Business Software Implementation Case

Business Software Situation

A marketing and sourcing company in Wisconsin outgrew its small business accounting software.

When it was still a small company the managing partners bought a popular small business accounting software that is available at most retail and office stores. At the time, the hundred and forty nine dollar software met its requirements,  but as the company grew and their head count increased—along with the complexity of their projects—even the highest and more expensive  version of their software (Enterprise) was unfit for business. The company needed project tracking and more financial capabilities like project costing, financial analysis and a robust system of internal controls; at the end of the day, such shortfalls in the management system forced the company to hire more people to make up for the software limitations.

ERP Implementation Problem

It became evident that the company needed to upgrade the systems, but management did not have a process or a set of guidelines to efficiently evaluate different technologies. Not only were there different technologies to choose from but different options from multiple software and hardware providers. It was a crowded space with lots of potential alternatives, and this made the evaluation phase time-consuming.

The evaluation process was just the beginning of this company’s decision making process; it also had to decide on alternatives with big variations in cost. The alternatives ranged from two hundred to seven hundred and fifty thousand dollars. Fully knowing that every variable has a cost implication, the company had to consider and evaluate the following IT options: set-up and maintenance services, peripheral equipment, database, compatibility options, process integration, implementation consulting, and whether to use in-house or web-based, centralized or syndicated systems; and the decisions continued.  Without technical experience, the partners felt that they were led by the vendors to make blind decisions.

ERP Selection Solution

The first step we took to help this company was to work with management and outline their specific needs, then to prioritize those needs based on their importance to managing the business. After the outline, we drafted a document with the user specifications and functionality needs for this company; subsequently, the specs document was distributed to all the vendors interested in participating in this project. Along with the specs document, we requested that vendors send quotes for their projects strictly based on the requirements, and we welcomed them to include their suggestions in a separate quoting document.

After the initial filter, the company was able to eliminate a good number of Enterprise Resource Planning systems (ERPs) that were either too big and complex for them or too small and inadequate; along with the system specifications, we were able to eliminate the companies that offered inadequate support and maintenance for this company.

Once we had a field of three companies we asked them to provide data for an internal team to build a business case. We asked for all the facts and data on hand concerning operations, IT and the accounting department, to build a case for each system based on the four P’s: Protection, Productivity, Profitability and Performance. The case had to be a comprehensive evaluation, including all technology infrastructure needing upgrades or maintenance, and their impact on the bottom line. In a few words, we evaluated the total cost of ownership as a ratio of the system’s impact on the bottom line.  After the three cases were completed, the internal teams presented them to management along with their assumptions and justifications.

Project Evaluation

The positive impact of selecting and implementing a new ERP process went beyond technology upgrades to create a better Return on Investment (ROI); going over the evaluation process forced the company to clearly identify their needs and outline the information outputs that management needed for the decision making process. In the process mapping stage of the project the company identified redundancies, which led to operating cost savings of fifteen to twenty percent of their overhead and Selling, General and Administrative (SG&A) costs. Strictly from the ERP perspective, the disciplined process of evaluation allowed the company to avoid the over-spending and over-investing in systems that were actually bigger than what they needed. On the other hand, smaller regional and local systems with doubtful support were filtered and eliminated.  One of the most valuable lessons for this company is the necessity of finding the right fit for them; not the biggest, fanciest, most expensive or cheapest but the system that fits their needs from the multiple variables established.