ERP Software Starting Point
White Paper by:
JOBSCOPE Software
www.jobscope.com
© 2014 Jobscope Corporation
A Guide to Overcoming the
Common Pitfalls and Fears
Facing Decision Makers in
the ERP Selection Process
White Paper
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© 2014 Jobscope Corporation. All rights protected and reserved.
Executive Summary
Today, many manufacturers are facing
the very real threat of financial loss and
stagnant growth during an increasingly
unsteady economy. Instead of taking
action to combat the very real economic
threats they face, businesses are
completely paralyzed with the fear of purchasing and implementing an enterprise-wide resource
planning software system. Maybe they have been “bitten” in the past by poor software and bad
implementations, or simply too scared to change the way work is done.
Choosing the right ERP software for your company is a serious, lengthy, and essential business
decision for all executives in today’s fast-paced marketplace. Having the right system in place
can lead to business growth and economic success, while selecting the wrong solution could
wreak financial disaster.
This guide covers many of the common pitfalls
and fears that decision makers face during the
ERP software selection cycle, and is broken
down into five main categories:
1) Cost – understanding the true ROI
2) Time – facts and myths
3) Implementation – a plan to succeed
4) Support – a plan for the future
5) Vendor Selection – relationship trust
These five areas will govern most of your time as you navigate your way through the ERP
selection process. Understanding the business value to each of these key areas will help you
create a more informed decision for your business, and your company’s future.
This white paper will provide several questions that your small to mid-size business should ask
itself and the ERP software vendors, as you navigate your way through the selection process.
With the right ERP software
in place, businesses can
experience significant
revenue growth; 300% or
more over a 5-10 year period.
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© 2014 Jobscope Corporation. All rights protected and reserved.
Contents Executive Summary .................................................... 1
Contents ........................................................................ 2
Cost ................................................................................ 3
Time ............................................................................... 5
Implementation ............................................................. 6
Support .......................................................................... 8
Vendor Selection .......................................................... 9
Additional Resources ................................................ 11
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© 2014 Jobscope Corporation. All rights protected and reserved.
Cost
Arguably the most prominent fear of
purchasing ERP software is cost. This is
of course very understandable considering
the price tag (ranging from tens of
thousands to millions), and the unknowns
that go into such a purchase. After all, why
should your business spend so much money for new software, when it has been operating
without it for years? To overcome your fear of ERP software cost you must:
Consider ERP Software as Capital. This may seem like a small difference, but it is very
important for the way that you will psychologically approach ERP software. Since control
of capital is the primary means of creating wealth for your company, this is a very
important distinction to make. But this
isn’t just a mind game; even the United
States government recognizes ERP
software as capital in their updated
Section 179 Tax Deductions (which could
save you up to 35% off of your ERP
software purchase). To learn more, visit
http://www.section179.org/.
Do Your Research. Now that you’re considering ERP software as capital, it’s important
to treat the potential purchase like you would any other capital investment for your
business. Identify the factors that you would consider for such a purchase - what will the
ROI be, what are the upfront costs, how will this improve my day to day operations, etc.,
to determine if the purchase is necessary.
No vendor or RFP sheet will be able to tell you where your economic benefit will be better
than you can. If you have not first identified the specific areas that you are looking to
improve, then you will not be able to determine how much an area has improved
afterwards.
Understand the ROI. It is easy to get lost in all the percentages, numbers, and dollar
signs that you will hear and read about when considering purchasing ERP
software. While these numbers might serve to give you guidelines for what you can
expect in return from your investment, the biggest ROI of any ERP system is the one
form of capital that you can never create more of - time.
United States government
Section 179 Tax Deductions
can save as much as 35% off
your ERP software purchase.
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© 2014 Jobscope Corporation. All rights protected and reserved.
If you own a bicycle and upgrade to a car, the car won’t put $50K-$200K worth of cash in
your pocket after owning it for 8 months, but it will certainly allow you to get from NYC to
LA a whole lot faster - 28 days to be exact. ERP software ROI works the same way - it
doesn’t place thousands of dollars in your pocket after 8 months, but it will enable your
business to execute operations significantly faster - performing year end financials in 1
day instead of 2 weeks, cut labor costs by 75%, and increase company revenue by 300%
over 8 years. Speed kills, and your newfound speed of business will help kill stagnant
growth.
Examine the Results. Before you make any major purchase, you typically want to know
what other users of the product have to say about it. What was their experience
like? What did they really love about the product? What did they really hate about the
product? The fastest way to cut through all the case studies, whitepapers, and other
criteria that vendors will throw at you is to find out what their customer retention rate is.
If a customer is happy, they will continue to use a product through multiple life-cycles
because they have developed a trust for the brand that they’re using. Take Apple for
example. How many people do you know that bought an iPhone 3, iPhone 4, that
haven’t bought the iPhone 5 (or planning on buying it?). For the consumer, that’s called
customer satisfaction, for Apple, it’s called customer retention.
If the vendor that you’re talking with doesn’t
have any idea what their customer retention
rates are, they probably aren’t very
good. This should tip you off immediately
that customer satisfaction is probably not
very high, and that you should steer clear of
this particular vendor.
Conversely, if customer retention rates are above 90-95% over a 15+ year period, you
know that you are dealing with a well-respected vendor that should be capable of
handling your business’ needs. Most businesses purchase new ERP or significantly
upgrade their ERP every 4-6 years. Having retention rates above 90-95% over a 15 year
period shows that customers have gone through several life cycles of the software and
remained satisfied with the vendor and the results.
Trusted ERP vendors have
customer retention rates that
are at or above 90-95%, over
a 15+ year period.
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© 2014 Jobscope Corporation. All rights protected and reserved.
Time
For years, businesses have been
increasing the speed at which they do
business through computers, cell phones,
internet, laptops, tablets, email, web
conferences, ERP software, etc.
While most businesses utilize all of the above to save them time, some are still very fearful of the
time that it takes to select and implement an ERP software solution for their business. Below are
the top fears and myths of time and how to overcome them.
Our business is too busy to evaluate ERP software. This is a very common objection to
beginning an ERP evaluation, we simply don’t have the time to begin. Truthfully, there is
never a great time to begin evaluating ERP software – either your business is too busy
and resources are thin, or your business is too slow and resources are forced to be
thin. Rarely does that happy medium of success and timing present itself. Instead we try
to convince ourselves that we simply don’t have the time, but consider this:
If you were on a rapidly sinking ship in the middle of the ocean, would you look at the
lifeboats on deck and say, “We know these boats would dramatically increase our
chances of survival, but we don’t have the time to untie the ropes.”
To overcome your fear of time, you must approach ERP software with a sense of
urgency. If you don’t, your business, like the ship, might be headed for an unfortunate
fate. Make the time, do the work, and untie the ropes.
ERP implementations take years to complete. Unless you have hundreds or thousands
of locations, most small to mid-size ERP implementations are completed in less than 4-6
months. This obviously is a far cry from the 3-4 years that you hear from multi-billion
dollar companies.
Panorama Consulting‘s independent 2013
ERP Software Report shows that
implementation times have decreased by
13% over a 3 year period. This trend
proves that ERP software implementations
are getting faster, not slower.
Nationally, implementation
times have decreased by 13%
over a 3 year period.
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© 2014 Jobscope Corporation. All rights protected and reserved.
So, what size is your business? Take the time to evaluate the scope of the project
yourself, don’t let the project just be dictated to you by your vendor. ERP
implementations should always be performed as a cooperative initiative to achieve
optimal results.
It’s not the right time of year to purchase ERP software. While it’s true that businesses
do typically ramp up ERP initiatives near the winter and spring, this does not mean that
they are the best times to conduct them. These simply happen to be the times that
companies realize that they should start an ERP initiative, because after peaking at their
Q3 books they want to start saving more money.
Remember the first point? The same applies here. Instead of waiting until the end or
beginning of the year, consider starting your ERP software initiative in the summer and
fall. Doing so will prevent your project from getting consumed with the other Q4 and Q1
projects that will be starting up around that time.
While it’s true that ERP implementations do take time, the benefits cannot be
denied. Don’t let the opportunity to own a life-boat pass you by because your business
was ‘too busy’ to cut the ropes. Make the time, approach it with a sense of urgency, do
the work, and experience the benefits.
Implementation
We’ve all heard the stories and read
the headlines - ‘Massive ERP Company
Sued by ABC Manufacturing after ERP
Implementation Went from 7 Months to
27 Months’. The reality is, this is not
the norm. However, that doesn’t mean
that you should ignore these horrible cases when they arise, but should instead study them to
ensure that you don’t suffer the same fate. Here are some helpful ways to avoid the pitfall of ERP
software implementation failures:
Ask for references to establish realistic expectations. In order to set up realistic
expectations for how long an ERP implementation can take, ask for as many references
as you can - before you purchase. The more information you can gather about
businesses that are in the same industry, revenue size, and resource capability, the more
accurate project time estimation you can receive. Don’t listen to the ERP vendor’s
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© 2014 Jobscope Corporation. All rights protected and reserved.
estimate, listen to their customers. If the clients consistently tell you that implementation
times take 4-6 months, then you know what to realistically expect from them.
Participate in the implementation plan. One of the worst things to do during the
purchasing cycle is to simply sit back, take a hands off approach, and let the ERP vendor
dictate to you what your implementation plan should be. Yes, the vendors are experts at
implementing, but, they are not yet experts at your business, your resources, and your
capabilities.
Before you establish an ERP implementation plan with your vendor, ask them to walk the
floor with you to help identify pain points and formulate your plan together. When both
parties have worked on the plan, then everyone knows what the expectations are going
forward, which is critical to keep the project on track.
Count your resources, carefully. Before the project even starts, you must ask yourself;
do I really have the internal resources available to devote to a 4-6 month
implementation? If you do not set up a plan to continue to execute everyday work, in
addition to the work of the implementation project, then one of two things will
happen. Either your everyday work will slide, or the implementation work will slide. This
is one of the biggest culprits of ERP
implementation project creep. However, if
you have planned ahead of time and counted
your resources, then you should have no
problem finishing your implementation with
the plan that you have both established.
Have a backup plan. Even if you have established a realistic implementation time
estimate though references, worked together to establish a project plan, and properly
counted and assigned your resources, delays can still happen. What happens when the
ERP implementation project manager gets the flu, gets hurt, or is otherwise unable to
participate? Have you accounted for vacation, holidays, etc.? Creating a backup plan for
these circumstances is critical to keeping the implementation on schedule.
Make sure that as part of counting your resources, you have also established a backup
plan internally, and with your vendor.
Industry specialized ERP
vendors implement 2-4
months faster on average.
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© 2014 Jobscope Corporation. All rights protected and reserved.
Support
In addition to Cost, Time, and
Implementation, another common pitfall
of purchasing new ERP software is the
on-going Support after purchase. Will
there be any? What will it look
like? What will it cost? How reliably
and quickly will my questions or business issues get resolved? Here are four helpful ways to
make sure that your business will have the on-going support that it needs to succeed:
Test the support system prior to purchasing. How responsive and helpful will the support
be? Find out for yourself. If the vendor has a number to call, or an email address to use,
test them out. Pretend that you have a critical business issue that needs resolving
immediately, and see how long it takes to get to a resource that is able to answer your
question. Do you get sent to a call center in another country? Are you placed in an
extensive queue system? Or are you speaking directly with a knowledgeable
representative that can answer your question immediately? Responsiveness in the sales
cycle can sometimes translate to the support side, but not always. Test to find out.
Ask important questions about your existing data prior to purchase. Will I be able to
transfer over my old data to the new ERP software system? Most vendors offer data
migration services for a fee. Since your existing data is one of the most important
resources that you have as a business, make sure that you are very familiar with the
process and conversion outline proposed by an ERP vendor, before you purchase. Make
sure that the vendor will be able to handle all of your data, and not be outsourcing your
data to another agency that isn’t familiar with your business or business processes.
Ask the ERP software vendor how they handle upgrades. Another important question to
ask is, if we make customizations to the software, will those stand in the way of a future
upgrade to a newer version? Some vendors charge upgrade fees, some don’t. Some
won’t migrate your data to a new version for free, and some will. Also, ask if there is an
additional cost for newly released modules or functionality. Some vendors include all
current and future modules with your
purchase, while others will charge for each
current module and all new functionality.
Most vendors only include 70-80% of core
functionality with each license, meaning you
will likely have to pay more for additional
Most vendors only include
70-80% of core functionality
with each software license.
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© 2014 Jobscope Corporation. All rights protected and reserved.
modules to cover the other 20-30% of what you need. These are important questions to
have answers to, before you need an upgrade.
Find out what services are offered to ensure future business growth. Simply purchasing
ERP software doesn’t ensure business growth without goals, guidance, and direction. Is
there a plan in place for you to connect with other users? Does the vendor offer a
platform for users to voice their opinions and suggest improvements to the ERP
software? It’s going to take an ongoing relationship with your vendor to help make you
successful. If the vendor that you select doesn’t sell modules in piece-meal, but instead
gives you all of the functionality, then the relationship that you’ll have with the consultant
will be much more amiable - you won’t be getting a sales pitch all the time, but real,
quality help and insight.
Vendor Selection
An equally important piece to identifying
the risks and rewards of Cost, Time,
Implementation, and Support, is actually
choosing the right ERP software vendor
for your business. This is not something
to be taken lightly, as you will be
‘married’ to your ERP vendor as long as you run their software. Before you select the ERP
vendor that you feel is the right fit for your business, here are a few helpful things to keep in mind.
Look for a vendor with a focus on your industry vertical. If you are a manufacturer of ball
point pens, look for a vendor that has an industry focus on repetitive manufacturing. If
you are manufacturing custom, highly complex machinery, you would want software
specialized for engineer to order manufacturers. It’s helpful to find a company that has
focus, versus a solution that can have a focus. If everyone at the company is
knowledgeable about custom manufacturing, then they will be able to provide better
business support for you than the alternative. If you need a can opener, do you want a
real can opener, or the one on your Swiss Army knife?
Dig up the honest truth. Type in the vendors name in Google, followed by the word
‘lawsuit’ and see what shows up. Not every company is as reputable as they seem, or as
kind to their customers as they claim, so it is well worth it to spend the time to look in the
ERP vendors closet to see if they are hiding any skeletons. If a company has been
around for 30+ years without one, they would be a reputable company to deal with.
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© 2014 Jobscope Corporation. All rights protected and reserved.
Find out if you are dealing with a software company, or a software acquisition
company. A software company cares deeply about their product and the services they
offer to their clients, because they’ve put their name on it. A software acquisition
company cares about growing their portfolio of products, and the revenue they provide to
their investors. Check to see if the software has changed names recently, or has been
bought out by someone else, etc., as these are signs of a software acquisition
company. A true software company will be deeply invested in their software because
they created it, and they will care much more about the relationships they have with their
customers, because the only investors they have are their customers.
Are they easy to do business with? Something that can often get lost in the comparisons
of functionality vs functionality and spec vs spec when comparing software is the actual
company behind those software offerings. When you get a proposal from an ERP
vendor, it shouldn’t be complicated. If you’re having trouble navigating the ins and outs
of a simple proposal, this could be indicative of the experience you’ll receive when you
have a support, contract, upgrade, or data migration question. If the relationship starts
off feeling complicated, you can expect it to stay that way. Software experts should be
able to deliver a smooth experience across all aspects of your purchase, from sales, to
implementation, to on-going support. Make sure that the vendor you select can handle
all of these areas with ease.
11 ERP Software Starting Point
© 2014 Jobscope Corporation. All rights protected and reserved.
© 2014 Jobscope Corporation. All rights protected and reserved.
ERP Software Starting Point
JOBSCOPE Corporate Headquarters
355 Woodruff Road
Greenville, SC 29607
Phone: 800-443-5794
Fax: 864-234-2852
www.jobscope.com
About Jobscope
Jobscope was established to develop manufacturing ERP software to meet the requirements of job-based manufacturers
[Engineer to Order (ETO), Make to Order (MTO), Maintenance Repair and Overhaul (MRO), Job Shop, and Government
Contractor manufacturers] that were not being met by traditional manufacturing software solutions. Jobscope's founders were
hands on manufacturing managers and software developers. They realized that companies manufacturing custom products or
providing contract services were not well served by any of the ERP software packages at the time, and created JOBSCOPE®
ERP. For more than 30 years, Jobscope has been providing best in class ERP software to thousands of manufacturers
worldwide. To learn more, visit www.jobscope.com
Additional Resources
JOBSCOPE Manufacturing ERP Software Brochure
JOBSCOPE Manufacturing ERP Software Demo
JOBSCOPE ROI Calculator
JOBSCOPE Case Studies
JOBSCOPE Success Stories