So why do folks go about acquiring ERP software the way they do? People approach it like the product was the only part of the solution. They get swayed by song and dance and the soft shoe about how this software does this, that or the other thing. This one has a blue interface and that one is green. Look how pretty this form is. I like the way this one does bank reconciliations. Yay!
Sure the product is important. If it doesn’t meet the need, don’t buy. This important fact leads to the first process based error. People come to this process with a spongy, squishy idea of what they need. It kinda, sorta needs to do this that and the other thing. Never mind, I’ll know it when I see it.
Again, nonsense. We’re not building rocket ships here folks, we’re buying software, and a particular kind of software at that. In most cases it’s not a big mystery what an accounting system should be capable of doing. Luca Pacioli (a contemporary of da Vinci) wrote the treatise on double-entry bookkeeping in 1494. People have been doing bookkeeping work for a very long time and even for a long time prior to dear old Luca. He just wrote it down.
So how should you go about the process?
First, you should actually write down on a piece of paper what it is you want your new system to do – in detail. In the literature, this is called a “needs analysis” – $2 words to say what it is you want this thing to do. It’s not hard. You’re doing it every single day – write it down, organize it into section or areas. Describe what you now do. Make it a checklist. That’s step one.
Now what? Well chances are if you’re even thinking about making a new software purchase there is a reason. Somethings not happening that needs to happen. What is that reason or reasons? Is your current software failing in some significant way? How? What is not doing that you need to do? Or is there some environmental reason that is driving this need?
For example, your customers may be telling you that if you want to keep doing business with them you’ve got to ditch the paper and start doing business with them using Electronic Data Interchange (EDI). Another $2 phrase that basically means stop sending me pieces of paper that I have to key into my system. You may still be using dear old Luca’s software but they’ve moved on to the 21st century and want you to send them files by this new-fangled thing called electronics, saves them the time and cost of keying it again. Write down the new things you want your software to accomplish. This is phase two. A full and complete list of things the new software MUST be able to do. This is all new functionality.
So at this point you’ve got a checklist of things your current software does and a list of the new things a package must be able to do. Now it’s time to put on the thinking cap. Let’s face it, installing a new system is disruptive. People are pretty comfortable with what they do each day. They are naturally resistant to change. So if you’re going to put them and your company through this process you should make sure you do it as well as you can. So the third step should be a little introspection.
Step three. Go back to step one and take a fresh look at all those things you’re now doing. If you’re like most companies, these thing have evolved over time. A problem arose ten years ago that caused a change in process or procedure to deal with it. It’s now part of the process but the reason that gave rise to it has long since gone away. Guess what, you’re still doing the process but, “surprise” – you don’t need to. Now’s the time to ditch it. And chances are, the people who are doing it don’t even know why they’re doing it.
This process is known as “business process re-engineering” – another $2 phrase that substitutes for taking a hard look at what you do filtered through the lens of need. Do I really need to be doing this? Why? What value does this step or steps bring to my business? Is it really necessary? Can it be eliminated? Is there a better, cheaper, faster way to do this? That describes the mind-set of this process.
And in reality, this part should be part and parcel of your on-going activities. Companies that do this regularly find efficiencies that others may miss. If you’re not doing this you should be.
So now take your first list and change it to reflect the process modifications or eliminations you’ve arrived at. That, in combination with the items you put on list two constitute the “need to have” list of feature functionality you’re looking for in the new system. But you’re still not done. There are two more steps.
In addition to the needs analysis part of the equation, put on your future hat and give some consideration to things you think are going to happen down the road. Part of these will be internal – things that are likely to affect your business near term (next 5 years or so – beyond that you’re basically guessing and you may as well pull out the Ouija board. This is more oriented along a SWOT analysis (another $2 word) meaning Strengths | Weaknesses | Opportunities | Threats. The S & W part of this analysis is inward facing, figuring out what you do well and not so well. The O & T parts are outward facing. Don’t try to get too cute with this. And don’t beat it to death. Don’t fall into the trap of paralysis by analysis. A good plan implemented today is in a lot of cases better than a perfect plan executed next week. You should know when you’ve done enough. Stop there. This can provide the basis for the “gee it sure would be nice if the new software did X” list. It will also stop you from spending money to buy and or implement things that you neither need now nor think you’re going to need near term. This is preventative maintenance of a sort.
We’re almost there. Now we’re down to the last bit. And I would argue that this bit should be first and is more important in the long run that the other bits. Selecting your business partner. Whoa nelly! What? You think this is more important than the software package? Well, yes I do. Why?
Well for starters, over thirty years of business experience kicks in. I’ve just seen too many organizations spend too much time on what the product does and not enough on who they are partnering with to get it done. Some of these failed efforts lead to news articles about how such and such software nearly bankrupted so and so company trying to put it in. This doesn’t happen often but it does happen. A much more likely scenario is the one where a sub optimal solution gets implemented with poor post implementation support. These companies limp along and never get out of their investment what they thought they should get.
It’s no big secret that companies that sell and implement software solutions make money in two primary ways. First they get a portion of the software price as a commission for selling the product. Second they earn fees from consulting services in guiding you through the crocodile infested waters of high tech software implementations and post implementation support. That’s pretty much it. Some partners are good at both ends, sales and support. Some can’t sell beans but do a good job of support. And a few, a very few, handle both ends well. If you can’t get the third category of folks good on both ends, at least go for the second, the company that can provide the support.
I once had a salesman for a software company say to me, out loud, on the phone with other people listening that he could “bring ‘em in the front door faster than they could go out the back”. Care to speculate what his focus was? How would you like to pick up the pieces left after the customer figures out the extent to which they have been over-promised and under-delivered? Chances are they bought a bunch of stuff they didn’t really need and perhaps missed a bunch they did. The image of a wet hen comes to mind here.
So how do you know? How do you figure out which kind of partner you’re dealing with? If you’re fortunate enough to already have a relationship with the third type, you should know what you’ve got. You’re safe to proceed in full faith and confidence based on your own experience and history.
The other two get a bit trickier. If you are thinking about changing partners or are choosing a partner for the first time, use your eyes and your ears. Talk, listen, observe and verify. The signs will be there, you just have to be observant enough to notice. How many of the partner’s people did you meet or get to talk to? Were they knowledgeable, experienced, professional and courteous? Did they diss you or a competitor or a competing package, or did they deal with you openly, honestly and factually? You can tell if you observe.
Ask for references. Verify those references. But don’t think for a minute that you’re going to get referred to the problem child. The partner won’t tell you about that one. But other people might. And be realistic. Don’t expect the moon. No two business partners are going to see eye to eye on every issue that arises. If they agree on everything, one of them is not needed. Don’t be surprised if you get some negative feedback. Evaluate it for what it is, decide whether it is important to you and appreciate the candor and honesty with which it was given. No one is perfect. No relationship is perfect. Ask my wife. No, on second thought please don’t. Ask your spouse and see what he or she says. It’s the same kind of thing.