The hidden ERP Software problem

February 22, 2012

erp-software-problemUp next in the series on problems with ERP software: the problem that you don’t know about.

I’ve read various studies that suggest the average company uses between 40% and 60% of the relevant functionality of their ERP software – “relevant functionality” being the functionality that, if used, would provide measurable benefits to the company. My anecdotal experience in the small and medium-sized enterprise (“SME”) arena over 25+ years tends to support these stats. If you stop and think about it, this is a staggering thought: most companies, even if they have selected and implemented the appropriate inventory accounting software, are still only realizing around half the measurable benefits! It’s like buying 8 tickets to the Superbowl, then only taking 3 friends with you, and dumping the other 4 tickets.

The reason for this is one simple missing ingredient: follow-on training. When you implement a new ERP system, the initial focus is on addressing key / existing business processes, and managing the key logistical daily functions of the business. This is also the period during which you’re most heavily engaged with the ERP vendor. During this time, any training or advice you receive regarding more advanced automation and data analysis, for example, tends to largely go in one ear and out the other, because it does not relate to the most pressing issues you’re faced with during those very stressful first few weeks.

The ideal time to really capitalize on the advanced benefits that the ERP software offers is some time after go-live, when you’ve mastered to routine daily and weekly functions, and ironed out your logistical business processes with the new system. So perhaps 2 or 3 months after go-live (in the SME environment), you really should be re-engaging with your provider and initiating a “phase 2″ implementation - based on measurable and beneficial “extras” and advanced options. But in the real world, most SMEs are not willing to do so. I’m never 100% certain to what degree this is an attempt at cost saving, versus a defense mechanism against information overload. But either way, it is most certainly a missed opportunity – because if you leave it too long after go-live, the organization becomes entrenched in the current way of doing things, and even if that’s in efficient, it becomes increasing,y difficult to effect change.

Real life example: a company went “live” on our ERP Software around 9 months ago, on the understanding that after 2 – 3 months, we’d show them how to completely automate an Excel analysis tool that they currently spend around 2 days per month manually updating – re-keying data that is already in the software. Well, 9 months later we’re still trying to get this customer to spend around 2 – 3 hours with us, after which that 2 days of manual updating per month will be completely replaced with a single mouse click. And yet they remain “too busy” to schedule that session.

At least the good news (from my perspective) is that this is an exception amongst my customer base.

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Posted by Mark Canes

Problems in the Search for ERP Software: Lack of Time

February 14, 2012

problem-search-erp-software-lack-of-timeLast week we wrote a post about some problems finding the right ERP software. This week we are going to focus on common problems inherent in the search itself. Let’s begin with a story.

You, the CEO/President/VP of Operations/CFO, are extremely busy. You work for, or own, a small business and chances are you are involved in many aspects of daily operations. You understand the importance of keeping the business running smoothly but at times you are too busy fighting fires to make changes necessary to maintain efficiency. So it is a Saturday afternoon and you have found an hour of spare time between helping your children with their homework and finishing up work for a client meeting on Monday, so your turn your mind towards to finding new software. You jot down a couple of vendors, fill out forms on their sites and eventually have a brief conversation with them on the phone. Then your head starts spinning and you figure you cannot continue the process because you are too busy, so you drop all communication. You continue with the status quo, knowing all-too-well that your current software is compounding the daily problems that keep you pre-occupied.

Does this story sound familiar? It is certainly very common from our perspective.

The good news is that, as a small business, there is a way to get around how busy you are – implementing new software! The first step to making the software the search process easier is by understanding how important it really is. Think of it like this: how much help would it be to have another efficient employee at your beck-and-call? A proper software system can be at least that effective – reducing strain on current resources by eliminating manual work, fixing errors, duplicate data entry etc. Thinking of a new software system as a full-time employee can be a very motivating mindset and can help with budget setting. You can spend $35,000/year on a new employee or $30,000 once on a new system. No-brainer decision, right?

It may seem impossible to add another item to your ever-expanding list of things to do, but avoiding “I’m too busy” is crucial to eventually implementing a system (that will save you a great deal of headaches and free up a lot of time in the future). Think of it as an investment in your mental well-being as well as your business.

The 4 steps to avoiding “I’m too busy” are to:

1 Comment | Accounting, Business Technology, ERP Software | Tagged: | Permalink
Posted by Mark Canes

The Problem with ERP Software

February 10, 2012

Anyone who’s used any ERP Software or accounting package for more than a few minutes has experienced some level of what we’ll generically label “ERP Software Problems”. Over the next few months, I’ll sporadically explore some of the more common categories of ERP problems that you may have encountered (or that may be in your future), with a view to providing some insider insight into why these problems arise, and how best to deal with them.

In this first look, we’ll examine what’s probably the largest and most costly ERP Software problem: namely, a poor fit. In this unfortunately common situation, a company has implemented a system that is just not a good fit for their business. This may be due to the software itself being inappropriate, but could also be because the ERP Software vendor was not the right choice.

ERP Software Problem: poor fit

 Why do so many companies end up implementing software that is not a good fit for their business? There are many reasons, but the three that I’ve most frequently seen, and that keep recurring, are:

  • Buying based on price, or with a pre-conceived budget – if you make cost your number 1 (or even 2) decision point, you will choose the wrong solution at least 50% of the time, if not more
  • Lack of understanding of your own business needs and processes. If you have a clear picture going into the decision process, of how your business should look after the implementation, you’ll likely choose appropriate software. If not, you won’t.
  • Sweating the small stuff – a corollary of the above point is that it’s the big things that count in this decision, but if you focus on the small stuff you may miss the big stuff. The more detailed features you focus on, without evaluating how important they really are, the more prone you’ll be to either indecision, or the wrong decision.

ERP Software Problem: wrong vendor

Even if you have chosen ERP Software that is potentially a good fit, if the vendor is not appropriate you’re going to have problems. If you work with a vendor that has no experience in your industry, or one that’s accustomed to implementations at companies that are much larger (or much smaller) than you, then the software problems you’ll encounter may well be related to setup, implementation and training rather than the package itself.

Additionally, I firmly believe that there should be a “meeting of the minds” between you and the ERP Software vendor – a similarity in corporate culture and values – as this will result in a truly positive business partnership.

From the perspective of an ERP Software vendor, I can tell you from many years of experience that the fit between ERP vendor and customer is crucial, and works both ways. As a vendor, I don’t want a customer if we are not a good fit for them, at either the software or corporate culture level – in such situations, everyone loses.

In summary, the starting point to avoiding ERP Software problems is to avoid the wrong software, and avoid working with the wrong vendor.

2 Comments | Accounting, ERP Software, Implementation | Tagged: | Permalink
Posted by Mark Canes

Customization: Finding the Right Software for YOU

January 13, 2012

customization-software-customDepending on your industry, it can either be very hard or very easy to find software that is a great fit for you. Some industries are better represented than others but even in well-represented industries there are many businesses with unique requirements that may pose problems for solutions that are designed from a “one-size fits all” perspective.

For example, consider software for wholesale and distribution – on the surface, wholesalers and distributors will share many of the same requirements. However, there are many different lines of businesses or sub-industries within wholesale and distribution with vastly different requirements. Those in the HVAC industry may require servicing & repair management while those in food distribution may be primarily interested in landed cost or lot tracking.

Different modules offered by vendors can accomplish specific tasks required for specific industries, but even at the module level there may be some functionality left to be desired. That is why customization should always be an important consideration when evaluating vendors. Regardless of how well the software works out of the box, you want to be assured that the vendor can accommodate your specific needs – now, and in the future when you make changes to your business/processes.

Although significant customization should be avoided (i.e. the software should do the majority of what you need it to), it should be considered a good option for the small pieces that are very specific for your business. Often these customizations help accommodate the unique aspects of your business that set you apart from your competitors. After all, if this functionality were available out-of-the-box then it wouldn’t be unique to you, now would it?

Ensure that your software solution is customizable to avoid having to drastically change business processes to accommodate your software. Your options are to develop customized software specifically for your business (which can be very costly and often difficult to upgrade) or you can choose to find a software solution that is a fully integrated solution with the ability to be easily customized. Don’t focus on finding the right software for your industry, focus on finding the right software for YOU.

1 Comment | Accounting, ERP Software | Tagged: , | Permalink
Posted by Mark Canes

ERP Software Consulting – It’s not just about the software

January 8, 2012

erp-software-consultingPerhaps you’re thinking of putting in a new ERP system or have already done so. Regardless, you should also be taking a very close look at your business processes. Making a change to your business software can be a big step in increasing efficiency and is the best time to make changes to your overall business processes as well.

Good ERP consultants, especially those that are on the implementation team, do not simply install software and say goodbye – instead, they work with you to take a hard look at your organization as a whole and make changes to improve efficiency. Some changes may be required to integrate the software with your organization while other changes may not be necessary but will greatly improve productivity. Before you select new software you should be thinking about what changes need to be made to increase efficiency so that you know what your requirements are. ERP software consulting (often offered by the vendor) can then help you build upon your requirements and add efficiencies you may not have thought of in the process.

A reputable vendor will often help you work through your requirements at no charge and help you gain an understanding of where you need to be on the software side of things for when you make your selection. This consultation can be used to identify price points for the functionality you require as well as solidify your needs on a functional and software feature basis.

After the sale, a number of consultation services are available such as on-going business support to refine processes as well as the in-depth setup and configuration according to your specific requirements. It may seem like a no brainer that this sort of consultation is offered but stories aboard of botched ERP implementations because the vendor sold their software and offered little support in helping tailor it to an individual company’s needs. Be sure to have a discussion with any vendors you are seriously considering regarding their consulting services and expertise. You should feel confident that they understand your business well and their software will be able to deliver on your requirements.

Hint: it is a bonus if they are able to identify requirements you were not aware of. The same goes for delivering above expectations on functionality.

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Posted by Mark Canes

4 eCommerce Implications for Distributors

January 5, 2012

ecommerce-implications-distributorsPreviously, we wrote about some of the opportunities and concerns with eCommerce and inventory management. We are now beginning to see more and more information spring up on this topic and it is obvious that distribution for eCommerce has become extremely important – and that integrated eCommerce and ERP software may be the key.

Consumer demands for eCommerce are peaking – they are demanding faster delivery times at cheaper costs – and distributors are rushing to keep up. So, it is extremely important to ensure you, as a distributor, do whatever you can to make the process more efficient. Derek Singleton, of SoftwareAdvice.com, points out in a recent article 4 ways distributors can capitalize on eCommerce, which we have summarized below:

1.     Make products easier to pick

Ensure fastest-moving products are kept at the front and are easy to access.

2.     Minimize package space

To reduce shipping costs, it is beneficial to minimize the amount of packaging on products. This has the added benefit of also being environmentally friendly – a growing concern in the business world.

3.     Boost efficiencies in delivery routes

If you do your own delivery, a proper software system can help you plan out shipments based on quantities available and help maximize truckloads. Software also exists to integrate with ERP systems to automatically select a shipper based on cost given various criteria from your ERP software.

4.     Critically analyze how orders are shipping

Orders need to be packed on an individual basis but before being shipped there are opportunities for cost-savings. Taking a periodic look at orders ready to be shipped can allow you to identify commonalities on where they are being shipped.

In the modern business environment managers must think about ways in which they can streamline their businesses using technology. These 4 points should help.

Leave a Comment » | Accounting, Business Technology, e-commerce, Inventory Management | Tagged: | Permalink
Posted by Mark Canes

Accounting Software Outlook for 2012

December 27, 2011

As we all know, the world will end in 2012. That means that this is your last chance to improve your accounting software - buy or upgrade now to avoid the apocalypse rush!

I do have three somewhat serious predictions for 2012:

accounting-software-outlook

  1. The percentage of new cloud computing / SaaS implementations will continue to rise rapidly: this one’s a no-brainer, as we seem to have gone beyond critical mass in acceptance of the cloud by smaller businesses as well as larger companies. In fact, if the trend we saw in 2011 continues apace, then by the end of 2012 a new on-premise implementation will be as rare as a SaaS implementation was a couple of years ago.
  2. Driven to some degree by the affordability of SaaS, more small companies will invest in newer ERP and Accounting software in order to improve efficiency and thereby reduce personnel costs. This may add marginally to the unemployment woes in North America, but in reality many of these investments will fail to pay off due to inadequate implementation planning and spending.
  3. By the end of next year there’ll be a massive reduction in the (already smaller) volume of business transactions reduced to paper and sent by mail. We’ve already seen this to a degree, but the number of companies that (a) can send invoices, purchase orders and confirmations by email, and (b) that are willing to accept emails instead of hard copies, is increasing rapidly. This will mean that accounting systems that cannot easily generate and email these documents are strong candidates for upgrade or replacement in 2012.

Wishing you all a very happy new year and all the best for 2012 (as long as it lasts…)!

1 Comment | Accounting, ERP Software, SaaS | Tagged: , | Permalink
Posted by Mark Canes

Wholesale & Distribution ERP Software Modules

December 8, 2011

wholesale-distribution-erp-software-modulesAs we mentioned in a previous post, it is important to ensure you are seeking out a system that is well-suited to the industry and space you operate in. For example, we recently covered what to look for in ERP software for food distribution or food wholesale. Now we’ll take a macro-level view and evaluate important ERP software modules for wholesale and distribution.

1. Financial Modules

   Basic    Important
  • AR/AP
  • General Ledger
  • Bank Management
  • Contract Pricing (Price-lists)
  • Landed cost tracking
  • Multi-currency
  • Inter-company accounting
Click here for more Advanced Accounting Modules

2. Inventory Modules

   Basic    Important
  • Order Entry & Invoicing
  • Purchase Order
  • Return Merchandise Authorization (RMA)
Click here for more Advanced Inventory Modules

3. General Modules

   Basic    Important
  • Contact management (CRM)
  • Commission Processing
  • Backorder management
Click here for more Modules/Components

This list should serve as a good starting point for identifying functionality relevant for most wholesale and distribution operations. Proper ERP software should have the majority of this functionality or more to be a true fit for distributors or wholesalers.

2 Comments | Accounting, ERP Software, Inventory Management | Tagged: , | Permalink
Posted by Mark Canes

Negative Inventory – an ERP Software anomaly?

December 5, 2011

About half a dozen times a year, I’m asked the question: “Does your inventory management and accounting software handle negative inventory?” The answer is no, and in my opinion no software should allow this.

negative-inventoryNow, if you can take me into your warehouse and show me what negative inventory physically looks like, I might change my mind. But of course there is no such thing. (In this case I’m referring solely to item level negative inventory, as opposed to location level, a different story.)

We’ve all heard the reasons:

 - We have to ship out before we have time to receive the incoming PO in the system

 - We need to invoice the customer what we ship, even if our inventory system says out of stock (common POS issue in retail environment)

 - We can always catch up data entry later and all will be correct at that point (actually no, it won’t)

The reality is that I’ve not yet encountered a single business who’s perceived need to handle negative inventory could not be superseded by a properly implemented set of business processes.

If you don’t have time to receive an inbound purchase order into your ERP Software before shipping out to a customer, and you need a physical invoice document to accompany the shipment, realize that the invoice is just a piece of paper. A modern system can generate a document that looks like an invoice without actually posting that invoice through the system. Then later (day-end perhaps) you can process the PO receipts for the day and post all invoices.

Similarly, in a retail environment, you can sell products through the POS, but be required to account for inventory in and eliminate any negative quantities before running day-end or shift-end processes and cashing up.

Check back in a week or so for some of the negative consequences of negative inventory.

1 Comment | Accounting, ERP Software, Inventory Management | Tagged: , | Permalink
Posted by Mark Canes

3 Signs You’ve Outgrown Your Accounting Software

November 29, 2011

accounting-software-changeThis question was posed to me a few weeks ago during a phone meeting: how do I know if I’ve outgrown my existing accounting software? (This person is currently using QuickBooks.) In just a few minutes we identified three very telling signs that pointed to a “Yes”. Do any of these apply to your business?

  1. The system is (or gets) slow: This may be a little subjective – we all think our system is slow a few weeks after we first get it and think it’s blazing fast. But if you have to wait for minutes while an invoice posts, or if generating a report takes longer than lunch, then your transaction volume and / or data file size may simply have grown beyond the capabilities of your existing system.
  2. Manual Spreadsheet Duplication: If you’re manually keying a lot of business information into Excel, either duplicating or supplementing data that’s in the accounting software, then it’s time to consider moving on. And the more time spent in your company manually updating Excel, the more true this is. (And yet some companies will rather hire extra people to handle these manual updates than spend considerably less money on a more appropriate ERP System.)
  3. Making Business Decisions based on Software Limitations: This one was the clincher on the phone call. The company is considering turning down an exclusive distribution right for what they believe will be a very lucrative product line. Why? Because these products have to be tracked by lot number for potential health recall purposes, and the only way they could do this currently would be manually, outside their accounting software. That would not only be costly, but fraught with risks.

I don’t know if this company will decide to upgrade to a proper integrated ERP Software system with lot tracking capabilities, but the fact that they’re even thinking this way is a clear indication: the answer to the question above is a resounding “Yes”.

Leave a Comment » | Accounting, ERP Software, Lot Tracking | Tagged: , , | Permalink
Posted by Mark Canes

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