Visual South Insights

You need a plan that outlines how to choose an ERP vendor and system

It may seem relatively easy to choose an ERP vendor—just pick the one that offers the best technology and customer support, right? But it’s often not that straightforward because many companies do not have a plan when evaluating vendors. I’ve been involved in enterprise application sales for over 25 years and there is little consistency on how organizations evaluate vendors like Visual South. What I can tell you is that organizations are happiest with their choice of ERP vendor when the evaluation team has a logical process in place to assess the ERP system’s functionality and the vendor’s services.

The good, the bad

I’ve been involved with manufacturing and ERP for over 30 years. During that time, I’ve learned a lot about the interaction between a manufacturing organization, their goals, and their ERP (or lack thereof). I’ve seen companies who have a good plan for choosing ERP; I’ve seen companies that don’t. I’ve seen companies that use ERP well; I’ve seen companies that don’t. I’ve seen companies admit they weren’t using ERP well and then work towards fixing that problem. I’ve seen companies admit they weren’t using ERP well and then lose interest in using it better. I’ve also seen a common thread between the companies who excel in selecting/using ERP, and those that don’t. The ones who excel have the expertise to develop a good strategy and execute it, or they admit they don’t have the expertise and they get help. They view the cost of getting help as an investment that has a payback. The ones who don’t excel aren’t aware they don’t have the expertise, so they never get the help they need. They view the cost of getting help as an expense.

Contents

• Introduction
• Chapter I – How to Run a Successful ERP Comparison
• Chapter II – 5 Characteristics of a Successful ERP Implementation
• Chapter III – 5 Characteristics of ERP Implementations Failures
• Chapter IV – Post ERP Implementation: How to Keep It Running Well
• Epilogue

Introduction

Buying ERP is a big deal. I know because I’ve done it. I was a Plant Manager in the mid-90s, and we were running production with a homegrown system that could not be modified because we didn’t have the source code. It was better than nothing, but not by much. We were not managing our capacity, our scheduling consisted of pushing product through the plant day in and day out. It was exhausting, and our on-time delivery range fluctuated from OK to bad. The results we got did not reflect the work we put into it.

ERP solutions don’t have everything

Evaluating Enterprise Resource Planning (ERP) systems is not an easy task. Naturally, your focus will probably be on finding a system that is a good match for your company. Much of the criteria used to judge the software will likely be based on what features and functions it has or doesn’t have. That’s reasonable, but limiting your evaluation to features and functions will not give you everything needed to make a great ERP decision for the company. To make a great decision, you also need to consider factors outside the ERP system.

Manufacturers have made the move to cloud-based ERP systems

It seems like just yesterday that the concept of cloud-based ERP for the manufacturing industry was far-fetched. But today’s reality is manufacturers are choosing cloud deployment over on-premise deployment virtually every time. That is a paradigm shift for those of us who have been working with enterprise applications in the manufacturing sector.

A big decision

If your company is evaluating ERP solutions, you already know that choosing the right system is a big decision. The evaluation process is not straightforward, or something that companies do on a regular basis. Selecting a new ERP is typically a “once in a (business) lifetime” decision, because if you land on the right solution, your company will extract value from it for decades.

The most common reasons for ERP project failure may surprise you

That vast majority of ERP projects are successful. There are obstacles and challenges associated with any large project, but good teams always succeed. That means you understood the specific steps in the ERP project, built a strong ERP implementation team, and made sure business objectives drove the primary deliverables of the expected new and improved functionality.

A big decision that you want to get right

If your company is thinking about getting or actively evaluating new ERP software, then you’re probably in a quandary about how to balance priorities and needs. Selecting the right ERP system for your company means finding one that’s not the most basic, not the most complex, not the cheapest, not the most expensive…. you get the picture. It can be tough to determine which one is a perfect fit. And to complicate matters, an ERP solution is typically a generational decision. Ideally, your company will use it for decades to come, so choosing the best ERP means being able to extract benefits from it now and way down the road.

Differences between make-to-stock and make-to-order manufacturing

These two manufacturing modes are just what you’d assume. Make-to-stock manufacturing is where finished goods are built to inventory. The demand associated with make-to-stock is typically driven by a forecast. Additionally, a mix of forecasting, inventory quantities driven by planning policies, and actual demand can drive planning and scheduling for make-to-stock manufacturers.

What is SAP?

SAP is a technology company that has been around a long time and offers what is often regarded as the top ERP software in the world. SAP ERP is built primarily for large companies in a variety of industries. Companies that are household names (e.g. BP, Coca-Cola, BASF, Audi, Burger King, and Citrix) very likely use SAP’s ERP software somewhere in their operations.