How to Negotiate and Purchase Your ERP System

ERP Negotiations Explained

There are many sources of information on how to select and implement software, but there is little information on how to negotiate and make the purchase of the software. The uninformed can spend thousands of dollars more than they need too by walking into ERP negotiations unprepared. Those that know the “tricks” of the trade can save themselves enough to pay for several modules or a good chunk of the implementation costs.

The first thing in ERP Negotiations to keep in mind is timing. When you buy the system timing is key. As this article is being written, the clock is ticking down to the end of the year. This is an opportune time to purchase a system. Even more advantageous is making the purchase at the end of the software vendor’s fiscal year. Vendors are hungry for the deal. The need to make the numbers for the year. They want to do whatever it takes to boost their sales figures and show a successful quarter. Actually, any quarter end will do, but year end is the time when bonuses are given and certain sales incentives are taunting the software salesperson.

The next thing to do in ERP Negotiations is to keep your options open. Even if you find the best whizzbang system that does exactly what you need, there are probably several systems that will work for you. Keeping your options open and communicating that to the salesperson will only make them work harder for the deal. Even if you know you will buy their software, let them know how much better or cheaper the competition is. Give them a reason to work for the deal.

ERP Negotiations around software pricing

When negotiating software pricing, keep in mind that you may not need all of the licenses up front. You can delay purchasing the entire suite of user seats until you are ready to go live. Get enough to cover your testing and implementation phases and be sure to lock in the pricing for a year or for the planned duration of the implementation.

Don’t forget that the implementation and how it will occur is negotiable. The terms of payment are negotiable. Who will be on the project from the vendor’s side is also a point of discussion and can be changed. There are many things that you can plan out and ask of the software provider or reseller.

Considerations for ERP Negotiations

Remember that most everything is negotiable. Software price, implementation rates, duration, and sometimes even annual maintenance contracts (those these are usually the most difficult). Perhaps negotiating when the maintenance begins will be possible. If you are splitting the user seats, have the maintenance pro-rated during the implementation phase.

Unlike the year 2000 preparations, there usually isn’t an absolute deadline as to when you need to purchase, so if you must, hold off for a month or two, if it is to your advantage. Or, tell the salesperson that you plan on doing so, so what can he/she do now?

Properly planned, the negotiation will more than pay for the time spent doing it correctly. Following the vendor’s lead will lead you to an overpriced system. Keep the money in your company’s bank, not the software company’s. Some negotiation strategies will work and some will not. The key is to remember that you are driving the sale. Get what you want at the price and terms that is fair to you.

Additional resources:
http://www.managingautomation.com/maonline/channel/exclusive/read/4063236

http://dealarchitect.typepad.com/deal_architect/enterprise_software_negotiationsbest_practices/index.html

File as: ERP Negotiations

Managing Project Risks (Part 1): Don’t Be Snared by These 6 Common Traps

When your enterprise decides to undertake a new endeavor —
whether it’s designing a new training program, planning a
new service, or revamping an existing product — this
endeavor is called a project. It involves people, funding,
resources, schedules, requirements, testing, fine tuning,
and deployment, plus a host of other activities.

You may have seen this phenomenon by now: projects are risk
magnets. Why is that? Continue reading Managing Project Risks (Part 1): Don’t Be Snared by These 6 Common Traps

SSA Global’s™ – Users conference highlights future of ERP

VENDORS continue to disappear from the turbulent world of ERP software, but the message to manufacturers is not to fret, but take heart from the consolidation.

While manufacturers with ERP systems may feel uneasy about this unrest, SSA Globalâ€™s CEO Mike Greenough says it is exactly what the software market needed after a boom built on post-Y2K excesses.

Speaking at the company’s global client forum held in Florida earlier this year, he said there were so many ineffective software providers out there that it was a broken industry”.

SSA Global’™s – Users conference highlights future of ERP

Feature – Lean-Enabled ERP

The old equation of part cost plus profit equals selling price is no longer accurate. Rather, a fixed or decreasing price less part cost yields profit. If manufacturers want to increase profits under this equation, controlling cost is key.

Increasingly, discrete manufacturers with blanket annual volumes are turning to lean-enabled concepts in an attempt to reduce waste (thus costs) to improve profitability. Some, however, have missed an important point: Lean manufacturing is not limited to waste reduction within pure manufacturing processes. It should also include all supporting activities, such as supporting ERP software. The entire organization should focus on eliminating inefficiencies wherever they occur, while continually improving quality.

The Japanese call waste Muda, which is defined as the opposite of value. Training employees to recognize and eliminate Muda can lead to reduced costs and, thus, improved profits.

There are eight types of Muda, motions that contain no value: motion, waiting, conveyance, correction, over-processing, overproduction, inventory and knowledge. (See sidebar) The goal is to eliminate activities that do not add value.
Read more at:
Feature – Lean-Enabled ERP

The Skinny on RFID

by John Hanson

RFID is the abbreviation for Radio Frequency Identification. RFID is a method used to store and retrieve data using RFID transponders or tags. RFID tags have antennas that allow them to accept and respond to queries from the RFID transceiver. There are passive and active RFID tags. The difference between the two is that passive tags do not need an internal power source, but active tags do. RFID technology is already used in many technologies today. The future of RFID technology seems Continue reading The Skinny on RFID

Adding Value to ERP

During the 1990s, the vast majority of Global 2000 companies deployed client/server systems for enterprise resource planning (ERP) to replace their mainframe-based accounting packages. Some did it as part of the business process re-engineering (BPR) boom, others as Y2K upgrades at the end of the decade and others simply to replace aging financial systems. A recurring theme throughout the â€™90s was that implementing ERP was difficult, expensive and frustrating. Study after study showed substandard returns for ERP investments. Perhaps because of this experience, many organizations have been very cautious about making changes to their ERP environments. However, doing nothing may be a costly mistake because most companies can use their ERP software more effectively than they are doing today.
Intelligent Enterprise Magazine: Adding Value to ERP

Handle your resources optimally, ERP is here – Newindpress.com

As many companies are part of the global or domestic supply chain, they have their own reservations, which include cost challenge, quality as well as less rejection of the product apart from the tight deadline to cater to the need of the customers.

The panacea for the above problems is a right platform to utilise resources like man, material, machine and money intelligently and here comes the role of Enterprise Resource Planning (ERP) system.

ERP helps how to effectively utilise all these resources to get the optimum result.

Once implemented, all departments can more easily share information and the workflow that takes place between departments can become much more automated, thus serving the customers much better way.

Handle your resources optimally, ERP is here – Newindpress.com

Small Manufacturers Achieve Lean Efficiency With Low End MRP System

(PRWEB) March 26, 2005 — â€œLean Manufacturing is all about eliminating waste. Since 1985 we have dedicated ourselves to the efficiency of small manufacturers. Tracking inventory requirements is one of the most important keys to eliminating waste in the manufacturing process, and one of the great strengths of E-Z-MRP.â€

Smolin is the founder of Beach Access Software and maker of the E-Z-MRP system. E-Z-MRP customers are able to leverage their investments in the E-Z-MRP system quickly, sometimes within one month.

The lean manufacturing process covers the strategic, tactical and operational areas of the business with particular focus on Demand Forecasting, Order Processing, Supply Planning, Manufacturing Execution, Warehouse and Shipping Management.

These small manufacturing firms are required by the principles of Lean Manufacturing to demonstrate consistent processes and performance against a checklist of best practices, which include on-time delivery, inventory accuracy, and production schedule performance. Many small manufacturers have achieved excellence in all of these areas through the implementation of E-Z-MRP.

E-Z-MRP History:
E-Z-MRP was first released under the DOS operating system in 1985, and achieved great success and widespread use with hundreds of customers around the world. The system has been successfully implemented in a wide variety of small manufacturing companies in such fields as medical instrumentation, appliances, automotive, pharmaceutical, woodworking and furniture construction, spraying systems, orthodontics, and firearms, as well as finding use as an instructional aid in universities. E-Z-MRP works just as well in job shop and build-to-order environments as in build-to-stock or build-to-forecast operations. The new E-Z-MRP system has now been completely rewritten using Microsoftâ€™s Access Database Management System â€“ a component of the popular Microsoft Office Suite â€“ making it compatible with a wide variety of third-party products.

E-Z-MRP Product Features and Low-Cost High-Value Pricing:
The E-Z-MRP package includes a full-featured Bill of Materials processor, plus a material planning and tracking module which tracks all sales orders, forecasts, work orders (planned, firm, and released), purchase orders, shortages, raw materials, and finished goods inventories. It also records a complete audit trail on all inventory transactions. Also included: a physical inventory function, a purchase order module for printing purchase orders, and a recently added capacity planning module.

http://www.e-z-mrp.com