Software Selection, Do it Right, or Disaster Awaits.

By Gary Seidel

Assume you are a manufacturing company looking to improve your supply chain process, or your ERP (Enterprise Requirements Planning). The software you select will change the way you do business and provide you with a competitive edge - you hope. Now consider that up to 70 percent of the software implemented fails or never meets it intended objectives.

In addition, consider that the companies you are looking to for solutions do this for a living, and you do it infrequently.

If done properly, software and technology offers you the opportunity to improve your margins dramatically. If it is done poorly, you are potentially putting your business at risk. Having been involved in hundreds of selections, from the sales side, I have seen many mistakes that can be avoided. Here are just a few things to consider when looking for software, which will improve your chances of success. {Executive involvement}=

Herein lies the critical piece of any major project. If the top executive is involved and is driving the process, the rate of success improves drastically. Without it, a project is dead upon arrival, and money and time are wasted.

1. The top executive must buy into the fact there is a need for a new system. If they don't buy in at this step, don't waste your time going forward.

2. You must buy off on the selection process.

3. The justification for the project must be embraced and approved. The justification must be done by in-house people. Software vendors will try to do this for you. If you let them do so, you lose a great deal of negotiating leverage. Vendors have developed these processes to help them sell products, not as a free service.

4. The budget must be ``blessed,'' and adhered to. A word of caution: Don't let the budget constrain you to other opportunities. Blindly sticking to a budget with imperfect information will limit you, as other opportunities may present themselves and have a much higher rate of return.

5. Delegate the selection process, yet be involved and visibly demonstrate that. Have regular updates, however stay above the fray.

6. If a board of directors must be involved as well, get their buy in early as well.

7. Eventually a decision must be made. Don't allow your organization to fall into ``analysis paralysis,'' where you miss out on opportunities because they can't make a decision. This is a very common problem. Don't let it happen. {Selection Process}=

I have seen companies spend millions on purchases of software that do not fit their environment.

Some points to consider:

* An RFP (Request for Proposal) process is typical, either started by your in-house staff, or outside consultants. Most of the possible vendors can meet your RFP requirements, so why do it? I suggest as an alternative that you define five to 10 key business issues that must be addressed (such as reduce inventory, improve customer satisfaction, improve turns, provide competitive edge, etc.).
You will quickly find that only a few vendors can address your key points. By doing so you will save a great deal of staff time and money. This will also shorten the process considerably, and possibly provide you with negotiating leverage when it comes time to discuss price.
* The process starts at the top of the organization, yet you must get buy in from the entire organization. Software can impact many groups within your company. The politics that is involved in making software work in a company is complex. Many times an executive will make a decision on software, pay a large price, only to have the people in the organization kill it. Don't let this happen.
* Either you establish a buying process or the vendor's will. The vendor you let establish the process and timeframe will win your business. When that happens you have lost all negotiating leverage.
* Document the process on one page, with target dates established. Have the vendors and your staff sign off on each stage. Use this as your gauge to progress and keep your staff (and vendors) on task.
* Change is a difficult process. People will complain about the systems they have today. Then when change comes about, they will spend the majority of their time trying to make a new system look like the old one. This is why the top executives must be involved, as they must drive change. Work with people, yet if you see that there is resistance to change in your organization, don't hesitate to make personnel decisions. Again, your business is at risk here.
* Put the best people you can on a large scale projects (ERP). This will be a test of your organizations's strength and depth.

One company did not put their best people on their project, rather putting who they could afford to lose for a period of time. They picked a poor package, and the implementation failed miserably. Inventory accuracy went from a net of 99.7 percent to 60 percent. Raw Material Inventory increased by more than 50 percent. An inventory write off of $20,000,000 was the final straw. They then had to do this again, buying another package and doing it all over.

Technology is not a luxury. It is a business necessity. Having a great product will only work for a short time period, and then competition will catch up. The same goes with technology. Software is just one component of the technology sector. Making the right software decision will pay enormous dividends, many times exceeding an ROI of 100 percent and helping to grow your business with few additional resources. Do it wrong and you are betting your business.

Gary Seidel