Choosing the Right Software Vendor (part 1)

0

Whenever you purchase software used to manage a significant part of your business operations, in the software vendor you are also choosing what will hopefully be a long-term partner for your business. Selecting the appropriate vendor is just as important as selecting the right software with the right features at the right price. Just as you may have a checklist in selecting the software such as particular functionality and pricing, when considering vendors it’s helpful to have a checklist of criteria as well. If you don’t do proper due diligence, you may be committing your company to an unstable relationship.

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.

Advertisements

Workflow, BPM, ERP Systems and ERP Workflow Integration

1

The aim of an ERP system is to provide an integrated solution to all business areas of a particular enterprise. Ideally, you have one software system that the entire company can access and work with. So, for example, all the data for finance, sales, accounting, human resources and inventory is managed in one central repository and each business group within the organization accesses only the subset of data that they need.

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.

What are Standard Operating Procedures? What do they mean in a business and why should they be taken seriously?

0

Standard operating procedures (SOPs) are a set of instructions for any particular operation within an organization. These instructions map out all steps and activities of a process or procedure, which, when followed with care, should guarantee a particular expected outcome. In the ERP world SOP is often used alongside or interchangeably with the similar term “best practice approach.” The idea behind this is that people have been working with a particular set of guidelines which they have determined to be the best way possible to get a particular job done: filling out a customer receipt for example, or completing a sales order. While each company is different, some of the broader processes and methods can serve as a model for other organizations with similar functions that need to be performed.

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.

Partnerships in the ERP/SaaS World

2

Channel conflict, changing terms, lack of support. These are all things that you will hear and read about in the world of partnerships and when considering the advantages/disadvantages of becoming a VAR for any type of vendor. In the shifting world of ERP/SaaS, you’ll probably be hearing about them more and more.

 

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

 

 

Bookmark and Share