The top 20 ERP implementation tips

Stumbling through various ERP websites, we came across this article that shows some of the key factors for doing an implementation correctly. You should probably read this one…

The top 20 ERP implementation tips
By Jan Stafford, Site Editor
22 Jun 2005 | SearchOpenSource.com

An enterprise resource planning ERP software project can be daunting for first-timers or veterans handling a migration. Get started on the right foot with the top 20 ERP implementation tips from Linux users, consultants and vendors.The top 20 ERP implementation tips

7 Ways to Fail in an ERP Selection

by Chris Shaul

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 all because of a failed ERP selection.

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.

ERP Selection Failures

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. Do not run an ERP Selection without well defined requirements.

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. You can find a software that best fits your business with a free ERP Selection consultation from SoftwareAdvice.com. 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 do an ERP selection 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 how to run an ERP Selection, 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 your ERP selection.

Chris Shaul is a Senior IT Consultant who is a regular contributor to ERPandMore.com

ERP Selection Help

ERP Selection

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

ERP Tiers: What Tier are you in?

ERP vendors and consultants are always trying to classify you as a company into distinct ERP tiers. What is your vertical industry? What is your revenue? How many employees? These are all questions of where you fit within their offering. Others talk about ERP Tiers. What are tiers? ERP Tiers are classifications of software by the size of the company the fit. Let’s break it down:

ERP Tiers: Tier 1 ERP

Tier 1 ERP software is software for the large enterprise. This includes multi-site, multi-national corporations. Typically the Tier 1 customer is a company with revenues in excess of $200 million dollars and has several sites, probably geographically dispersed and in multiple companies. There used to be what was known as JBOPS. JD Edwards, Baan, Oracle, People Soft, and SAP. Now that Oracle purchased People Soft, who had just prior purchased JD Edwards, the map has left the three primary ERP vendors: SAP, Oracle and Baan. These are your Tier 1 ERP players. Although not yet quite a Tier 1 ERP player, Microsoft with their Axapta (now called Dynamics AX) is pushing to be a Tier 1 software system.

ERP Tiers: Tier 2 ERP

The Tier 2 market is the largest of all the tiers in terms of the number of potential customers. This is the mid-sized tier. The customers of Tier 2 software usually are in the $20 million to $200 million dollars. They are usually just a few localized sites. For example a company that has a main office in California, with a manufacturing facility in Ohio and a distribution outlet in Texas would be a typical Tier 2 client. Often though, Tier 2 customers are single site. The main indication is the size of the company by revenue. This is important in that you probably will not find more than a couple hundred users all said and done. More likely though it is less than 100 users. Some references to the Tier classifcation refer to the number of employees. This is really not a good indicator as sometimes smaller companies with labor intensive processes may only have a few computer users.

Software in this class includes QAD, Infor’s Syteline, Microsoft Navision (Dynamics NV), ABAS, Glovia, Best’s MAS500, Epicor Vantage, and a host of others.

The problem that the Tier 2 vendors are facing is that the Tier 1 players are pushing down into this space. The market in the Tier 1 arena is small and to continue to expand their businesses, the Tier 1 players are reducing cost, simplifying transaction sets, and offering outsourced hosting and other incentives to allow a medium sized company to have the broad features of the Tier 1 package.

ERP Tiers: Tier 3 ERP

Tier 3 software is designed for single site customers of under $40 million dollars. These are companies with 5 to 30 users and have less demanding needs. Often these companies have just grown out of the Tier 4 packages and are looking to expand their capabilities. These companies tend to be the family run or small corporations.

Software in this market space includes Lily’s Visual Manufacturing, Intuitive Manufacturing, Microsoft Great Plains (Dynamics GP), DBA Software and Best’s MAS200.

ERP Tiers: Tier 4

Tier 4 software is your basic accounting systems. These include Peach Tree, Accpac and Quickbooks. This is the startup to $2 Million dollar software.

The next time you hear a vendor referring to a Tier 2 client, you will understand now that they are referring to a midsized company with just a couple plants. It is amazing how in the IT industry acronyms and categories spring up and every assumes they know what the other is referring to.

An interesting article is the segmentation of ERP into two tiers. You can read more in this publication: The rise of two-tier ERP: what it is and what it means.(TECHNOLOGY)(enterprise resource planning ): An article from: Strategic Finance

ERP Tiers

ERP and Lean

Chris Shaul

Today, many ERP vendors are offering Lean Manufacturing modules in their solutions. These modules propose to assist companies in their lean effort. The real question is to what degree will these modules be used. Can a traditional manufacturer going to a lean model utilize a lean software tool immediately? When implementing an ERP system, process redesign is a must. The change that must occur in order to support an ERP system can be tremendous. But can a company bite off and digest all of the changes? Which should be done first, lean or ERP? These are all some of the questions that a typical manufacturing manager who is about to embark on an ERP implementation might ask.

First, lets define a few things. Lean is the removal of waste within a process and the concept of pulling items to a demand. It is also known as the Toyota Production system as it was developed and refined by Toyota in Japan. ERP is a business process enabled by software tools. It is not a software project! ERP streamlines your information flow such that it parallels your process flow. ERP works to build product to a forecast and then execute a production plan and inventory purchases synchronized to meet the predicted and actual demand. Lean, on the other hand, uses a pull system to meet an actual customer requirement. Lean uses the philosophy of smaller batches and reduction in non-value-added activities to create a much shorter lead time, thus delivering faster to a customer. ERP does not by its’ nature drive efficiencies in the production process. It only provides planners with information on what is going on and allows them to plan faster. If the process is broken, then automating it with the use of ERP will only highlight the problems.

What is the answer? The answer for many is to implement lean as part of an ERP intiative. Some would say that it should be a predecessor to an ERP initiative. Lean purists will argue that you do not need MRP and MPS to drive the production. ERP folks will argue that MRP and MPS are essential to having parts in-house and suppliers coordinated with the production. The answer for most companies is a hybrid solution, where lean is driving waste from the production and supply chain process (although also in the above-the-shop-floor activities too), while ERP is being implemented, such that you are automating value added processes and not trying to replicated waste processes in your new system. MRP can be used to plan longer lead time items, or items with higher value, whereas a Kanban can be setup for the faster turning and less expensive items.

Working from the perspective of a hybrid model, lean principles and practices can be implemented just prior to the ERP initiative. Then during the ERP implementation, the lean concepts must be considered and utilized in the setup of the new system. Tools such as Value Stream Mapping can define areas for quick improvements. Then once those improvements are made, a process flow based on the future state model can be applied to the ERP system. For example, a production cell might be setup for a particular product line with kanban inventory control. This would change how you would define your production process in the ERP system. Better ERP systems can run in this hybrid mode of traditional MRP and modern Lean concepts. Some product lines might be more suited to the MRP/MPS method because of supply chain issues or because of the long lead times that are associated with the products. Other product lines might be easy to immediately switch to flow manufacturing. Because of this, you want a system that can handle both methods.

Using a hybrid model, you select and position the ERP system to work alongside your lean initiatives. By leaning out processes (above and below the shop floor), you are avoiding “automating the mess.” Doing so will shorten lead times, reduce inventory, reduce production costs, improve employee moral and streamline your ERP implementation. Be sure to choose an implementation partner that is familiar with lean and is able to work in a hybrid manner. What order should these two tranforming intiatives occur? It might be best to have the lean initiative lead the ERP intiative by a few months. Then begin to implement the system. But do not stop the lean transformation. That should now be an ongoing philosophy of continual improvement. Use it to your advantage during the ERP implementation. Doing so will only help you on go-live day.

References:

http://www.advancedmanufacturing.com/September00/informationtech.htm

http://www.lean-manufacturing-info.com

http://www.qad.com/company/newsroom/lean_value.html

http://www.mapics.com/software/EE/SyteLine/sl7-aps.asp

http://www.cmtc.com/

http://www.inventoryinc.com/complimentary.html

Chris Shaul is a Sr. IT Consultant and specializes about ERP selections and implementations.

What makes a successful ERP implementation?

ERP implementations are the most difficult thing you will probably have to do. They are painful and they usually tear a team apart (and then bring them back together) before going live. Some say that a major ERP implementation will go live under its third project manager! While this is extreme, it can be seen in large corporate environments. Add to the fact that ERP is not really one system; there are document management systems, bar code systems, report writers, warehouse management and other sorts of bolt-on’s. The greatest challenge is Continue reading What makes a successful ERP implementation?

Implementing ERP Systems begins with the Selection

Chris Shaul

There are two major parts to implementing an ERP system, the selection and the implementation. The selection of the correct software is key to implementation. Selecting the wrong software can kill an implementation or at least make the project very expensive and overrun the budget. Be careful when selecting a new system. There are basic steps to a system selection.

Systems selection entails first detailing your requirements. You can do this in a spreadsheet that is divided into various worksheets for each business function. Then identify the critical success factors that the system must meet in order to be successful. You will also want to document your basic business flow to get a product or service to the client. This should be from the initial contact to the client paying for the product or service. Once you have this criteria, then you can begin looking at software.

To find the best software, you can use google to search for the vertical market place of software that you belong to. For example, you can use the search â€œmanufacturing erpâ€ or â€œdistribution erpâ€ to find the candidate software systems.

Draw up a long list of about 10 vendors that sound like they have the modules and features that you are looking for. Then start calling these vendors and talk to them. You can even arrange web demonstrations for you to get a look and feel of the software. Of course every vendor will tell you that they are the best and that they can answer every one of your needs. The trick is to have them demonstrate your requirements through a business flow of your own design.

After discussing your needs, you should have a good idea of the capabilities of the vendor. Some you will be impressed by and some you will not want to speak to again. Develop a short list of 2 to 4 vendors. Then develop a scripted demo for them to provide to you. The key is for you to develop the demonstration, not the vendor. They will only show you their best features. You want to see them demonstrate your business process.

Once you have seen the vendorâ€™s demonstration, then you can check references and negotiate pricing. The key things to remember is that you must have your own requirements defined and the vendor must demonstrate your business flow. If they are successful in meeting your requirements and showing you that it can work, then they can be a viable candidate and you can feel somewhat assured that you are going to implement a software that is compatible with your business.

Chris Shaul is a Sr. IT Consultant and specializes about ERP selections and implementations.