Innovative ERP Strategies - A Forum for Superior Solutions

The Latest Price List and other follies

      I hate to rant.  But pricing continues to be one of the areas that drives ERP customer (and their consultants) CRAZY.

         In the due diligence phase of ERP projects, pricing always gets a closer look.   

      I recently had a conversation with a really top-notch salesman from a top-notch ERP provider, attempting to review some budgetary pricing.   

    At least 3 times - not just once, not twice, but at least 3 times, as we went over the pricing and I asked questions - my question was met with  -" I'm not sure I got that right, I think that's changed, the terminology is confusing".   

    A conversation with another VAR resulted in him telling me that there are two ways to price the solution and I'll forward you some spreadsheets so you can figure out which one is best for you.   That's great. Now I have to become an expert in a particular solution's pricing  - and there's MORE THAN ONE WAY TO PRICE IT.   

   If the ERP vendors and their sales teams can't keep it straight - how can customers have any confidence that what they're being quoted has any grounding in reality?   

    I'd rather not name names - unless those of you out there ask me to - and please share your experiences.   

    It's time we had some sanity here.    That's my rant.  What's yours?   

"C" is for consolidation, or is that confusion!

It's hard to argue with the fact that the ERP space is consolidating.   Whether it will continue to consolidate or not is not a foregone conclusion in my mind.   

Certainly in the Tier 1 and upper Tier 2 space, the market can't support 100 solutions.   An ERP system capable of supporting large enterprises is simply too complex, requires too much support and ongoing T&D for anything but a large company behind it. 

In the middle market, it's another story entirely.

What I find surprising is that I only seem to hear of people on the extreme sides of the fence - those who don't find consolidation to be an issue at all, and those who because of consolidation won't look at anything other than a solution from SAP, Oracle or Microsoft.   

The vendors are partly to blame for this - with their lack of candor about their strategies.  Take Infor, for example.  They have become a fairly large company through a series of acquisitions.  However I challenge even the more ardent ERP expert to list even half the ERP products under the Infor umbrella, much less what the future of those products is.

So, CONSOLIDATION REIGNS, I mean CONFUSION REIGNS.   

What do you think?   

E is for enterprise - isn't that everything?

With all the consolidation going on in the business application space, something has gone unnoticed.

Just about every vendor offering a solution wants to be considered an "ERP" vendor.  Of course E is for enterprise- and even smaller customers want to be considered enterprises too.  On the other hand, ERP is notorious and synonymous with complex, costly and prone to failure, and noone wants to be that.   So we have software vendors claiming to be ERP vendors, and customers who want to be considered enterprises, and it's starting to be pretty meaningless!!

So what is it?  Can you have it both ways?   

To really be considered an ERP, an application has to start from a single, unified design.   The application has to include all critical business and financial functions, starting with planning and forecasting, to pricing, customer and supplier management (not just maintenance), manufacturing, scheduling, order management, billing, financial accounting and reporting.   Certain things don't have to be part of this integrated system.  Things such as Business intelligence, CRM, Sales planning, can be standalone or interfaced to a core ERP system.   When you look at the tier 1 ERP vendors such as SAP or Oracle, you get a good idea of what the potential for a full enterprise implementation might be. 

But customers have to separate the marketing hype from the reality.  So many of the ERP vendors have been on an acquisition binge, acquiring older ERP systems and then trying to supplement them with everything from soup to nuts, thinking that this is what they need to do.  In many cases, they are making things worse!    Unless these acquired systems are re-developed with a common tool set or architecture, they run the risk of being no better than loosely coupled applications. 

With the current state of the market, it is my opinion that customers shouldn't be looking for one package to do everything, just everything important!   This is likely to change rapidly over the next several years.   So when you're speaking with your potential ERP vendor, ask where the pieces came from, how and when they were developed, and how many customers are using the "enterprise-wide" solution so you can relate this to your particular enterprise.   Then decide for yourself if what you're being offered is really an ERP contender or just a pretender.   

The Widget makes a comeback!

In my many (too many?) years in the software and consulting industry, the term "widget" got to be a commonly used term.

It was always used in generic software demos, Sample Company A who makes widgets. . . and on the demo went.   Of course clients never liked this.  It does them little good to see a demo with products that have a weird name, and customers that aren't their own.

Of course now we always do demos with client-specific data (see our white paper on ERP selection best practices) to make the sofware accessible and meaningful to end users who don't deal with new software applications on a day to day basis.

Does this mean the end of the widget?   Quite the contrary!  The widget is back, bigger and better (well better, if not bigger) than ever.   

In the world of blogging, the widget is a real beast!   A widget is a small tool, component, feature  - some small software application (applet?) that gives provides a specific capability on your BLOG, one of my favorite topics. 

Widgets are being created left and right.  Could be a clock, a counter, a bookmark, a sign-in box, etc.  And with open API's the library of widgets is growing exponentially.

For information on widgets, and on blogs in general, please check out typepad, or sixapart, wordpress, some of the companies behind the blogging revolution.   

Check out a few blogs, and find the widgets -- you'll be impressed! 

Not so small business!

You can hardly pick up anything pertaining to Business Applications or ERP without hearing the term SMB, Small and Medium Business.  Every vendor has an SMB team, and the prevailing thinking is that the "mid-market" (aka SMB) represents huge opportunity.

I couldn't agree more.   But let's not equate small with simple!   Let's not equate small with unsophisticated.  And let's not equate small with small-time. 

What we're finding is that there is a new class of SMB's out there - companies that are 20, 30, 50, 70  or 100 million in sales that have needs that are almost as complex as far larger companies.  In many cases, they've been successful growing because of an intense focus on customer satisfaction, or in focusing on a niche.  And they have some very customized processes and approaches. 

What they don't have are the resources, particularly IT management and strategic management and planning skills that it takes to re-engineer and streamline.  That's where we come in.

It creeps up on them.  Many of these companies don't even realize how complex they have become, or how many different systems, tools and applications they use on a daily basis to keep things running.

Part of the challenge in the SMB space is the challenge of education.   Software can be made simpler and easier to use.  But implementing it and re-engineering business processes still takes a large, focused effort, and many SMB's refuse to accept this fact of life.   

Small business is big business today!!! 

Till Death do us part!

This can't be about ERP can it? 

Isn't this part of a marriage vow?  Well, yes and no.  When you implemented your current business system, you did in fact "marry" your business to that package. 

I've been busy working on a series of Webinars with one of our business partners, Trilogy Solutions.  They asked us to address the most common obstacles to IT success.  It got me thinking about my Information Gridlock concept.   This is the situation that most small enterprises find themselves in, locked in by a bunch of disparate systems, all designed with a specific purpose in mind, aside from the main purpose, which is to work well together to support a streamlined and efficient mode of doing business.

They end up spending all the their precious IT resources on manual work-arounds, sneaker-net integration and Excel reporting.   But they're proud of their hard work and the neat tricks that make it all work - sort of. 

When this happens it's time for a divorce from your current IT and Business Applications environment.  Staying in gridlock hell can mean Death  -  maybe not put you out of business, but certainly put a big dent in your competitiveness and ability to offer what your competitors may offer.   

Like a lot of changes made over time, they sort of creep up on you.  You add something here, add something there - bolt on a contact manager, get a standalone production system or a little kitting application, and before you know it you're spending all of your time fiddling and tweaking, and not recognizing that something is fundamentally wrong here.    You're in Information Gridlock, and you need to take the offensive.   

So, till Death do us part - and if you're saddled with a gridlocked IT environment, it's time to kill the old system before it kills you and start anew - this time Getting IT Right, starting with that integrated foundation that is the key to long term success.

It Gets a Lot Better

While on a recent business trip with my partner, Paul Sita, he reminded me of a saying that I use often when referring to any major project - "It gets a little worse before it gets a lot better".  Think about the first house you bought and remember all of the work that went into selecting the right one, purchasing it and preparing to move in.  Then think about the first few days (or weeks or months) of unpacking, settling in and getting used to the new neighborhood.  Now think about how confortable you felt in the house after that.  And how much more room you had or the bigger yard, etc.  The settling in after the hard work is the "little worse" before the comfort that is "a lot better".

The same can be said about the implementation of a new ERP system.  There is a lot of hard work selecting the right one, purchasing it and preparing to use it.  Then there is the settling in period and getting used to a new system and/or procedures.  It may seem like it is a little worse at this point because it is not as familiar as the "old way".

At some point in everyone's post-implementation there is the recognition that the new system is a lot better.  There are efficiency gains, ability to see more information in a timely manner, and a foundation for increased integration of functionality (see Seamless Integration Doesn't Seem Integrated and Seamless Integration Revisited for more on this).  If you haven't reached this point yet it may feel like it will never come, but it will.

Of course, this assumes that you selected the right ERP system and implemented it correctly.  But, we'll leave that for another post.

Solution Creep

  It stuck me recently that we're succumbing to a new type of disease.  I'm naming it Solution Creep, and by this I don't mean the nasty guy in the IT department!

  As software engineering has become more of a science, the number of excellent products and solutions in the market is increasing.   A lot of our work revolves around ERP systems, and frequently we get involved in bolting on or adding onto existing ERP systems with high ROI types of initiatives such as Business Intelligence and Document Management (see Captaris, and Altec for some excellent solutions).

  What seems to be happening is that the software vendors are broadening their product suites, and in trying to increase their value proposition, the solutions are starting to overlap - thus the term Solution Creep.   

  For example, document management vendors are all touting workflow capabilities, that are already included in ERP systems in many cases.   And business intelligence vendors are providing dashboard tools, infringing on the space previously reserved for portal vendors and ERP vendors. 

  On and on it goes.   Is there a moral here? 

    Definitely.  The choices are greater than ever before.  This makes strategy and choosing the right tools and partners more important than ever before or you could be afflicted by Creepy Problems! 

RFI versus RFP

As part of the process of selecting a new ERP package we must narrow the long list of vendors into a short list (for more information see The In's and Out's of Software Selection).  To do this we often use a Request for Information (RFI) document, not a Request for Proposal (RFP).  I am often asked why we prefer this tool.  There are several reasons, but the one that is the most important is that the RFI generates a dialogue between you and the vendor.

The RFP is a long, cumbersome document that is onerous for the vendor.  Many vendors will not respond unless the opportunity is substantial, some will not regardless of the size of the opportunity.  Why would we want to exclude a possible solution that made it to the long list?  When they do respond it is almost always in writing.  In short, it's a "stuffy" process.

The RFI is much shorter and, frankly, more vendor friendly.  Most of the time the response by the vendor is to answer in person or with a conference call.  It generates enough information to make an informed decision without creating a lot of work for the vendor or the selection team.  And, it gives the selection team the ability to "meet" the people behind the software and the company.  It creates a natural forum for conversation, which is healthy for the vendor, too.

Even though ERP software runs on a computer we are all people.  This is a people business, first and foremost.  When you get to the "dog days" of implementation it's good to know that the people you're working with are the types you want to work with.  We all "like to work with people we like".  Shouldn't we find out early in the game who we like?

When is it time to rebuild?

It's baseball playoff time.  If you're a sports fan, this time of year has to be the best, between the baseball playoffs, football season getting into gear, and all the other fall sports kicking in. 

When watching the painful NY Yankees disintegrate before our very eyes, the most expensive baseball team ever assembled, it became clear that it was time to rebuild - to dismantle the team and start rebuilding. 

Of course, this blog came to mind, and the connections between the decision when to rebuild a team and the decision to replace your existing legacy or ERP system.  When is it time?

There is a natural tendency to avoid a major change.  Just one more improvement, just one more additional player, and we'll be the winner we envision.  In most cases, we know in our mind, not just our gut, that it isn't right.  But changing systems and rebuilding a team involve difficult, expensive choices, and an admission that a phase, an era, or just a part of our life is over. 

So when is it time?

• When you can't get THERE from HERE. 
• When every additional new capability involves another piece of software, with another maintenance contact, and another new hire to support it.
• When every new request involves creating another interface that is custom and likely to fail at the most inopportune time.
• When the bulk of your budget, time and resources are devoted to "keeping things running" instead of innovating and responding to business needs.

When is it time?    Most of us know when it's time. 

Successful teams and successful businesses are always assessing and reinventing themselves, always changing before they have to to stay on top.

Think like the baseball GM.  The more moves you need to make to stay competitive the less likely that you'll be able to make them all successfully.  Then you'll know it's time to rebuild and start looking for that new ERP platform.   

Oh and by the way - IT"S ALWAYS PLAYOFF TIME IN BUSINESS!!!