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How to Choose ERP and Business Packages like SAP, PeopleSoft, Baan

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It was amazing to me somebody actually read my stuff, liked it and asked some advice. I am flattered.

> Hi,
> I have been doing research for my company regarding implementing ERP 
> software.  I came across your web pages and found your opinions to be 
> rather interesting.  We have been here for 20 years manufacturing passive 
> components for the electronics industry.  All of the systems for 
> inventory, capacity, scheduling, etc. have evolved from different 
> individuals at various times of software technology and their own 
> abilities.  This discontinuity creates problems seeing the big picture as 
> far as where we are and were we need to go.  As well as general 
> communication issues.  For these reasons, among others, we have planned to 
> improve the information infrastructure by either purchasing a shrink wrap 
> solution or designing it our selves.
> Being in the electronics business primarily in support of 
> telecommunications we are continually being challenge to support the next 
> latest and greatest business practices such as ISO9000, EDI, Web based 
> customer service, etc.  This loads our limited developer staff with hand 
> to mouth projects often causing applications to be developed with little 
> regard for integration and leaving no time for a large project such as 
> ERP.  This is why purchasing seems the best solution.
> 
> I would appreciate any information, or opinions you may have on my 
> situation.  Please contact my by email when and if you get a chance.
> 
> Thanks
>

Hello Gentle Reader,

Purchasing a package is a good solution. But the product you will buy will largely dictate the way you do business procedures. This is a major change to the organization.

Here is how most businesses choose an ERP package: When the ERP sales folks come in they tell everyone it does just what they want. Even if it does not have the feature. Or, "it is easy to customize to look just like that Lotus 123 Dos 3.3 report." Then the managers who will not use or support the system get together and match fictional features and vapor customizations to the current way business is done and decide on something. This random method may work. But if you are unlucky you end up like HP, Hershey, Adidas, Jostens or many other companies that took a smack in the wallet from an ERP package.

The only way to verify the ERP software works at all for your company is to get a customer in a similar business of similar size that already uses the same version and actually visit the site and see if it does work. Not a customer "implementing next quarter". This gets rid of a lot of "Krapware" as the sales people with no happy customers can be jeered at and will go away.

At the customer site verify that it is not customized heavily. Find out what they had before and how long it took to implement. Are they making money now or can't deliver product? What is the pay back? What was tricky in implementation? What people are needed to support this package? How many people left the company? You may have to pay the other customer company for its time as this evaluation period should be thorough.

Be prepared to not take the first package seen. For example, if the inventory people look at it actually in production and say "it is not going to work for us", you may have to look for a different product, or fire the inventory people. Far cheaper to back out now instead of later after hardware, software, consultant costs and employees leaving.

The employees have to know that this package is the way they will do business, not the old way. That this package is the way they WANT to operate the business. The key people that run the business package should know what to expect. Sometimes this is the managers but many times the managers will not actually use the stuff and should not be the only people deciding. And maybe the best decision is not to do it at all.

The up front costs of picking a system that could work are a lengthly time and expense vs. the risks of pointy headed managers randomly picking some system quickly and cheaply. After you decide on the business package the awful pain of converting the old systems and implementation can begin. And then the wailing and gnashing of teeth.

Let me know if you have any more questions for free advice.

How to Choose ERP and Business Packages like SAP, PeopleSoft, Baan

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