If you do not already have an ERP system in place, you might want to consider looking for a system that covers both the specific functionality you are looking for, as well as being a fully functional company wide solution. For companies that already have an ERP system, try to find out if your vendor offers a WMS option, and even if it doesn’t include all the very specific functionality, if it’s “close enough” you should certainly weigh it carefully against the integration of third-party options. Let’s look at the case of Warehouse Management Systems, or WMS.

Implementation of WMS systems has always been a major challenge even when undertaken with budgets of $500K and upward, so it is understandably a greater challenge within the budgets that small and medium-sized companies can afford. A major contributing factor to this challenge is the integration complexity of a system that is not part of the ERP system. Implementing a stand-alone WMS solution, in addition to the complexity of its integration, could have a tremendous impact on pricing and costs, overall system stability and the efficiency of day-to-day work.

Issues
Following are some of the common problems faced when integrating an ERP and WMS system:

1. Inventory balance discrepancy (or “mismatch”): there are a plethora of issues that could trigger an inventory balance discrepancy between a system with separate ERP and WMS software. For every part for which a mismatch is detected, there may be hundreds (or thousands) of transactions that should be investigated to analyze the cause of the discrepancy. Selecting the two-system approach mandates the appointment of individual/s who would do the investigation and make it part of their job description.
2. Incremental system initiation is almost mandatory to avoid costly downtime in a warehouse. There are two ways to achieve incremental implementation, both of which are difficult if not impossible to accomplish when the WMS is a separate entity:
   1. Isolate an area in the warehouse and implement the WMS on that area only.
   2. Isolate an activity (e.g., “pick”) and implement throughout the warehouse.
3. Incremental system shut-down: warehouse management systems (integrated or separate) can suffer from erroneous data definitions that will result in system malfunctions. When working with a third party WMS, there is no way to incrementally isolate the area or operation in which the malfunction was detected. Unless a quick fix is provided, the whole warehouse operation may come to a standstill as the problem spreads and is exacerbated with every additional transaction or activity reported into the system. Incremental shut-down capabilities are a readily available option in a fully integrated WMS/ERP system.
4. Managing assemblies (packing small packages into larger ones, unpacking, etc.): due to complexity, managing assemblies can be a significant issue to resolve when working with two separate systems. But in a fully integrated system, it’s an integral part of the ERP system, extended into the WMS.
5. Data synchronization challenges:
   1. There are a number of inventory attributes that are customer-specific in both what they represent and the business process/rules that they must fulfill, such as customer-designated inventory allocation (quantitative, prepaid, etc.), “ship to/bill to” locations and more. Any mismatch between the ERP system and the WMS when such attributes and rules are synchronized could cause a discrepancy between the two systems, which in turn may result in prolonged work stoppages until the problems are identified and resolved.
   2. Delivery priorities as set by the Supply Chain Management (SCM) system in the ERP system are difficult to synchronize with an external WMS on an ongoing basis. Tracking and synchronization between two systems to account for other actions in the warehouse, such as “Put”, that are temporarily implemented in the ERP system can be troublesome.

An integrated solution

Some ERP systems now include an integrated WMS module. Following are some of the benefits provided by the integrated WMS-ERP solution:

1. Integration: an integrated WMS system enables the warehousing functions to interact seamlessly with other system and corporate activities, be they manufacturing or distribution related. Whether your business is manufacturing bars of soap or providing maintenance for jet engines, the warehouse functions as an integral part of the business, so it makes sense to manage it as an integral part of the core software solution.
2. Visibility: an integrated WMS system provides a greater depth and breadth to supply chain visibility, helping users not only to check order statuses, but also to meet ever increasing delivery standards, manage global operations on many levels more efficiently, and provide customer service reps with crucial information and alerts.
3. Unification: unified data structures (part catalogue, warehouse/location records, etc.). As a result, any authorized user can perform data validation during initial system implementation using a single system and interface.
4. Interface consistency: With a unified user interface, training fees and learning curve times are greatly reduced. Getting new employees up and running on two different user interfaces is always more costly and time consuming than learning a single user interface.
5. Unified system maintenance: Of the many issues that could be covered under this topic, a predominant one is maintaining “user permissions/profiles” in two different systems.
6. Overall benefits of the ERP system are automatically included in the WMS functionality: BI features including Dashboards and KPIs, BPM functionality and more.

If the WMS is part of the ERP system, warehouse operations can interact seamlessly with accounting, CRM, Supply Chain, production processes and more. Purchase, sales and inventory processes can be used to trigger the putaway, picking and replenishment tasks, or vice versa.

What makes software or technology sexy? Historically that would be design and technology: think ipods. For business software the focus had always been on different traits: functionality, reliability, stability and availability. But more and more ERP developers are tapping new technologies and incorporating them more rapidly than ever before. Perhaps this is driven by better development tools, or simply by the technological innovations that continually sweep into our lives, and vendors are “riding the wave” of customers’ demands. With more people using VOIP and social networking for business, for example, it was only a matter of time before they would want functionality to support these tools in their ERP system.  WPF, Cloud Computing and SaaS are only some of the sexier adjuncts recently coming up in the ERP dialogue. With new design and graphic options ERP software is becoming more attractive and easier to use, and many ERP/CRM programs can now be accessed via a browser window from anywhere in the world. And of course the range of functionality is growing.

ERP is made sexier with more options. And as one company put it – ERP options are now limited only by as far as you can think. Product innovation not only attracts customers, but it attracts talented and creative engineers and designers, which in turn leads to creative thinking and design.  In some programs users now have more control over certain features, even some basic level of design and customization. As long as you can trust that the traditional aspects of the system are sound (functionality, reliability, stability and availability), you can look for a product that excites the users and promotes adaptation within an organization. Employees who can control their user experience will have a sense of ownership of the product, and they will be more inclined to make the best use of it.

Companies should look for vendors that are excited about their products, not only for what is in place on the day you evaluate it, but in terms of what innovations and developments they have in the pipeline. Vendors that are familiar with and take advantage of new media and technology options are ready to incorporate them into their systems once reliability and stability are established. Look for vendors that issue regular version releases, keep up with new developments in back- and front-end technologies, and encourage their customers to keep up as well. ERP vendors should listen to their customers and help them manage the processes they have in place, but they should also be able to challenge them to do things better. ERP should be about empowering companies and individual users, and not forcing them to make do with inferior technology and products that look and feel outdated. In today’s ERP market, functionally, reliability and stability can be found in products that are at the same time making inroads with the technologies that do excite us. Solving business problems and streamlining is the driving force behind most ERP sales, but there is no reason that the UI can’t be exciting and inviting, platforms flexible and the user experience empowering. And that’s sexy.

• Vendor Stability
• References
• Software Upgrades and Version Release

This installment will address crucial aspects of the actual anticipated working relationship you will potentially have with each vendor and covers:

• Maintenance and Support
• Implementation
• Training
• Working Demo

Maintenance and support                                                         

With any complex software that is upgraded on a regular basis you can expect occasional problems or issues to crop up. The important thing to look for is a system in place to address these eventualities. This is something that can vary widely by reseller and by manufacturer, and one size does not fit all.

• What are the support terms?
• Are different levels of support available?
• What are the escalation procedures?
• Is there a guaranteed response time (even if only to say that they are still working on the issue)?
• Are upgrades/service packs released on a regular basis?
• Is there a toll-free line, Web support or e-mail support?
• Can you track progress of your support ticket or call on the Internet?
• Who from your team is allowed to contact technical support?

Terms and cost of support will vary. Many will charge an annual maintenance fee which is often calculated from a percentage of your software’s price, to provide basic level support and upgrades. Most will charge an additional fee per ticket item or service related issue, or you may have to pre-pay for a set number of service tickets or hours spent providing support. Just as all support plans are different, so too support services may come in all flavors and colors. Make sure you understand what kind of support is available so that there are no unpleasant surprises down the line. Also, while some resellers and/or vendors may only support their own product, others may have support teams who are able to assist in areas that may be underlying to their solution such as database management. If not, make sure that you find someone that can support those systems so that in the event of an emergency you don’t have to start doing your homework while in crisis mode.

Implementation

It’s crucial that any potential vendor takes the time to understand your needs and how you work as a company. Be wary of vendors that agree to show you their solution without first asking you some in-depth questions about what you are looking for in a solution and what key issues you are hoping the system will address. That being said, if a vendor has experience with other companies in your space, you may learn from their experience and discover new and better ways to do things so move forward with an open mind.

Ask about the vendor’s implementation methodology. Are they able to customize the software or processes as required? Are the costs of training rolled into implementation? For example while doing some initial data conversion to the new system, perhaps in the process the consultant will show key member of your team how to it for different areas or in the future. Find out in advance what is included in the implementation and rough estimates on how long each item will take. Does the vendor help you set up business rules? Are SOP (Standard Operating Procedures) included? The idea is to uncover as much information as possible and to commit the vendor or reseller (and yourselves) to a plan in writing. This will help all concerned stay on track, on schedule and within budget.

Following are example of some of the items that may be included in an implementation checklist:

• Business/system analysis
• Project management services
• Installation
• Customizations
• Setting up reports and business rules
• Data conversion/migration into the new system
• Training

Training

The vendor should have a clear plan for training your team on the system. Although many businesses prefer having the training done on-site, that is not always possible or cost effective. Optimally, the vendor will have different options which you can choose from including user documentation either built into the system, file based or a combination of both. Do not expect printed manuals as many vendors now leave the decision to print to the customer and provide PDF files or even word files that companies can edit to suit their particular needs. Ask to see samples of the documentation. Verify if some basic training is included in the implementation plan. Set out clear goals for training that is arranged either on-site or remotely. Web-based training can also be effective, if done properly. Find out what topics are covered in each session, where and how the training is done, who is trained, how long it takes. Another thing to look for is a demo company or database set up within the software itself. A demo company is one that includes dummy data that users can manipulate without affecting the “real” or production data. The advantage of having a demo company is that it allows users to become familiar with the software without having to use real data. Consider the option of training managers or “key users” of the system only, who will then be available to train other members of your team in house thus reducing training costs overall.

Be prepared to factor some level of training into your overall budget. This will ease users into using a new system and hopefully foster ownership of the tasks that will be performing in the system.

Working Demo

Some vendors will present beautiful PowerPoint presentations showing you corporate information and often screen shots of the software tailored to what you, the prospect, wants to see. This is not enough. Some vendors will have a demo environment that they will allow you to access so that you can poke around and get a feel for the software. As the software is new to you, the demo might not have all the features available and even if it did you might not know where to look, this isn’t enough. Some will show you a demo of their system, showing you the bits and pieces that they want to show. This isn’t enough either. Indicate to the vendor what your specific needs are and insist that they show you at least some of the functionality working on their application. The data doesn’t have to be specific to your company, and they don’t need to show you every single field that you may require in a particular form, but they should be able to walk you through some of your key functions all the way to the level of reports generated or how the information will look on the dashboard with sample data.  This is a good indication that the software can, perhaps with tweaking, address your business needs, and that the sales people know and understand what they are selling and aren’t spinning stories of what their software can and cannot do.

In conclusion, with so many issues to consider, choosing a software vendor should be done carefully and thoroughly. However, if you use the above checklist and do the due diligence, you should be able to make an informed decision and choose the best partner to help meet your business needs.

The full list will be presented here, but part two of this post will delve a bit deeper into the last 4 criteria recommended for evaluating a software vendor.

Here are some things to consider:

• Vendor Stability
• References
• Software Upgrades and Version Release
• Maintenance and Support
• Implementation
• Training
• Working Demo

Vendor Stability

You may be purchasing directly from the manufacturer or from a reseller. In either case, when assessing stability find out how long the product manufacturer has been in business, how many employees it has and what their installed base is. It’s important to select a software provider who will be around for years, and longevity and a large install base can be one indicator of stability. This can also indicate whether the vendor will continue to upgrade and improve their software, but we’ll get to that below. This is less important in the reseller. When considering a reseller make sure to ask for a letter from the manufacturer indicating that they stand behind this partner and will support the partners’ customers in any eventuality. In terms of stability, look beyond the organization marketing the software and do the research on the manufacturer.

References

Ask for references. Even if the software is a perfect fit for your company, this will hopefully be a long-term relationship and you need to check out the vendor and/or reseller. The vendor should be able to put you in touch with references using the software, and the resellers should be able to put you in touch with other companies for which they have provided similar services. Call the references and ask questions such as:

• Has the system improved your overall performance?
• Does it do everything you expected?
• Are your employees satisfied with it?
• Are you satisfied with the level of service provided?
• How does the vendor/reseller react when you have problems?

Software Upgrades and Version Release

Technology changes quickly and you want to make sure that your vendor is not only up-to-date with the current technological advances, but continues to upgrade their software to address technological advances. Updates and new releases also indicate a commitment to the software. Ask how the provider handles bug reports and feature requests, how often they release new versions and what if any costs are involved in upgrading. In general software fixes or service packs are offered as part of the on-going maintenance, but different vendors have different schemes for upgrades to new releases. Some will require payments for new versions; some will provide them free-of-charge as long as you pay your annual maintenance fees. So in terms of upgrades and new versions ask about frequency, policy and costs.

With so many software vendors and resellers fighting hard for your business, you need to choose wisely so that you don’t wind up with an excellent software system behind which is a company that no longer exists. These top three criteria are good indicators that the company behind the product has staying power, good working relationships with its customers and a vision for the future. Our next installment will address understanding the actual working relationship you will potentially have with each vendor, so that you enter a partnership with eyes wide open.

Workflow as a concept is nothing new. Even before the era of computers, there have always been established procedures for handling operations within a corporate structure. Take a purchase order, for example: an employee notifies their manager that they require a particular item; the manager then puts in a requisition, which, depending on his level of authority, may need to be bumped further up the management chain until it is authorized; it is then handed over to the purchasing coordinator and finally purchased. The workflow can be relatively straightforward or very complex, but it is basically a business process that consists of a number of sequential tasks performed in a particular order or following a set of rules that is designed to facilitate a particular objective. Examples of processes for which workflows are commonly in place include order processing and fulfillment, sales cycle and campaign management, performance reviews, medical/insurance claims processing, expense reporting, warranty management, invoice processing and more.

The ERP workflow can be part of the larger concept of Business Process Management (BPM), which is a more holistic approach to business processes. Companies that employ BPM aim to optimize their business processes while striving to be more efficient, more effective, and improve the level of tracking and control built into their processes as a whole.

BPM and workflow implementation force companies to sit down and evaluate their processes and the rationale behind them:  what is the flow of a particular task (e.g. draft -> ready -> financial approval -> final authorization -> sent to vendor), what possible scenarios exist, what rules need to be applied at each stage of the process (e.g., a purchase order cannot be moved from a status of “cancelled” to “sent to vendor” or any order over $10,000 needs another level of authorization), who is involved at each stage and what level of authority should they be granted. Creating a detailed blueprint of business processes, streamlining and regulating the workflow facilitates a greater degree of control; enhanced ability to respond to any potential issues; and increased efficiency, accountability and transparency for continued auditing and analysis of the process.

In many of the available solutions, in addition to automating the routing of documents and tasks from one person to another, email or SMS notification is employed to inform the next person in the chain of events that a document or process requires their attention. Rules can often be set so that another person in the chain is notified if a document remains at a particular status for too long (e.g. if the tracking document for an item in a repair shop remains by a certain technician at the status “in process” for more than two days, both the technician and his or her supervisor will receive automatic notification so that they can investigate the delay).

BPM and workflow functionality are increasingly a part of many ERP solutions, and it makes sense to implement such process maps and controls early in the game in order to maximize the benefits of the ERP system. Some ERP vendors offer built-in workflow functionalities, while others offer possibilities for third-party integration. If third-party solutions are employed, it’s very important that the ERP and BPM/Workflow groups understand and communicate about the technology and processes that are being implemented.

Remember: workflows involve humans, and the people involved at all levels of the process should also be involved in the initial mapping out of the processes before they are implemented. While mapping out the process, you may discover new and better ways to perform tasks or provide better oversight. The defining and modeling phase is often a learning process for both employees and managers. Collaboration during the definition process can produce enhanced processes, improve performance of both the system as a whole and of individual employees, and ultimately foster a sense of “ownership” in each individual regarding his or her part in the process itself.

In conclusion and to recap, workflow and BPM systems control the flow of information between individuals or departments, and direct it to the next appropriate processing stage according to an established workflow map. A good system should enable managers to monitor the progress of a particular process within the workflow, handle exceptions, escalate individual exceptions and generate reports that can be used to improve performance. It is therefore advisable that you make BPM and workflow one of your priorities when selecting or implementing an ERP software solution.

There are many benefits to having SOPs in place within an organization. In the first place, in documenting any function within an organization, you commit collective or even individual knowledge into something tangible: a document. Written procedures and practices then become part of the corporate knowledge base, and are no longer limited to one particular individual or group. Routine training of new employees can be based on the SOPs, and tasks across the company can be standardized. Performance of and adherence to set guidelines can be enforced.

In an environment where regulatory compliance is a requirement and spot checking is in place (pharmaceuticals, medical devices, chemical plants, etc.), SOPs are a must. According to some literature, one of the most frequently reported problems identified in regulatory inspections is a lack of written SOPs and/or the failure to follow them. In a manufacturing environment, SOPs are also imperative in order to insure uniform results, effective quality control, and ultimately, traceability. SOPs are not static documents, however, and they need to be reviewed regularly and updated to assure that they are keeping up with any new working procedures, developments and/or regulatory requirements that are put in place. Changes to the SOPs should be documented.

On a corporate level, SOPs are all about improving your business – be it striving towards continuity, or putting into action best practices for the long run. In the process of documenting and putting SOPs in place, companies may even discover better ways to complete tasks.

When deciding on whether to invest in an ERP system, before moving over to a new system, while in the process of implementing or even re-evaluating the way you do business: take the time to think about SOPs. To get real value from your software and your implementation, insist on working with SOPs. Make sure that the system you are having installed can handle the way you do business. And make sure that things are documented. The people that are involved in the work itself OR their direct supervisors should be consulted when preparing SOPs. If your consultant tells you this is not necessary – beware. The people in the trenches of your establishment are the ones responsible for doing the work documented in the SOP. The greater their involvement, the greater their sense of ownership, the greater their investment and ultimately, the greater the likelihood that they will adhere to the SOPs. Where this is impractical, at the very least the SOPs should be “owned” by the supervisor.

SOPs are proven to work. They can help you streamline processes, enhance performance, improve customer service and, ultimately, boost business. Investment of time in creating and maintaining SOPs will be well spent. In today’s economy, companies need to make the most of the resources they have. In creating SOPs you are not only using your resources wisely, but you ensure that hard earned knowledge and experience is shared, becomes tangible and is transformed into a corporate commodity.

Changing Face of ERP

ERP systems have traditionally been sold as in-house solutions, where the VAR is often not only the sales conduit, but the implementation and service provider as well. Different vendors have historically implemented different terms and conditions for the opportunity to participate in their partner programs. Some require substantial payments for the privilege of becoming a partner, some don’t; some provide sales commission or leads but no commission, some don’t; some expect their partners to make money only on implementation and service, and many employ a combination of any or all of the above and more. With the new opportunities of SaaS, where an ERP system can be hosted and many of the implementation and service issues are necessarily falling back to the vendor, things have gotten complicated, and in some cases with big name vendors, even nasty.

While there is inherent logic in the decisions many VARs are making, to stick with the partnerships they have been nurturing for years, others are realizing that it may be time to broaden their horizons and try to make the most of the new offers that are now available. While there is a need to focus on a particular specialty or area of the market, both you and your market may benefit from more of a choice of offerings. A look at our previous post ERP Fees & Installation Alternatives will outline some of the different options now available, while we continue to focus here on how these changes effect the partner relationship.

Partnerships with Vendors

Trust. Beyond the terms of partnership, possible channel conflicts and the way they are addressed, and initial and continuing support, the bottom line when choosing a vendor is trust. Can a vendor be trusted to be fair and to treat their partners decently? Complaints will always be made about varying terms of the partner relationship and fluctuating commission fees, but in the long run, does the vendor treat their partners as true partners, or a necessary evil of doing business in today’s environment?

Fairness. Changing realities, new technologies and options in the market will ultimately result in vendors’ need to restructure their price lists or partner terms. This is fair. But do vendors give enough advance warning to their partners? Are they willing to discuss the issues and explain the points and rational behind the changes? Are they flexible with outstanding quotes to end customers, so that no face is lost in attempts to close the deal? All these are key questions to ask potential vendors and will help you determine whether they are fair in dealing with partners.

Business Ethics. Channel conflict, where partners have to compete against one another or the vendor’s own sales teams, is another touchy issue between partners and vendors. In addition, poaching customers is not an unheard of phenomenon among partners. While this may have more of a financial impact on partners in on-premise installations with one-time and annual use payments, it remains an issue in the SaaS arena. Different options have been employed by vendors to address this, including deal/lead registration and providing direct support, but the jury is still out as to the effectiveness of these options. Lead registration has been touted as a protection device to ensure that a partner does not undercut the partner who initiated the deal, but has also been thrashed as helping some vendors sweep up the deals themselves. A vendor that is truly interested in promoting the success of their partners will ensure that lead registration is respected and maintained. And that if at a later stage, for whatever reason, a customer decides to switch service providers, the partner who originally made the sale continues to receive some revenue, even if they are no longer providing support.

Cooperation. Some believe that if you have a captive market, then the partner working that market is at an advantage. We’ve actually found the opposite to be true. Healthy competition is not necessarily a bad thing. Also, when prospective customers see that there are more and more vendors of a particular solution, they are less insecure about investing in the said solution. As long as the vendor is looking out for everyone’s best interest, cooperation across geographic or even technical expertise lines can be bridged, making cooperation mutually beneficial for all concerned: customer-partner-partner-vendor, a win-win-win-win scenario.

Support. In terms of product support, one of the key indicators of a vendor’s willingness to work hand-and-hand with partners is the level of support provided. Often vendors require partners to take expensive training courses as well as pay for on-going support. While this does seem to be fair, it should not be abused by the vendor, and as much material as possible should be provided to enable the partners to help themselves. Again, this fosters the growth of a foundation of strong partners that can be self-reliant and independent, allowing the vendor to concentrate on their own priorities.

Ideally, vendors should be focused on getting the best product out to market and providing the support and infrastructure necessary to allow their partners and VARs to flourish. By significantly expanding and maintaining a growing footprint in their market, sales will benefit both the partners and the resellers. Look for win-win scenarios when reviewing terms and contracts, not only from the partner-vendor point of view, but from the partner-partner-vendor and customer side of things as well.

By Rebecca Haviv

Business intelligence. Now more than ever you need to have your finger on the pulse of your business – to ensure that all department heads know how their sectors are performing, are able to identify problems as they arise and are in a position to put corrective action into place quickly and efficient. Businesses just can’t afford to waste time and effort on getting data out of their systems and then figuring out what to do about it.

The ability to identify fluctuating business conditions in real time, as they are happening, and then react accordingly can significantly affect a company’s overall performance.  Business Intelligence needs to go beyond gathering of data. Corporations need to be able to set and monitor goals, build strategies and scenarios to address business needs as they arise, and turn these strategies into action items if necessary. They also need to gather data to assess the execution of plans on a financial and operational level.

There are plenty of BI solutions that can plug into your data and churn out reports, or that you can integrate with your existing corporate system. But ideally, you want a software solution that can not only manage your business, but provide you with a bird’s eye view of the information you need to make critical business decisions. A system that can help you build the plans and strategies for dealing with your operation. A system within which you can set parameters, and then examine your data from multiple angles.

ERP systems, in helping you to run your business, must be able to address this need. They should not only provide you with real-time data that can tell, for example, what product or campaign is performing best, in what region and even what store, but help you analyze why something is not performing as expected. In drilling down to the details of orders and analyzing trends, you can determine that selling snow shovels in Florida isn’t the most effective approach, and re-organize to allocate that stock to Maine. Or if sales for one particular store or salesperson have been outpacing all others, you need to figure out why and see if the same strategies can be effectively employed elsewhere in the organization. In manufacturing, managing and monitoring production or scrap materials can have a significant impact, as can tracking the efficiency of vendors and quality of raw materials. All these are key factors that can substantially impact the bottom line of any business.

When evaluating products that are designed to help you make sense of your data, beyond the cost of the software itself and integration with your existing system (if required), look for the following:

Timely data: Running analysis on data that is a week old won’t be very effective. Conversely, systems that can only provide you with a snapshot of where your data is holding at any given moment are limited in scope and usefulness. Look for solutions that can provide you with real-time and historical data.

Ease of use and rapid implementation: If you can’t figure out how to get the information you need out of a system, the fanciest and most expensive tool in the world won’t be much use. Look for solutions that have pre-defined reports and even dashboards for certain targeted groups or areas of operation (executives, sales/marketing managers, CFOs, HR, Projects etc.), which can be customized for an individual’s particular requirements. This will not only make it easier for your team to access the data they need, but will ultimately save countless hours in putting the pieces together.

Analysis, or “slicing and dicing”: Look for systems that can filter and sort data to identify potential problems before they snowball into bigger issues. Analysis of dimensional data through intuitive query and online analytical processing (OLAP) tools should let your users “slice and dice” data and drill down to as many levels as there are parameters. So you can sort and analyze data by region, store and even sales rep. Or flip the data and look by item sold, then region. Different angles can reveal different trends, so make sure you can see as many as possible within the data.

Visualization: Try to find a solution that will help you understand key trends and patterns at a glance and display data in familiar forms, such as graphs and charts. Dashboards and key performance indicator (KPI) dials are particularly effective tools. The visualizations will enable users to track and monitor the metrics they are responsible for, compare actual performance to predefined targets and trigger alerts when performance strays too much from goals.

Access to data: Seeing data in real-time is crucial, but what if you want to analyze that data off-line as well? Make sure your data can be accessed when you are online and offline for maximum ROI.

As a rule, but especially now in this time of belt-tightening across the board, every company should be looking for ways to streamline operations and expenses. Make the most of the software you have and see what kind of BI information you can get out of it. Go one step further and ask your software representative or consultant what they can do to help you mine your business data and make sense of it. All too often, complicated BI tools make it too hard to find the data you are looking for, and too easy to get confused by what you find. Integration can be a problem with stand-alone BI systems. Try to look for software that can pull all your data together, help you set up targets in the form of KPIs, set business rules for alerts when KPIs are missed or met, and of course display the information in a simple and intuitive interface.                 

By Rebecca Haviv

Traditional On-Premise Installation – One-time license payment

Although SaaS and hosted software are the buzzwords of the day, traditional on-site implementations provide some companies with the sense of security and ownership they require, with a one-time license fee instead of an ongoing monthly expense. There is often an additional yearly maintenance fee which must also be taken into consideration. While this model requires an investment in the purchasing and maintenance of hardware and infrastructure, it can sometimes be more cost effective in the long run then a per-user/per-month installation. Once you’ve paid the initial license cost, the service charges are usually fairly stable and hosting and other charges (including testing environments, which in on-premise installations can be a back-up or test server) shouldn’t surprisingly increase as time goes on.

To summarize some of the benefits of an on-premise installation:

• Ownership vs. monthly fees: This might be most cost effective in the long run
• Security: You control of the security of the environment including back-ups
• Accessibility: Connectivity to the system is intrinsic, without the need for internet connections throughout the organization

Software as a Service (SaaS) – Hosted Option

The SaaS model provides an ERP option for companies who need the solutions provided in ERP software, without forcing them to make a capital investment in on-premise IT infrastructure: software, hardware and implementation.

The hosted option has a number of benefits over an on-premise installation:

• Fees: Ease of use, no costly set up fees, and no need to invest in IT infrastructure or personnel.
• Automatic upgrade: Upgrades are handled automatically on the hosted platform so you are always using the latest version of the software.
• Accessibility: Connectivity is available online, anytime, from any common web browser.
• Low-risk: With no large up-front investment or long-term commitment, this model allows you to “try-before-you-buy,” as it were, though migration from an existing system does need to be considered.
• Security: In general, data is protected by the platform security; systems and backups should be in place to ensure uninterrupted service.

When the SaaS model is offered a pay-as-you-go, per-user/per-month basis, with its own advantages:

• Initial cost: No major initial outlay of capital
• Stability: Your fees are ostensibly stable and on a regular basis with no surprises
• Functional Scalability: Often, no additional fees required for most of the functionality (e.g. begin using ERP software for CRM and expand to Accounting, Inventory Control etc., at either scalable or no additional cost, depending on the package)

On-Premise Installation – Pay-As-You-Go

For companies that want to take advantage of the pay-as-you-go per-user/per-month basis model, while maintaining their ERP system in-house, many companies now offer the option to do so, though it’s a mixture of both benefits and disadvantages or each approach. The benefits are, as above for the SaaS option:

• Initial cost: No major initial outlay of capital
• Stability: Your fees are ostensibly stable and on a regular basis with no surprises
• Functional Scalability: While often no additional fees are required for most of the functionality (e.g. begin using ERP software for CRM and expand to Accounting, Inventory Control etc., at either scalable or no additional cost, depending on the package) – there might be some configuration involved and updating which would be automatic in the regular SaaS solution

Mixed with advantages from the traditional on-premise installation:

• Security: You control of the security of the environment including back-ups
• Accessibility: Connectivity to the system is intrinsic, without the need for internet connections throughout the organization

The many flavors of ERP systems now give you the power of choice. So it’s important that you consider both the short and long term requirements of your organization. If you’re not sure, try to find a solution that offers as many variations as possible so that you can move from SaaS to on-premise if the need arises, without costly migration expenses and the headache of switching such a major part of your business operation.

By Rebecca Haviv

The leading expenditures on ERP projects are (listed in order of magnitude):

• Internal resources
• External (consulting) services
• Software (licenses and maintenance)

Some of the factors that affect these expenses are the size of the company, number of ERP users, and the depth and breadth of functionality. The true total cost of the ERP system’s deployment, however, is usually unclear during the evaluation process, because these expenditures are not readily apparent until they come up over the lifecycle of the project. Some (but not all) of these “unexpected” or “hidden” costs can include:

1. Data conversion and improvement (both from existing systems and ongoing)
2. Add-ons (external components), private customizations, satellite utilities (web sites, BI, BPM, Document Management, mail, etc.), their interfaces to the main ERP application and their migration through ERP upgrades (service packs and advanced versions).
3. Identity management and security enforcement

All of these hidden costs take close scrutiny and time to discover.

IT Related Expenses

One of the bigger hidden costs, or one not always adequately factored into the equation, is the expense item of IT (or the IT staff/internal resources).

Data collected for 2004-2007 on companies with 500-999 employees in the U.K by Kew Associates clearly shows that annual spending on IT staff is larger by a factor of 4 than any other IT expense item.

What are the IT people doing?

IT people make a host of applications tick, including the selected ERP system and all other applications. An ERP system that can incorporate as many applications as possible will minimize the costs involved in maintaining a large IT staff and the hours spent on dealing with multiple applications, not to mention the costs of the applications themselves.
 
To be sure, there are plenty of good-quality, low-priced, very specific software tools out there in the market. But when you combine the price of the software with the expense of their integration with an ERP application and the IT overhead required to support and maintain them all – the costs just keep adding up.

Installation
Installation of traditional ERP products can take months. There are a few products out there that can shorten that time frame substantially. Ask when vetting products, in order to get a clearer picture of what the cost and time frame for this will be.

Implementation & Adoption
A speedy implementation cycle lowers the TCO, but the truth is that there is no easy road for implementation. It doesn’t matter if your solution is SaaS, on-demand or on-premise since the time and cost of implementation depends on the depth and functionality of the chosen system, and the effectiveness of its adoption by the workforce.

Finding a solution that can either smooth the road to a successful implementation, or provide you with tools to do it yourself as much as possible, is the best solution. This can often also provide a hidden benefit, if you will, of giving end users a sense of “ownership” of their processes, which can smooth the path to adoption. Some things you can look for in a software package are:

• User-level configuration utilities for data migration, eliminating the burden of writing customized conversion routines.
• Training tools incorporated in the application, including ready made templates, and step-by-step interactive help files and/or wizards which will ultimately empower end users.
• Good, easy-to-understand documentation and help tools.

Software Costs/Platform Options
Special pricing plans for various software solutions offer a wide array of convenient flexible options, from fully hosted SaaS ERP to per-user/per-month to flat fee on-site installation:

1. Choosing the fully hosted on-demand/SaaS ERP plan not only sets a low-cost fee per user per month, but can help you save on the cost of servers, operating systems, middleware, databases and accompanying administration (maintenance and security). You can also “try before you buy,” and stop using it if the software does not match your requirements.
2. With the “Per-User/Per-Month” on-site installation you can start out small, using a few of the modules, and expand to use additional modules as you need them. Let the use of the software grow with the features you gradually employ and the number of users within the organization that progressively move over to the new system.
3. For companies that have existing infrastructure, or that need to keep the application “in-house”, on-site installation are often the only solution.

Private Customizations

Look for software that includes user-level design and configuration tools for as many aspects of the software as possible (which can also be limited if required), especially to control layout and reporting functionality (e.g. look for software that can help you build the reports you need). This will keep private customizations to a minimum.

These are some of the major factors that are part of the equation and affect the TCO of any ERP solution. The challenge is to choose an ERP solution that not only fits your business requirements, but can help you address and minimize even these “hidden costs.”

By Rebecca Haviv