Getting the Most Out of an ERP System · Getting the Most Out of an ERP System The Entrepreneur’s Edge. Click to add headline Managing the Maintain, Upgrade, or Replace ... (KPI)

Click to add headline

Scott A. Holter, CPIM April 9, 2014

Getting the Most Out of an ERP

System

The Entrepreneur’s Edge

http://www.meadenmoore.com/


Managing the Maintain, Upgrade, or Replace Dilemma for ERP Software

Closing Gaps in Existing ERP Systems

• Functional

• Utilization

• Structural

• Technological

Finding a replacement ERP System

Presentation Outline

2



• How ERP Systems Lose

Their Effectiveness

• Squeezing More Out of

Your System

• Planning for Replacement

Managing the Maintain, Upgrade, or Replace Dilemma for ERP Software

3



Requirements and Expectations Change Over Time

• Business Model or Processes Change

• Customers’ Demands Change

• Governmental Agencies and Regulators Demand More

• Knowledge is Lost as Employees Leave

• Poorly Implemented from the Start

Our ERP System Doesn’t Seem to Work as Well as Expected…Why Not?

4



Distributor acquires a manufacturing business

• New requirements include

– Routings

– MPS/MRP

– Scheduling

– Shop Floor Control

– Quality Management and Control

– Preventative Maintenance

Business Model or Process Changes – Examples from among our clientele

5



Assembler backward integrates and adds injection molding business

• New requirements include

– Tool / mold management

– Finite scheduling of machines

– Infinite scheduling of labor

– Co-products (multiple products made from one mold)

– By-products (such as re-grind)


6



Job Shop (Contract) manufacturer launches its own product line

• New Requirements Include

– Standard Costing

– Engineering Change Control

– Complex Pricing routines to support sale of single product to many customers

– Retention-based CRM (rather than opportunity/project-based CRM)


7



Capital equipment manufacturer begins to service and repair customer’s equipment

• New Requirements include

– Help Desk

– As-Built and As-Maintained BOMs

– Serialized Equipment

– Service quotation and order processing

– Preventative maintenance and other service contracts

– Service technician scheduling, dispatch, and repair orders

– Mobile computing


8



Domestic manufacturer acquires overseas business unit and increases export sales


– Currency translations

– Financial consolidations and eliminations

– Multi-currency quotations, sales orders, and invoices

– Value Added Tax (VAT) charges and collections

– Trade documents produced in foreign languages

– Processing language selectable by user


9



Large multinational metal processor purchases five (5) small electronics companies around the world

• Tier 1 ERP solution perceived as overkill for new high-tech companies


– Smaller, simpler solution

– Language and tax localization for South Korea, UK, and Ontario CN

– Reference designators (“bubble numbers”) tying BOM to drawing

– Serialized components and serialized assemblies

– Revision-controlled perpetual inventory


10



New requirements include

• E-Commerce and Electronic Data Interchange (EDI) orders

• Consignment and minimum inventory

• Package, box, and container size specs

• Palletization

• Customer-specific labels

• Customer-specific formatted shipping documents and invoices

Customers’ Demands Change

11




• Certificates of Analysis / Conformance

• Advanced Ship Notices

• Lot, heat, batch, or serial traceability

• Flexible performance (KPI) reporting

• Industry-specific compliance requirements for automotive, medical, aerospace, etc…

Customers’ Demands Change

12




• Sarbanes Oxley

• Sales and value-added tax compliance

• Dual or foreign language formatted labels and documents

• Underwriters Laboratory

• FDA – Food and Pharmaceutical

• AIAG – Automotive

• EPA – Emissions monitoring and control

Governmental Agencies and Regulators Demand More

13



• System successfully implemented initially

• Setup and processing rules known mainly by cadre of key employees

• Key employees retire or leave company

• Company loses expertise with current system and processes

System Expertise Leaves with Departing Employees

14



Transaction processing often implemented without decision support

• Sales Order processing

• Shipments

• Invoicing and Accounts Receivable

• Purchase Order processing

• Receiving

Partially Implemented from The Get Go

15



Continued…

• Vendor Invoice processing and Accounts Payable

• General Ledger

• Basic BOMs and Routings

• Basic Inventory Control, including Physical Inventory

• Basic Work Order Processing

• Standalone Customer Relationship Management (CRM)


16



Often not or partially implemented

• Quoting

• Estimating

• Engineering Change Control

• APICS Principle-Based Modules

– Master Production Scheduling / Material Requirements Planning

– Capacity Requirements Planning

– Detailed Finite / Infinite Scheduling

– Lot Traceability

– Cycle Counting


17



Often not or partially implemented continued…

• System-Generated Financial Reporting

• Business Intelligence / Analytics

• Quality Management and Control

• Fixed Asset Maintenance Management

• Fixed Asset Accounting

• Workflow Management

• Integrated Customer Relationship Management (CRM)


18


Click to add headline Substitutions for Partially Implemented ERP System

19



ERP Software Results / Scorecard – State of the market

• Standalone quotation and estimating process with limited pipeline visibility

• Slow Engineering Change Order process

• Slow responses to customers with delivery promise dates

• Unreliable delivery promise dates

• Fill rates less than target

• Excess or shortages in finished goods inventory


20



ERP Software Results / Scorecard – State of the market continued…

• Obsolete and suboptimal production schedules

• Extensive management intervention in schedules

• Duplicate entry to maintain Excel-based production schedules

• Duplicate entry of production and labor

• Overtime and idle time in same week

• Part and raw material shortages

• Excessive expediting of parts and raw materials


21



ERP Software Results / Scorecard – State of the market continued…

• Inaccurate perpetual inventory records

• Quality data collection after-the-fact

• Quality data maintained offline with limited visibility

• Maintenance schedules not integrated with production schedules

• Sales personnel “blindsided” from lack of insight into “back office”


22


Click to add headline Utilization and Effectiveness of ERP- a Client Example

23



24



25



• Transaction processing / clerical perspective toward systems

• Accounting-driven implementation lets Operations and Sales “off the hook”

• Excel preferred for unstructured work like CRM, quoting, and estimating

• Excel preferred for journal entries and financial reporting

• Information sharing not pursued as a strategy

Reasons for incomplete / partially implemented systems

26



• Lack of supply chain management foundational knowledge

• Software doesn’t “fit”

– Discrete system for a process manufacturer

– Distribution package for a manufacturer

– No modules for tangential functions leads to point solutions

Reason for incomplete / partially implemented systems

27



Functionality Gaps

• Upgrade – newer version may provide the feature

• Purchase add-on modules from software publisher/vendor

• Purchase add-on from Independent Software Vendor (e.g. O2 for MAS500)

• Third-party interfaced product (e.g. Preactor or Planet Together for Scheduling)

• Workflow management tools

• Customizations and personalizations done within system tools

• Source code modification – last resort

ERP Software Gaps and How to Close Them

28



Utilization Gaps

• Provide conceptual/foundational education

• Software training

• Miniature implementation/re-implementation project

– Educate

– Design, Model, and Simulate

– Setup and Prepare

– Train

– Deploy and Monitor


29



Structural Gaps

Short- and intermediate-term workarounds, at best

• Multiple Companies – set up separate databases/installations

• Multiple Plants – set up each plant as a separate company/database/installation

• Multiple Warehouses – set up as locations; replenishment planning and transfers done outside the system


30



Structural Gaps continued…

• Multiple Currencies – currency translations done outside the system

• Multiple Languages – run separate system in foreign country

• Chart of Accounts, Item Numbering, Customer IDs, Vendor IDs – adopt system convention

• Inventory/COGS Costing Methodology – adapt to costing systems supported


31



Technology Gaps (short- and intermediate-term workarounds, at best)

• Symptoms

– Unable to collaborate with customers and suppliers electronically

– Reporting and information access weaknesses

– Lack of analytics and graphical reporting

– Lack of interaction with Office tools like Excel or Outlook

– Limited remote connectivity options

– Inflexible

– Slow processing speed


32



Technology Gaps (short- and intermediate-term workarounds, at best)

• Solutions are Stop-Gap Only; if weakness is strategic, replacement is likely

– Web-based collaboration tools

– Port to a modern database

– ODBC connections to allow report-writer access

– Data warehouse

– Citrix or Terminal Server for remote access


33



• Functional

• Utilization

• Structural

• Technological

Strategic Benefits of Modern ERP Systems

34



1. Ancillary/tangential systems frequently part of integrated ERP

• Marketing

• Sales activity tracking

• Opportunity management

• Quoting and estimating

• Graphical, engineering

configurator

• New product development projects

• Engineering Change Control

Functional

35



1. Ancillary/tangential systems frequently part of integrated ERP continued…

• Distribution planning (supply chain)

• Production quality

• Supplier quality

• Maintenance

• Field Service Management

• Production Scheduling

Functional

36



2. Flexibility to support multiple modes of manufacturing in single system

• Make to stock (according to forecast)

• Make to order

• Engineer to order (according to design/project)

• Process/formulation-based

• Alternate BOMs and Alternate Routings

• Subcontract processing

• Product-specific costing methods (some standard, some actual)

Functional

37



3. Customer and Supplier Portals to: – Request quotations

– Place orders

– Report problems

– Request help

4. Inventory Control and Traceability – Lot and sublot tracking

– Graded inventory

– Dimensional inventory

– Consigned inventory

– Quality/quarantined inventory

Functional

38



5. Shipping Documentation – Packing slips and bills of lading

– Export documents

– Quality documents

6. Improved Cost Accounting – Multiple methods

– More cost elements/buckets

– What-If cost simulations

7. Improved Credit Management

8. Faster period close processing

Functional

39



Increased utilization due to:

• More intuitive

• More user support structures for self-help

• User-friendliness

• Flexibility to “have it your way”

• Screens and transactions look familiar to users

– Standard Windows layouts similar to Outlook, Excel, etc.

– Browser and Web Page orientation

Utilization

40



1. Most ERP systems, even Tier 3, are:

– Multi-company

– Multi-currency

2. Shared records among related companies and/or plants

– Shared item master

– Shared BOMs and Routings

– Shared customers

– Shared suppliers

Structural

41



1. Remote access through

– Web browser

– Terminal services/Citrix

– Tablet and smartphone apps

– Integration with Email

2. Interactive workbenches replace paper reports

3. Object Linking and Embedding

4. Document management

5. Flexible report writing and analytics

Technological

42



6. Customization infrastructure to:

• Add fields

• Add screens

• Add processing

7. Software as a Service

8. Alerts and notifications

9. Workflow management tools

10.Handheld and Touchscreen for non-office users

Technological

43



1. Functional

2. Utilization – Ease-of-Adoption

3. Structural

4. Technological

Strategic Benefits Summary

44

Questions / Discussion


Click to add headline Replacing an ERP System

45

Strategies for ERP Replacement


Click to add headline Meaden & Moore

ERP Software Brief History


Click to add headline ERP Industry Background

• Pre-1990s Manufacturing Software

– Accounting software packages for mainframes and minis

– Separate MRP and Job Shop packages for operations

– Heavily customized in most instances

– Complimentary custom applications developed internally – hard-coded or using tools like dBase



• Early 1990s through 2000s – Enterprise Resource Planning conceived

– ERP unites accounting, operations, and others

– Thousands of custom developers attempt to brand/“package” their software for re-sale

– Industry and software company consolidation accelerates but new ones emerge

– Environment changes over time: mainframes, minis, fat client-server networks, thin-client and browser-based applications



• Early 1990s through 2000s

– Software management trend

– Custom applications dwindle, remain

– Modifying packages’ source code comes and (mostly) goes

– Plain-vanilla implementation strategy

– Customization and personalization strategy emerges



• 21st Century – 2nd Decade – Dozens (100+) viable ERP software vendors remain

– Most have carved out target markets based on size, scope, industry, or niche features

– 5-25 competitors in a target market

– Continuum of integration: fully-integrated ERP to core plus best-of-breed.

– Vast differences in technology, sophistication, rigidity, and cost to own



Importance of Choosing

Your ERP Partner

ERP Partner Selection


Click to add headline ERP Partner Selection

• ERP Vendor/Partner is a strategic choice that: – Touches virtually every aspect of a manufacturing

business

– Is a marriage

– With rocky relations, at times

– Where divorces are painful and expensive

– That requires a careful courtship

– Requires executive leadership and mid-level management and staff support and input



Decision Dimensions to

Consider



“He who knows others is wise; He who knows himself is

enlightened.” - Chan

As applied to ERP – know what you want from ERP before going

shopping



1. Strategic Factors – Company-based

2. Strategic Factors – Partner-based

3. Features / Functionality

4. Technology

5. Cost of Acquisition and Ownership

6. Initial Implementation and Long-Term Support Approach


Click to add headline Strategic: Company-based

1.1 Business and

departmental

1.2 Supply chain

1.3 Manufacturing mode

1.4 Information technology



Business / departmental

• Size (revenue, employees)

• Tier 1 - $250MM - $1B

• Tier 2A – $75 - $500MM

• Tier 2B - $30 - $150MM

• Tier 3 - $15 - $75MM

• Tier 4 - $5 - $30MM

• Tier 5 - $0 – 10MM



Business / departmental

• Strategic Competitive Focus

• Low-cost / low-price

• Product differentiation

• Customer service

• Hybrid



Supply Chain Model(s) • Engineer-to-order

• Make-to-order

• Configure-to-order

• Assemble-to-order

• Make-to-stock

• Distribution

Material Acquisition

Manufacturing

Distribution



Manufacturing Mode • Continuous flow process

• Batch process

• Repetitive / rate-based discrete

• Intermittent / batch discrete

• Project / one-off discrete



Information Technology Continuums • Technology follower / early adopter

Follower Innovator Middle of the Road



Other IT Continuums

• IT Staff: Self-sufficiency to outsourced service

• End-user autonomy / rigidity

• Data-based / intuition-based decision-making

• Customer and supplier collaboration and interchange intensity



Partner (Vendor) Dimensions


Click to add headline Strategic: Partner-based

Vendor Criteria Continuums

• Vendor size and reach – large multi-national to boutique shop

• Industry / niche specialization

• Single source to best-of-breed approach

• Availability of 3rd party resources

• Local support – does it matter to you



Vendor Criteria Continuums

• Vendor Viability • Strong financials and longevity are important but

don’t prevent acquisition

• Even acquirers become targets

• Independents resist more than publics



Vendor Criteria Continuums • Product Viability

• Strong, modern, and accepted technology increases odds of life after acquisition

• Large installed base (500-1,000+) increases odds of on-going support post-acquisition



Sample Client Strategic Profile


Click to add headline Sample Client Profile

Strategic, company-based factors

• $50MM annual revenue, 250 employees with plans to grow 2-3X next decade

• Intermittent, discrete manufacturer with 75% MTO and 25% MTS

• Compete based on low cost/price and don’t need a high-end ERP solution



Strategic, company-based factors

• More of a technology follower – just want stable and reliable technology

• 1-2 person IT staff forces them to rely on outsider expertise to manage our system

• Extensive quote and order exchange with customers



Strategic, partner-based factors

• Open to any sized software vendor but must have a 10-year history as a going concern

• Open to reseller or direct-sale channel provided there’s strong local (100 miles) support



Strategic, partner-based factors

• Prefer a vendor that specializes in or has numerous metal fabrication shops as customers

• Core ERP functions must be owned and maintained by vendor, but open to interfaced products for reporting, analytics, asset management, and CRM



Using the strategic requirements

• Enable a company to reduce the potential list of candidates to 20-30

• Enable an experienced consultant to reduce the potential candidates to an even shorter list



Using the strategic requirements

• Framework for functionality and technology requirements

• Those become implementation vision or checklist, so don’t skip next step

• Framework for implementation approach and on-going support preferences


Click to add headline Strategic Evaluation

Research

• Trade associations, magazines

• Internet

• Other companies

• Consultants, industry observers

• Software vendors / partners

• See Samples


Click to add headline Strategic Evaluation

Req ID Subtopic Attribute (Short Description)

Client

Priority A B C D E F G H I J K

3 Size and Scope Tier 3 ($30- 70MM) Required Exceptional Exceptional

Above

Average

Above

Average Exceptional Exceptional

Above


Above

Average Exceptional

4 Size and Scope Tier 2b ($70 - 150MM)

Nice-to-

Have

Above

Average Exceptional Exceptional Exceptional

Above

Average Exceptional

Industry

Standard Exceptional

Above

Average

Industry

Standard

Industry

Standard

10

Manufacturing

Strategy Make-to-Stock Discrete Key

Above

Average

Above

Average Exceptional

Above

Average

Above

Average

Above


Above

Average Exceptional

12

Manufacturing

Strategy

Make-to-Order Discrete (Job

Shop) Key

Above

Average

Above

Average

Below

Average

Industry

Standard Exceptional Exceptional

Industry

Standard

Above

Average

Above


13

Manufacturing

Strategy Engineer-to-Order Discrete

Nice-to-

Have

Above

Average N/A

Below

Average

Below

Average Exceptional

Above

Average

Above

Average N/A

Above

Average

Above

Average

Industry

Standard

15 IT Strategy Technology Leadership Key

Above

Average Exceptional

Above

Average

Above


Above

Average

Above

Average

Above

Average

Above

Average

16 IT Strategy

IT Staff Technology Self-

Sufficiency Key

Industry

Standard

Industry

Standard

Above

Average

Above

Average Exceptional

Above

Average Exceptional

Above

Average

Above

Average

Above

Average

Above

Average

18 IT Strategy Analytical, Data-Driven Key Exceptional

Above

Average Exceptional

Above

Average

Above

Average Exceptional Exceptional Exceptional Exceptional Exceptional

Above

Average

19 IT Strategy External Collaboration Key

Above


Above

Average

Industry

Standard

Above

Average

Above

Average

Above

Average

Above

Average

Above

Average

25

Industry Specific

Support Automotive Required Exceptional Exceptional Exceptional Exceptional

Above

Average

Industry

Standard N/A

Below

Average

Industry

Standard

Industry

Standard

Industry

Standard

34

Industry Specific

Support Medical Required Exceptional N/A

Industry

Standard N/A

Industry

Standard

Above

Average N/A

Below

Average

Industry

Standard

Below

Average

Below

Average

37

Industry Specific

Support Plastics / Polymers Key Exceptional

Industry

Standard

Industry

Standard

Above

Average

Industry

Standard

Industry

Standard N/A

Below

Average

Industry

Standard

Industry

Standard N/A

39

Industry Specific

Support

Non-Consumable Tooling

Intensive Key Exceptional Exceptional Exceptional Exceptional

Above

Average

Above

Average

Industry

Standard

Industry

Standard

Industry

Standard

Above

Average

Above

Average



Functionality Requirements


Click to add headline Functionality Topics

Marketing Management Process Master Data Asset Maintenance

Sales Automation Sales Forecasting Purchasing

Quoting and Estimating Dist’n. Planning/Control Receiving

Sales Order Processing Master Prod. Scheduling Inventory Control

Shipment Processing Material Req’s. Planning Cost Accounting

Post-Sales Service Production Scheduling Accounts Payable

Product Master Data Shop Floor Control Accounts Receivable

Project Management Quality Management GL / Financial Reporting

ERP Groups/Topics to Dig Into


Click to add headline Functionality Requirements

Functionality requirements building • Typically 50-100 requirements per topic

• Include master files and transactions

• Should be weighted relatively (High, Medium, Low, etc.)

• Require input mainly from users

• Consider future needs, not just current, so executives must be involved

• Use industry accepted terminology from GAAP, APICS, etc.



Approach 1. Do-it-Yourself

• Online template or “clean sheet of paper”

• Online knowledgebase

2. Consultant facilitator / architect

• Online knowledgebase

• Proprietary tools and knowledgebase



Approach 3. Review Your Business Processes Supported by

• Current package(s)

• Custom software

• Reports

• Excel spreadsheets and Access db’s

• Manual systems – log books

• Include the basics; focus on what’s unique


Click to add headline Functionality

Requirements

Requirement and Use/Application

Requirement Use / Application in Our Company

Estimate and quote with non-existent items

Win 20% of custom jobs (job shop) and don’t want to set them up

Link a Shop Order to a Sales Order For our MTO jobs, print customer information on shop documents

Forecasting with seasonality model Products sold to construction market (25% of our revenue) are seasonal

Scheduling groups like work together Sequence paint line by color Sequence presses by raw material

Record production of co-products Many family dies produce more than 1 item when run (left side / right side)

Multiple costing methods within plant Product line ABC costed at standard Product line XYZ costed at actual

Consolidated cash application Large corporate customers central AP pays invoices for multiple customers



Technology Requirements


Click to add headline Technology Topics

User Interface Query and Reporting Tools

Document Management Business Analytics

Training Aids and Help Simple Personalization Tools

Database(s) Advanced Customization Tools

Network Operating System(s) Workflow Management

End-User Access (Fat Client, Thin Client, Browser, Tablet, Phone)

Integration Tools

Security

Tend to be features, not functions


Click to add headline On-Paper Comparisons

Approaches to Getting Answers

Solicit Responses from Vendors Utilize Online or Consulting Firm KB

Lowest internal cost alternative Best option if engaging a consultant

Will the vendors understand the requirements, applications descriptions?

Consulting firm and online research can be expensive. Are the time savings and quality worth it?

What incentive do vendors have to respond completely and accurately?

Understand consulting firm’s research process

Start with module configuration needs and only most critical, deal-breaker requirements, especially those that are high-degree of difficulty.

Examine samples from prior engagements


Click to add headline Many Ways to “Yes”


Click to add headline Comparison Matrix

Req ID Topic (Client Sort)Subtopic Attribute (Short Description)

Client

Priority A B C D E F G H I J K

778

Manufacturing

Execution Work Order Creation

Conversion of planned orders directly

into work order

Nice-to-

Have Y Y Y Y Y Y Y Y Y Y Y

783

Manufacturing


Link a work order to sales order (order

line item/release)

Nice-to-


785

Manufacturing


Warning or hold capability for work

orders with open engineering

changes

Nice-to-

Have N Y N Y T T Y T Y Y N

786

Manufacturing


The Work Order maintains both the

quantity to be produced and the

customer's required quantity.

Nice-to-

Have Y Y Y T Y N T T Y Y Y

787

Manufacturing


Material availability inquiry at work

order release

Nice-to-


789

Manufacturing


Multiple outputs for a single work

order

Nice-to-

Have Y Y Y Y Y Y Y Y Y Y N

790

Manufacturing


Multiple output work order creates

multiple scheduled receipts

Nice-to-

Have Y Y Y Y Y Y Y Y Y Y N

791

Manufacturing


Work order release allocates required

components / materials Required Y Y Y Y Y Y Y Y Y Y Y

794

Manufacturing

Execution Work Order Creation Material pick list Required Y Y Y Y Y Y Y Y Y Y Y

797

Manufacturing

Execution Work Order Creation Consolidated material pick list Required T N N Y Y T P T T T N

798

Manufacturing

Execution Work Order Creation Shop traveler for a work order Required Y Y Y Y Y Y Y Y Y Y Y

799

Manufacturing

Execution Work Order Creation Bar-coded pick list and shop traveler Required Y Y 3P Y Y Y Y Y Y Y Y

800

Manufacturing


Automatic print of attached / linked

documents and files Required Y Y T N Y P Y T Y Y Y

801

Manufacturing


Automatic generation of lot / serial

numbers Required Y Y Y Y Y N Y Y Y Y N

802

Manufacturing

Execution Work Order Creation Automatic print of lot / serial labels Required N Y Y Y T N T T T Y N


Click to add headline Software Evaluation Model

On-Paper Research and Analysis

Proof of Satisfaction to Highest Weighted Requirements

Proof of Concept Demonstration / Workshop

20-30 Candidates

4-6 Candidates

2 Finalists

Winner

Using Functional and Technology Requirements



Evaluating the

Software


Click to add headline Software Evaluation

Demonstrations provide • For evaluation of qualitative factors (user-

friendliness, flow, and integration)

• Quality test of “Yes” responses

• Opportunity to assess acceptability of workarounds, tailoring, and customizations

• Opportunity to gain employee buy-in for change that’s coming



Software Demo Preparation • Define your own agenda, but assist vendors with

preparation – minimize curve balls

• Communicate agenda internally to all attendees

• Allow vendors to visit your facility

• Provide them with sample data

• Give vendors 2-4 weeks to prepare

• Ensure vendors are clear on contents



Software Demo Conduct • Keep all internal attendees on script – questions

need to be timed

• Let the vendor present – seek first to understand, then to be understood

• Document issues and fit mismatches quickly and move on

• Observe, don’t pilot test or implement



Software Demonstration Types

• Vendors’ overview demo

• Prequalification / Pre-screen

• Scripted Day-in-the-Life

• Proof-of-concept workshop



# Demonstration Scenario A B C D

1 Technology, Navigation and User Friendliness 57.00 50.00 54.00 55.00

2 Alert/notifications and workflow 52.00 46.00 56.00 46.00

3 Centralized item master 42.00 37.00 48.00 39.00

4 Engineering change control 49.00 39.00 31.00 49.00

5 Customer quote / order management 45.00 32.00 37.00 28.00

6 Serialization 28.00 37.00 40.00 37.00

7 Multiple plants 38.00 37.00 37.00 38.00

8 Incoming inspection and quality control 39.00 36.00 37.00 49.00

9 Product structure variables 41.00 38.00 28.00 36.00

10 Shipping, including Data Collection 18.00 34.00 32.00 44.00

11 Service and Repair 41.00 33.00 30.00 52.00

12 Customer Demand / Forecasting Management / MRP 34.00 29.00 30.00 38.00

13 Costing / Cost Accounting 17.00 10.00 15.00 32.00

14 Purchase order flow 31.00 28.00 27.00 48.00

15 Production Scheduling and Control 32.00 23.00 30.00 33.00

16 Customer Relationship Management 28.00 31.00 26.00 37.00

Total Score 592.00 540.00 558.00 661.00



Cost Dimensions

to ERP Purchase


Click to add headline Cost Evaluation

Software Cost Components

Traditional On-Premise or Hosted Model Software-as-a-Service Model

Infrastructure N/A

User Devices (handhelds) User Devices (handhelds)

Specialty Hardware (printers) Specialty Hardware (printers)

Software Licenses N/A

Lower Assurance and Support Higher Assurance and Support

Implementation Services Implementation Services

Staff Costs Lower Staff Costs



General Observations on ERP Costs • Software licenses are close within a market segment

vendor-to-vendor

• Different cost structures than manufacturers

• Multiple demonstrations and antagonistic interactions and negotiations can increase buyer’s costs

• Timing means a lot, but not everything

• Niche leaders have pricing power

• Large, stable vendors have pricing power

• Conclusion – costs are more useful when picking semi-finalists, not finalists or winner



Implementation and On-Going Support

Dimensions



ERP Implementation Observations • Companies are attempting to implement more features and

capabilities than in the past

• Business software has become more flexible – no longer “install, convert data, train, go-live”

• Companies’ personnel are already taxed running the day-to-day

• Consulting costs have gone up as software costs have come down

• ERP is a buffet – be conscious and realistic of what you can digest over a reasonable timeframe



Partner Source Considerations

• Vendor – Local? Cost? Available?

• VAR – Local? Quality?

• Other 3rd parties – Quality?

• Independents – Current? Local?

• Combination model often win-win

• Validate with customers



Implementation Sequence • Conflict between time-to-benefit and time required

per day/week

• Implement what was purchased – “All In”

• Phased approach to minimize disruption

• By module or feature

• By location or department

• Companies need to compare software vendors’ approaches with preferred strategy and confirm with customers



Internal Resource Considerations • Skills to retain in house or outsource – initial and on-going

• Choose a vendor that fits with your strategic spot on the continuum

• Validate your choice with other companies

Do It Yourself Combination Consultant Driven



On-Going Support Options • Direct vendors typically include phone tech support

in annual assurance fee

• Phone support is not the same as consulting

• Vendors that sell through resellers generally do not offer phone / tech support

• Resellers typically offer phone support as an add-on service at additional cost



Summary and Conclusion



Decision Dimensions

• Series of hurdles or filters

• Quantitative and qualitative

• Objective and subjective

• Cannot put a weight on each dimension, compute scores, and let math pick the winner



Decision Dimensions

Qualifier Dimensions Winner Dimensions

Strategic – Company Based Functionality

Strategic – Vendor Based Technology

Cost of Acquisition Implementation Approach and Resources

On-Going Support



Questions


Documents

Getting the Most Out of an ERP System · Getting the Most Out of an ERP System The Entrepreneur’s Edge. Click to add headline Managing the Maintain, Upgrade, or Replace ... (KPI)