Case Studies: Enterprise Software Selection Nightmares

Posted by Gerry Poe


Case-Studies-Enterprise-Software-Selection-Nightmares

This is our product to revolutionize buying methods and place the client and provider first. With this method, everyone involved get what is needed: for the client - goods and services without compromises – for the seller – cash-flow with reliable sales volumes. Gerry Poe, CEO/Founder

Case Study:

Here is an actual case story of our experience and proposed solution which may be useful to you.

Let’s look at the raw costs to these organizations:

  • Customer Organization
  • Reseller Organization

Let’s look at these expenses:

  • Payback when implemented – ROI only starts when it is live.
  • Costs not factored into the equation – if it is not measured it is not counted.
  • Emotional costs of protraction – people are worn out and beaten from the process.
  • Every daily business need must be met including selection.

Each example includes customer costs as follows:

  1. Key individuals involved – most costly in any company are the active participants on the team – minimum:
    • CEO
    • President
    • CFO
    • CIO
    • Operations Manager
    • Production Manager
    • Warehouse/Shipping Manager
    • Line Supervisors
    • Finance Manager
    • CPA
    • Outside Consultants – part/full-time
  2. The Vetting Processes 
    • Selection usually involves from three to ten vendors vying for the customer
    • This is a process of running through enough options and providers to satisfy due diligence, rejecting the unqualified, and honing the short-list to only those qualified, and their product.
    • This process usually takes from 3 to 12 months, involving up to 300 hours/person by a team of up to 20 key individuals ($$$) at the company burdened rate of say $150/hour X 300 hours X 20 employees = $900,000. Without, nevertheless, benefiting from new systems.
  3. Re-vetting processes
    • When the shortlist is achieved, the company and those on the short-list go back through their processes to further proof their choice of the packages until the best-suited rises to the top.
    • More time for all – another 4-6 week depending upon schedules and products.
  4. Reducing challengers to the short-list
  5. Final selection processes to make your decision.
  6. Purchase, finance, check, loan, or capital expenditure.
  7. Enterprise preparations – education, hardware, software, systems infrastructure – 2-3 months
  8. Installation – infrastructure preparedness and execution – 2-3 weeks
  9. Integration – training and systems integration – 2-4 weeks
  10. Implementation processes – 3-12 months
  11. ROI can now begin – 18-36 months later, $1M to $2M w/o savings benefit promised.
  12. Follow on: Revamping, re-visiting old ground, training, and ongoing support

Case #1 – Customer is unprepared for what is coming – but thought they were okay.

A manufacturer/distributor must change their software to satisfy their business and client needs, or they will inevitably fail. Upon investigation, we find infrastructures are inadequate, and internal resources do not permit this change. Further, because of their cash position, they cannot fund the minimum requirements for a new enterprise solution.

What are they to do?

They must retrench and rebuild quickly in as cost-effective manner as possible. To serve their needs, they must replace all servers, operating systems, upgrade the PCs, printers, network architecture, install wireless networking, upgrade their internet connection, increase network bandwidth, secure their data backups, implement security firewall, email SPAM control. i.e.: replace it all! What was thought to be a software spend of $30-$50K came to be an enterprise spend of $150-$250K, plus the software.

This sad case is not the exception – it is true far too often. In all cases, it is preventable with proactive budgeted enterprise management.

Our experience is, businesses are inadequately provisioning the resources for sustainability, grow/shrink, and operational efficiencies. You cannot allow your business to fail because systems are out of reach.

Case #2 – Customer is prepared for the spend – but does not know enough to execute properly.

When we encounter a client that has the financial resources but not enough technical resources to implement today’s enterprise systems, we are prepared to assist in hiring, training, and support. The problem is the cost of these resources is high, and availability is limited. Businesses in a sound financial position must also know they have resource requirements to consider while taking on a modern solution. It is not because systems are complicated it is because infrastructure and user needs are accelerated.

For example:

Take these points – Infrastructure, integration, implementation, future-preparedness, and vision. These factors will determine your ability to profit, grow, scale, enable, decide, and even survive.

Today is a highly competitive and contentious environment. Let’s look at some factors affecting these pieces. Global competition is all the rage. China pays its employees $0.50/hour. Try to compete with this fact. Then add the policy of “dirty industries” we can no longer produce certain products. Without the absolute best systems, technologies, integration, implementation, utilization, cost-controls, accuracy in data, security of the enterprise, dedication to constant monitoring and decision support tools, our businesses will fail and feel like there was nothing they could to about it.

We have, today, perhaps like no other time, the absolute most robust and reliable tools any generation of business has ever seen. We can run our business from a mobile phone from the middle of the Sahara Desert. If we can do this, the rest is a matter of application.

Let’s make a better story, starting today. Call us today to have an Enterprise Survey done for your company.

Case Example: The Solution – ERP-in-a-box?

If all we had to do was go to Target and buy it off the shelf, install, configure and use it. Would this not be a good thing? Well, we now have it in several varieties. Shrink-Wrapped-ERP! Why not? Is it so lofty a proposition it is not possible to do-it-yourself? Learn what it is and how to use it? Complete within a timeline allowing ROI and measurable key metrics (KPIs) to validate the expenditure?

Actually, Yes and No.

Here is why in a nutshell.

ERP is not a simple solution it is the enterprise-wide encapsulation of every component and parcel of your operations. It must have many determinations resolved before considering take-on. Once installed, it encompasses things like accounting, manufacturing, wholesale distribution, customer relationship management, internet sales (e-Commerce), credit card processing, warehouse management, barcode, labels, inventory, sales orders, and returns authorizations (RMA).

So then how could it be possible to assert a shrink-wrap solution could be packaged, priced, installed, trained, implemented and supported by an off-the-shelf standard?

Your Case Study: Consider the following example of perhaps your company needs.

You are a distributor selling a range of automotive related items. You have about 25,000 inventory items, and some of them have serial numbers and lot numbers, 5,000 customers, 200 vendors, 75 employees, two warehouse locations with multiple bins consisting of rows & shelves, you have an inside and outside sales force some of whom are commission-only.

So, what is the composition of your startup minimum software requirements (you can always add-on when necessary)? You will need full accounting, HR, and payroll, distribution, maybe even light kitting or “bill of materials”, warehouse barcode management software and hardware, credit card processing, electronic funds, sales analysis, and all of the equipment necessary for the company to be effective and efficient.

Next:

What are the costs associated with these elements of the Enterprise Solution? Let us take a story like yours, 75 employees and of those, 16 must have software access. This, then, places your company in a “level” of purchase linked to a standard software suite principle called “seat-count-pricing.” This fits most of the products on the market today.

It usually means for each component or system; your system will be estimated at a level equivalent to about $2500 per system-module or $156 per user/module accessing the system.

So, let’s calculate out your basic cost per user for the whole solution if you have 25 modules. Your costs would be about $4000 per user, and for the total cost about $62,500. Then calculate the costs of training, implementation, and support for the first year; you would probably spend about 1.5 times the cost of the software or roughly: $93,750. So, your anticipated total may be, for this example, around $158,000 for year one, plus licensing and support.

What then would be a “bundled-standard-offering price” for the off-the-shelf tailored solution?

It should be roughly 15%-20% less than the individual costs, or around $127,000 @20%, instead of $158,000. Creating a leveraged bundled savings, up front, of $31,000.

What is the expected ROI and payback for this undertaking? When can you expect to have the system paid off? When can you get cost, efficiencies and effectiveness gains to benefit?

Perhaps the first year feels like the system is just costs to your business. Depending on the prior, current software take-on, and future state design of your company, you can expect a 3-5-year payback. The system, then, is an investment. Let me say it again; it is an investment.

So, what can you expect if you do not execute the system as described?

Your competition will see the new you emerge as serious competition. You are going feel the success of your investments. You are prepared properly, at all levels of your business, you can expect to survive, be profitable and grow. You will grow in your industry presence and position yourself for the future.

Summary

Next, where can you get this terrific deal?

Well, we would like to help you find the ideal system. So, if you have gone through the gamut and made no decision or are about to, please let us save you not only the costs of the search, selection, and emotional energy but hopefully a ton of cash.

Suggested Preparedness Prerequisites:

  1. Enterprise Assessment and site audit certification and report.
  2. How to Choose Your Accounting System
  3. Ways to ensure your meetings are productive
  4. Can you try the software before you buy?
  5. Review ERP Case Studies to support your business decision.
  6. Perform a current and future analysis of business
  7. Enterprise systems to consider as part of a complete needs analysis:
    • ERP
    • CRM
    • WMS
    • MOM
    • Barcode
    • Infrastructure and technology
    • Workforce skills-gap analysis

Please call us today to let us schedule your evaluation.

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Tags: Enterprise Software, Choosing ERP, enterprise performance

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