Support after purchase. Will

there be any? What will it look

like? What will it cost? How reliably

and quickly will my questions or business issues get resolved? Here are four helpful ways to

make sure that your business will have the on-going support that it needs to succeed:

Test the support system prior to purchasing. How responsive and helpful will the support

be? Find out for yourself. If the vendor has a number to call, or an email address to use,

test them out. Pretend that you have a critical business issue that needs resolving

immediately, and see how long it takes to get to a resource that is able to answer your

question. Do you get sent to a call center in another country? Are you placed in an

extensive queue system? Or are you speaking directly with a knowledgeable

representative that can answer your question immediately? Responsiveness in the sales

cycle can sometimes translate to the support side, but not always. Test to find out.

Ask important questions about your existing data prior to purchase. Will I be able to

transfer over my old data to the new ERP software system? Most vendors offer data

migration services for a fee. Since your existing data is one of the most important

resources that you have as a business, make sure that you are very familiar with the

process and conversion outline proposed by an ERP vendor, before you purchase. Make

sure that the vendor will be able to handle all of your data, and not be outsourcing your

data to another agency that isn’t familiar with your business or business processes.

Ask the ERP software vendor how they handle upgrades. Another important question to

ask is, if we make customizations to the software, will those stand in the way of a future

upgrade to a newer version? Some vendors charge upgrade fees, some don’t. Some

won’t migrate your data to a new version for free, and some will. Also, ask if there is an

additional cost for newly released modules or functionality. Some vendors include all

current and future modules with your

purchase, while others will charge for each

current module and all new functionality.

Most vendors only include 70-80% of core

functionality with each license, meaning you

will likely have to pay more for additional

Most vendors only include

70-80% of core functionality

with each software license.



modules to cover the other 20-30% of what you need. These are important questions to

have answers to, before you need an upgrade.

Find out what services are offered to ensure future business growth. Simply purchasing

ERP software doesn’t ensure business growth without goals, guidance, and direction. Is

there a plan in place for you to connect with other users? Does the vendor offer a

platform for users to voice their opinions and suggest improvements to the ERP

software? It’s going to take an ongoing relationship with your vendor to help make you

successful. If the vendor that you select doesn’t sell modules in piece-meal, but instead

gives you all of the functionality, then the relationship that you’ll have with the consultant

will be much more amiable - you won’t be getting a sales pitch all the time, but real,

quality help and insight.

Vendor Selection

An equally important piece to identifying

the risks and rewards of Cost, Time,

Implementation, and Support, is actually

choosing the right ERP software vendor

for your business. This is not something

to be taken lightly, as you will be

‘married’ to your ERP vendor as long as you run their software. Before you select the ERP

vendor that you feel is the right fit for your business, here are a few helpful things to keep in mind.

Look for a vendor with a focus on your industry vertical. If you are a manufacturer of ball

point pens, look for a vendor that has an industry focus on repetitive manufacturing. If

you are manufacturing custom, highly complex machinery, you would want software

specialized for engineer to order manufacturers. It’s helpful to find a company that has

focus, versus a solution that can have a focus. If everyone at the company is

knowledgeable about custom manufacturing, then they will be able to provide better

business support for you than the alternative. If you need a can opener, do you want a

real can opener, or the one on your Swiss Army knife?

Dig up the honest truth. Type in the vendors name in Google, followed by the word

‘lawsuit’ and see what shows up. Not every company is as reputable as they seem, or as

kind to their customers as they claim, so it is well worth it to spend the time to look in the

ERP vendors closet to see if they are hiding any skeletons. If a company has been

around for 30+ years without one, they would be a reputable company to deal with.



Find out if you are dealing with a software company, or a software acquisition

company. A software company cares deeply about their product and the services they

offer to their clients, because they’ve put their name on it. A software acquisition

company cares about growing their portfolio of products, and the revenue they provide to

their investors. Check to see if the software has changed names recently, or has been

bought out by someone else, etc., as these are signs of a software acquisition

company. A true software company will be deeply invested in their software because

they created it, and they will care much more about the relationships they have with their

customers, because the only investors they have are their customers.

Are they easy to do business with? Something that can often get lost in the comparisons

of functionality vs functionality and spec vs spec when comparing software is the actual

company behind those software offerings. When you get a proposal from an ERP

vendor, it shouldn’t be complicated. If you’re having trouble navigating the ins and outs

of a simple proposal, this could be indicative of the experience you’ll receive when you

have a support, contract, upgrade, or data migration question. If the relationship starts

off feeling complicated, you can expect it to stay that way. Software experts should be

able to deliver a smooth experience across all aspects of your purchase, from sales, to

implementation, to on-going support. Make sure that the vendor you select can handle

all of these areas with ease.




ERP Software Starting Point

JOBSCOPE Corporate Headquarters

355 Woodruff Road

Greenville, SC 29607

Phone: 800-443-5794

Fax: 864-234-2852

www.jobscope.com

About Jobscope

Jobscope was established to develop manufacturing ERP software to meet the requirements of job-based manufacturers

[Engineer to Order (ETO), Make to Order (MTO), Maintenance Repair and Overhaul (MRO), Job Shop, and Government

Contractor manufacturers] that were not being met by traditional manufacturing software solutions. Jobscope's founders were

hands on manufacturing managers and software developers. They realized that companies manufacturing custom products or

providing contract services were not well served by any of the ERP software packages at the time, and created JOBSCOPE®

ERP. For more than 30 years, Jobscope has been providing best in class ERP software to thousands of manufacturers

worldwide. To learn more, visit www.jobscope.com

Additional Resources

JOBSCOPE Manufacturing ERP Software Brochure

JOBSCOPE Manufacturing ERP Software Demo

JOBSCOPE ROI Calculator

JOBSCOPE Case Studies

JOBSCOPE Success Stories

http://www.jobscope.com/

http://www.jobscope.com/files/pdf/JOBSCOPE-Manufacturing-ERP-Software-2013.pdf

http://www.jobscope.com/company/erp-software-demo.htm

http://www.jobscope.com/company/literature-request.htm

http://www.jobscope.com/company/literature-request.htm

http://www.jobscope.com/manufacturing-software/success-stories.htm

Documents

A Guide to Overcoming the Common Pitfalls ... - ERP Software · 5) Vendor Selection – relationship trust These five areas will govern most of your time as you navigate your way