For many wholesale and distribution companies, replacing internal inventory and accounting ERP software is like going to the dentist; necessary, but potentially painful. Even for those businesses who consider the software purchase as a strategic investment, it can still cause stress and anxiety among employees. Often, you can stave off the need for replacement with preventive action such as upgrades. This is why it is important to invest in software maintenance, and to find a software vendor that will also upgrade any customization work you have done – without charging more. However, if the system you’re using will no longer be supported, or if there has been a change in the business that renders it inadequate, you have no choice but to go to market. And when you do, it’s easy to make big mistakes. Here are the biggest ones.
- Requirements not defined properly (which can lead to nasty surprises).
This mistake is often the result of a rushed sales and implementation process, and poor communication with the software vendor. It is as much your responsibility as a company to define your requirements as it is that of the vendor you work with to spend the time learning about your business, and asking the right questions. Be wary of vendors who try to rush your company to the demo and proposal stage and especially of those who offer price incentives based on specific timeframes. To avoid this mistake, find a vendor who spends the time getting to know you and your business in order to make sure that their software is the best fit for your needs. Lastly, never assume that certain features will be available; always check with the vendor to make sure you’re not missing functionality critical to business operations. Once again, this should not be an issue with a vendor that does a detailed job during the sales process.
- Lack of buy-in.
If the people who are going to use the system are not motivated to make it a success, you’re headed for trouble. This includes those employees in management positions with decision making power and those who will be using the system at various levels within the company. Resistance from employees is a natural reaction, however there are certain steps you can take as a manager to ease the transition to new software.
- Involving the wrong people.
Without highly motivated and knowledgeable people, your project will go nowhere. A fully integrated ERP solution can reduce or delay the need to hire additional employees by providing opportunities for automation, however there are a couple instances where employees with a more advanced skill set may be needed. In order to take full advantage of an integrated system, it is important that your employees have the correct skill set to make use of the advanced functionality. This issue most often arises when it comes to (1) managing internal IT maintenance and (2) when no one at the company has advanced knowledge of accounting practices. Implementing a cloud based solution can help with issue one, however issue two usually requires additional training or hiring.
- Feature myopia.
Many companies spend too much time assessing the features of the system and not enough on the implementation and on-going support. Functionality is only one area of the software that you should evaluate before making a decision. A robust feature set will only get you so far, if the implementation is not performed properly and on-going support is poor. Once you have determined that functionality-wise a system would be a good fit, start asking questions about on-going support, company culture, technology improvements and upgrades, customization opportunities etc. Is the support personalized or do they outsource that division of the company? How often does the system get upgraded? How much customization is feasible? All of these questions will allow you to gauge the type of on-going relationship you will have with the vendor.
- Disregarding smaller vendors without brand name recognition.
There are a lot of very good small software companies that support specific industries with specialized needs, such as pharmaceutical distribution. Although small, these companies are not necessarily risky. Just as there are benefits in working with large companies, there are also benefits of working with small ones. For the most part, once your business reaches a certain size, there will be several systems available with very similar functionality. In certain cases some smaller vendors may provide more industry specific features, but if this does not apply to your business there are other benefits to working with smaller vendors. These include: personalized support, more flexibility when it comes to software customization, a higher degree of transparency and more opportunities for developing business relationships.
- Not improving business processes.
Implementing a new system is the best opportunity you will ever have to improve your business processes. Making a software purchase decision around bad processes already in place will cause many issues down the road, and reduce the positive benefits of implementing such a system. ERP software is supposed to drive processes and streamline actions to simplify and increase efficiencies. A good software vendor will not only spend time discussing their product, but also getting to know your business and current processes in order to identify potential areas of improvement. Software vendors can often provide valuable insight from an outside prospective, effectively helping you to learn and benefit from the experiences of their other customers.