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ROI of ERP: Software Money Games & Executive Moves

ROI of ERP: Software Money Games & Executive Moves

Once you calculate ROI (return on investment) of ERP software and determine that a new system will result in new profitability, the most important step appears: your software selection decision. But who should make this final and most important decision about the future of your organization? 

Every business has a minimum expected return on investment (ROI) of ERP projects. They have some threshold that allows a potential investment, whether in software or another asset, to even be considered. It takes a balanced software project leadership team to determine if a vendor is providing an enterprise solution that will ultimately result in solid ROI. 

Imaginative visual of business people and financial firms staff. Concept of human resources, ROI of ERP, enterprise resource planning ERP and digital technology

Who are key players and who are “extras” in your ROI journey?

Software implementation team: 

An enterprise-level software implementation is complex and takes a strong pool of talent. ERP (Enterprise Resource Software) implementation poses high risk to your business if your team doesn’t execute projects with exactitude.

External stakeholders:

We live in an outsourcing world and third-party solutions build external networks of trustworthy stakeholders. Advisory boards and partnered firms will be affected by your software of choice, so be sure to entertain their insight in selection decisions. 

Fellow CEOs, CIOs, CXOs, and the like, might have nuanced experience that will give you valuable insight into how a new system will change your company culture. Deployment decisions can also affect external stakeholders. If you move to the cloud, will your new infrastructure support your third-party integrations?

Internal support and project management teams: 

Don’t simply play “follow the leader” when it comes to software management. Choose the talent that matches the task, and build a team that works well together. A complete software implementation can take years with all configurations and customizations in consideration and can significantly alter every aspect of your culture. Deploy a team that could handle any ERP deployment necessary, and your project will be a success. 

IT experts – internal or external:

EstesGroup assists clients on a daily basis with seemingly “simple” technology decisions. In the ever-changing cyber landscape of ever-increasing cybersecurity threats, it’s critical that the people informing your software project leadership team are highly skilled at both soft IT skills and “hard” hardware skills like cloud migration and data center relationship management. Tech-savvy consultants tend to be gifted at ROI calculations. They can help ensure that your initial investment results in cash flow.

The inclusion of IT experts is especially pressing in an increasingly cloud-centric world in which consumption-based modeling can save you thousands upon thousands of both dollars and hours. Make sure to not only consider current infrastructure needs, but also entertain how technology could change. Will the vendor alter your software and force change? Consider Epicor’s Prophet 21 new client architecture updates of 2021 as an example of vendor interference. 

Cloud experts and cloud migration experts:

Even if you choose an on-premise solution, it’s important to get a cloud migration analysis, assessment, and report. Make sure your software selection and implementation teams understand the differences between public cloud and private cloud deployments. Choose the best platform for your future needs, even if investments costs run higher than your ERP software budget had pencilled in. Project plans should adapt to new information. A few extra dollars now for a high rate of return later most likely won’t break your ROI formula.

Independent enterprise resource planning consultants:

It’s important to find someone who isn’t vested in the software vendor and can therefore give an impartial review of your business needs. Enterprise resource planning software firms are everywhere. Look for one with excellent customer relationships. Testimonials are your best bet for understanding the team members you’ll add by bringing in an IT or ERP consulting firm to help in your software selection process.

Who will complete your system analysis?

You and your software implementation team have analyzed the data and prepared your findings. Now you must make a presentation to your executives for a decision. Regardless of the findings in your analysis, the decision must be made at the executive level. They know this software acquisition is under consideration. Even if the return on investment is low, let the executives make the decision.

Their choice might be to ask for further analysis or more data and the analysis returns to your group. They could ask for some reduction in cost from the software providers or possibly a review of whether some costs could be deferred. At the end, they will let you know whether to request the final purchase documentation or to let your contacts at the software provider know you have chosen not to go forward.

Who will determine executive support?

This executive decision is probably required by the rules your business follows and only this group is authorized to make significant financial decisions. There are practical values, too. If you move on to acquire your software, there will be stresses on people and resources and resistance to change. Unless your executive team fully supports the changes required, you will not have the full support of others in departments and functions around your enterprise.

When you get the go-ahead from your executive team, more work is ahead of you and your team. Begin that work with some communication. Let your employees know the decision was made and tell what will begin to happen. You will start forming work teams. Your expected completion date is some approximate future time. 

Between now and then there is a rough outline of work to accomplish, and you know everyone will do their part because there are benefits for all. It can be helpful to make a list of those benefits.

Who will predict and measure ERP implementation success?

  • Is the software a good fit for your business?
  • Are your current business processes ready for change, or are you in need of a business process review?
  • If the software is complex, like Epicor Kinetic or Prophet 21, do you have an implementation plan that will guarantee good ROI?
  • Do you need legal advice to help you negotiate a solid contract with your software vendor?

Cold hard IT fact: In the current climate of Internet of Things (IoT), one of our contacts was hacked through his refrigerator. The ROI of ERP implementation can quickly diminish when ransomware infects your system.

Is your cybersecurity solution protecting your remote workers from their toasters? Sign up for a free technology assessment with Chris Koplar, our cloud & technology expert, today.

 

When Your Value Stream Begins With Software

When Your Value Stream Begins With Software

Stay in the Flow: Estimate Your Software Value Returns

Businesses are supposed to earn a profit. New software can quickly lead to debt. Before you commit to a new software acquisition, know if your new possibilities will also be new expenses. If one of your customers wants to open up new product channels and your legacy systems will not work to meet development needs, the software selection process begins. You want to keep the good relationship you have with your customer, and you also want the new business. If you’re a small business, this means exploring the greater world of enterprise resource planning (ERP) software.

Software Value Stream Mobile Device Cloud ERP

Can you forecast the revenue stream for this incremental product or channel?

Your customer will have their estimate. You might also be able to increase sales to other customers with the capabilities the new software brings. Is there new business you can develop that did not exist yesterday? Maybe you can win some business from your competitors using your new capabilities. Incremental revenue will also have an incremental cost of sales. The additional margin is what you need to estimate for this analysis. Some of the new sales might replace existing orders and, if this is your case, subtract the forgone revenue associated.

All You Need to Know About the Savings Game

During the meetings you and your team hold for developing software requirements and talking in general terms about this new software, you will hear excited thoughts about sales orders moving faster into production. People will talk about how you can manage inventory much better. Another one might suggest that you could produce the same level of product with half the personnel in a department.

Some “software value stream” thoughts will make it to your software selection requirement list.

Here’s a potential thought stream surrounding value potential, especially when considering adding or upgrading an ERP software.

  • What can I do to enable a 25% reduction in inventory levels?
  • How can I ensure that all new sales orders will be in production or shipping within four hours of receipt of the order? Can I achieve this using only one support person to handle exceptions? Can I do this if I reduce staff to one from the current level of five people?

With new software, value can now be seen everywhere in your company’s future. Other potential savings are not requirements but remain as expectations. You know that you and your team will benefit from this software. Develop your list of savings and describe those savings in monetary terms divided into time phases. Remember that reducing your sales order support staff as described in your requirement only counts when you actually reduce staff.

Downstream From Your Software Value Stream: Ensuring Future Business

Often some of our software requirements enable us to meet new demands such as a new compliance regulation that our legacy system cannot support. When our new software allows us to meet that compliance, we cannot say we increased revenue or reduced cost. But we can continue in business so that there is a clear value. We could say the cost avoided is the loss of any margin that comes from an entire product line, so the loss would have been significant.

Your Total Value Stream

Evaluate all of your cost savings and incremental revenue and any other measurable improvement related to your new software. Lay these objective benefits out in time buckets over the next several years. You will probably be able to name other benefits that are not easily measurable. An easier user interface will be valuable to your employees, but there might not be any cost savings related. Keep your benefits simple and only use those that you can measure. When in the selection process and considering your software value stream, get your costs of acquisition and usage defined, so that you can compare these benefits directly with your costs later.

Book an hour with a software expert & find new value in your business.

6 Steps When It’s Time for a Software Demo

6 Steps When It’s Time for a Software Demo

STEP 1: Contact providers and arrange demonstrations

A new day is here and you can finally start contacting potential suppliers for your new software. If you already have a short list to begin with, you can start right away. Software suppliers come in several flavors, so it makes sense to set up multiple ERP (enterprise resource planning) solution demos. A variety of demos with help you find the perfect ERP software for your business. It might seem boring to sit through one software demo after another, but putting in the time to find the perfect fit will allow you to swiftly return to focusing on your business, rather than on its infrastructure. During your demo, be sure to also consider and question ERP deployment options. Your company might be heading toward SaaS (software as a service) when it’s truly a private cloud hosting platform that you need to sustain operations.

Enterprise Software Demo

STEP 2: Compare different types of software suppliers

You might see a particular brand of software and one option is to get your software directly from the business that developed the system. Many work directly with end customers and have adequate tools to provide the support you need for implementation and maintenance of your system whether you choose to install it on premises or use the cloud version of the system.

There are providers that primarily are third-party consultants that can help you with some of the same software brands. Often these will provide better ongoing support compared to the developer company that has a continued interest in maintaining the software and perhaps less time to provide support.

Some of those third-party consultants represent more than one software brand. You might contact them regarding brand X but after getting to know your business they might suggest brand Y could be a better fit. You will need to make the choice and keep in mind that it is also possible that they earn more money from brand Y.

Another possibility is open-source software. These can be downloaded free or at little cost for your use. There are consultants that specialize in these systems much like those that represent branded software. If your business has substantial resources in software development and maintenance, this could be an excellent choice.

STEP 3: Make the right software selection contacts

Any of these sources can provide the support you need. Contact them and provide some background for your business, why you are looking, a description of your business, and a list of the requirements you have defined. Most of them will reply quickly and will be happy to introduce themselves and begin to get to know each other.

STEP 4: Control your software demonstrations

A vendor might suggest a demonstration of their software to enable you to make a choice. They already have a standard, prepackaged demonstration ready. Hold off because you should keep some control over the demonstrations. The company has your requirements you’ve provided, so they should be ready to demonstrate how the software answers to every one of your needs. Ask the vendor to customize the demonstration to show exactly what you have requested from the software.

Keep an open mind though. Their business is the software and they have experience with many customers. If they suggest that one of your requirements should be modified, they might be right. If they suggest that a requirement is not possible using their software, they might have a work-around that will satisfy your requirement. These are your choices. You can insist on your requirement list and simply keep looking at other software providers who can fill your needs.

Schedule a demonstration. Find a time that allows representatives from all your stakeholders to attend. Even if the software is intended for production, it will affect finance and engineering and others and they should attend for their own evaluation. If two demonstrations are needed to ensure your team can attend, ask the supplier to schedule two demonstrations.

STEP 5: Evaluate each software demo systematically

Before the first demonstration, prepare a common survey or questionnaire for your team. Ask each attendee to use a common format to evaluate the demonstrations. Collect the questionnaires quickly after the demonstrations. After several different demonstrations no one will be able to remember specific points and how each supplier covered specifics.

When the demonstrations are finished, combine the individual questionnaires into a common report. Work up a point value system for each question point. Summarize the demonstrations and total the points for each supplier. Ideally one will have more points and you will have your objective winner. You might ask one or two of the suppliers to provide additional demonstrations and reply to specific follow-up questions.

STEP 6: Check references and read customer testimonials

Contact the references your top supplier candidates gave you. Learn what they felt went well and what they wish might have gone differently. Ask if they know of any other business that used that supplier. Use the internet to find additional customers you might use as references that were not provided by the software supplier. When you feel you have found the right supplier, you can begin negotiations.

After the software demo, the software

Do you need help comparing software supplier data? Are you still watching software demo videos looking for differentiators? When creating a software demo, suppliers often skip the details, and our business experts can assist in determining potential pain points after your installation. Our IT experts can assist with everything from system software compatibility to software license protocol. Our ERP and managed IT specialists understand everything from source code to supply chains.

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Software & Vendor Selection: Where to Look

Software & Vendor Selection: Where to Look

The Best ERP Software Begins with the Best People

At every step, from software selection to ERP implementation, people are always your best resource.

Software and Vendor Selection Team

Back-feed your software & vendor selection script with experiential feedback.

Now that the internal part of the work is done, you can start contacting people outside of your business to help with your software & vendor selection process. Before you call any vendors or developers, there is another step. Peer and expert help is a good idea, especially when considering new enterprise resource planning (ERP) software.

Where to look for feedback and ideas

Advice from industry peers and other groups will help you understand your software application options. Cloud-based ERP education is easy to come by, but it is important to have a trusted person explain the fine print. ERP solutions are often sold in a pure SaaS (Software as a Service) deployment, and this might not be the perfect fit for your business. You might be a small business looking for your first ERP software solution, or you might be a complex manufacturing company looking for the real-time flexibility of a cloud hosted ERP system.

We all have friends from previous jobs and alumni groups that we can lean on when making big business decisions. The internet is full of advice and much of it is useful. Chase answers, seek multiple views, and engage in a business process review if you’d like an assessment of where you’re at before adding anything new to the mix. An ERP vendor will give you one perspective, and those near and dear to your internal business processes might have different opinions.

Keep your search organized

Develop a questionnaire. This will help keep the members of your team unified when they begin gathering information. The questionnaire also keeps the questions useful. For example, the question “Did you like the software?” is not a very powerful question. Instead, use questions such as, “What was the primary requirement you wanted to satisfy?” Then you might follow up with a related question like, “In what specific ways did the software satisfy that requirement?” The final value of your questionnaire is that you will be able to compare and relate responses from a variety of sources to each other. You will also be able to develop a value scale that can allow you to have an objective scale to compare the responses and their value to your business.

Talk to people 

When trying to choose ERP software, it is helpful to contact people from industry and trade groups. These will often be businesses that are similar to yours and their input can be useful in helping you make your decision. Use a little caution and avoid sharing where your next growth is expected and understand these businesses will be wary of sharing anything that might allow you to become a better competitor.

Your CPA and other resources that you have can benefit you as well when selecting software. Other clients that your CPA has might have been through a software search of their own. At this stage, you are not ready to take action yet and your CPA probably is ready and willing to act as a consultant helping in your search for a fee.

Use the internet for software & vendor selection research

The internet can provide examples of other businesses who have experience with software selection. Often you can find these businesses on the fifth page of your Google search and once you find them, even a quick phone call will frequently yield a person who directly participated in their selection and software implementation and has useful experiences to share. Many people are more than willing to help if you ask them.

Now take action

Once you have done your research, you might first decide to re-evaluate your requirement list. You might find some listed requirements to be of less value than originally considered or have found a point from one of your sources that should be added to your requirement list. Through this research, you probably learned of a software provider, previously unknown to you, that was highly recommended. You certainly learned new ways that others found that helped in their search or even helped their business operations after their implementation. You also learned of search actions others would have done differently if there were an opportunity to make their search again.

Now you can develop a list of only a few software providers or brands that likely will be beneficial to you. An internet search might list a thousand systems, which are too many to evaluate. Focus on your short list and begin contacting those few. The goods or services you offer will greatly benefit from new solution, whether you’re adding a third-party business intelligence platform or a new accounting software to your resource pool.

Remember that people are your best resources for ERP and more

Mid-sized manufacturing and distribution companies are especially vulnerable right now to supply chain management issues. Make sure you have the in-house human resources it takes to ensure that warehouses managed during a pandemic are restored to pre-crisis stability. If you need help with inventory management, enterprise risk management, cloud migration, or other critical business operations, EstesGroup offers you a one-stop-shop approach to operational optimization.

Are you ready to talk to a software & vendor selection expert? Let’s begin a conversation today.

Ask an IT or ERP expert a question now.

Getting Selective with Software Selection

Getting Selective with Software Selection

Begin by gathering both business requirements & software requirements

After all that inward looking, it is time for some more inward looking. It’s now time to set a basis for communication that will help keep current and future software projects on track. It’s time to begin the process of discovering and sorting out the real requirements for your business as they relate to software acquisition.

Cloud Software Selection Process

A conversation that leads to a complete requirement list

When it feels like every possible software and technology requirement is on the table, publish the list for your entire company to review it. Let the whole business know what software is under consideration and what you hope to achieve through the new software. This could be a subject for the next company-wide get-together or a post on the company intranet. Give everyone a little time to consider the potential requirement list and ask for feedback. The guy at the shipping dock might offer an idea no one yet thought of. A remote worker might demand additional integrations in order to optimize a virtual office.

Try to separate the team members from the business processes to let your selection project entertain every product or service that could benefit both people and infrastructure. This is especially important when considering ERP systems. Every software system has its challenges, but as companies grow and enterprise resource planning increases in complexity, due diligence in the software selection process will overcome both high level and more detailed problems along the way.

Your software selection team

Always choose a selection team that represents departments from across your business. You will have some managers and directors, but also include people who will benefit from working on this project by getting to know the bosses while contributing to the cause.

Your potential requirements list is probably quite long, so take a comprehensive approach when it comes to team building. When it comes to software requirements, specification is key. When you have a talented team working together to brainstorm every potential problem and solution, you’ll likely surface a long list of needs and expectations. Likely some of the items are duplicates, or very similar. Combine those and shorten the list a little. It is not yet time to strike any ideas out yet. And avoid assumptions: take time to understand what the proposals really mean lest any good ideas become diluted beyond the original intention.

Look for requirements that probably cannot be helped by this particular software acquisition. Don’t simply strike the idea; move it to another list for future consideration. Someone thought they had a requirement to be solved, so keep it as it still needs a resolution, just not now with this particular software.

Prioritize software selection process outcomes

Prioritizing is the next step. Split your list into one section that truly is a requirement and another that is very nice to have but truly less than a requirement. Sort each section into your best consensus of priority. Theoretically, the required list is all number one, but there is still a good chance that less than 100% can be attained. A software selection process doesn’t always end with a new software. Keep an open mind when considering all options and how they might affect your business. Stuck on old software or technology? A growing manufacturing company will struggle without the move to an ERP software, and an ERP system will most likely benefit from a cloud hosting environment. Know your history and know your goals and choose your system and its deployment model wisely.

Communicate still more

Time now for more communication. This time upwards: meet with your executive sponsor and consider each requirement again. Be certain your sponsor agrees with your breakout of priorities and good ideas, and also with the sorting. Your sponsor might have other ideas too on how to revise some items, or they might have entirely new items for the list. Your executive sponsor must agree with the requirement list and commit to supporting your future efforts.

Communicate again with the rest of your business by sharing the current requirement list and a second list of items you hope to achieve. Let all know you will soon look for software that meets every one of the required points and as many as possible of the nice-to-have list as well. Be sure to thank everyone who helped with requirement points and with the enterprise evaluation of your requirements.

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How To Begin Your Software Selection

How To Begin Your Software Selection

Toward a Simple Software Selection Process

A very typical software selection process begins by clicking on “I am interested” after reading about a software product. Someone replies, and pretty soon a salesperson has you convinced their product will have you living the Life of Riley.

Is that narrative oversimplified? Maybe, but all of us have followed that process at times and possibly even with enterprise-level software products such as Enterprise Resource Planning, or ERP solutions

ERP Software Selection

A simple selection process can work because there are many very good systems on the market, and they are flexible enough that good value is there for many businesses. None of us knows what we don’t know. Choosing an off-the-shelf software could lead to an 80% or even 90% satisfaction, but the 100% solution we hoped for could be beyond reach.

Software Selection First Steps: Look Inward First

Rather than taking a chance, consider yourself, your business, and your co-workers. You might have had past success at developing workarounds to resolve little shortfalls in software. The cost wasn’t too high, and the work still got done. There is nothing wrong with this approach and possibly a lot right. The workaround gave someone in your business a successful win. You did not need to pay any additional money to arrive at your satisfactory solution.

The Old ERP & the New ERP

On the other hand, you might want to replace an ERP that your business has used for many years, and although it began as off-the-shelf, you have modified and customized it over the years. Your users are comfortable with the software, and their work gets done well. That legacy system is not available now and can no longer be maintained. Do you want to get another similar system and begin again to modify and customize it?

Software in the Cloud

Today we need to consider the platform in addition to the software itself. In the past, companies bought software and installed it on in-house servers and managed the system internally. However, many ERP systems run in the cloud now. 

Cloud-ready software, like SYSPRO or Prophet 21, requires substantially less money up front and the maintenance is provided as a part of the ongoing fee. For many the total cost of ownership is much less than running a system on your own server.

But What Cloud?

There are several varieties of cloud, beyond cumulus or cirrus. A very common option is a shared system provided by the software company. The software is a single instance and each multi-tenant customer has secured storage for their own data. You set your own configurations and can personalize user interfaces. But little or no customization is available, as that single instance is shared. Integration of other systems might be possible, but automatically updating files or uploading data from another system will be tightly controlled by the software cloud managers.

A second option is single tenancy where you have your own instance of the software in the cloud and your data is similarly secured. Here your options to customize or integrate are a little more flexible, but the ongoing cost is higher.

The third option is to purchase the on-premises version of the software but install it in a cloud server. With this option, the system is yours to customize or integrate as your business needs. But the system is yours so that your business also must manage ongoing maintenance. You have many options related to the software and to the platform. 

Consider carefully how your system will work best for your needs and with your style of operating. Only after knowing your own business and its culture and style should you begin a search for your future software.

Do you need help with software selection or management? Contact us now, chat with us, or ask an expert about IT or ERP. We love to talk about ERP software. EstesGroup provides a unique value to businesses like yours: we understand your software and its underlying technology. Learn more about our EstesCloud managed services and how EstesGroup ERP & IT consultants work together to help you optimize your infrastructure so that you can focus on the work you love while we secure your foundations.

 

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