The conflict occurs when the company begins to consider replacing their legacy information system with a modern ERP system. At this point one of the following arguments surface:

• Our business information processes are so bad that that we should throw them out and start over with a new ERP system.
• Our business processes are so bad that we cannot implement a new ERP system until we improve our existing processes. Otherwise we would be implementing bad processes.

So, who is correct? Can both statements be correct based the circumstances and the attitudes of management. Let me examine both situations.

1. “Throw out current processes and start over” – The company’s attitude is that they cannot achieve improvements by reengineering their existing systems and processes. They believe they can only change their poor business processes as part of an ERP implementation that has best practices. Many of these existing processes were driven by decisions made far in the past. This company has done some process improvements in the past that have been department driven. The result may be a number of islands of information driven by loosely or non-integrated solutions.
2. “Improve our businesses processes first’ – This company has people on the team that have had success improving business processes through either Lean or Six Sigma programs. The attitude is that incremental steps toward business process improvements will yield incremental benefits. The company has a legacy system. Through its journey of continuous improvement, the company has modified the legacy system, and added various departmental solutions. Again, the result may be a number of islands of information driven by loosely or non-integrated solutions.

Both positions exist in today’s world. Both positions have validity based on the personality of the company.

At Ultra we have been asked to assess both situations. For both situations we recommend a plan to assess all of the aspects of their current state, get educated on what is possible, and to develop a vision of a future state, and a plan to achieve the business benefits of change.

Eventually, all of these legacy systems have to be replaced. Most companies loose their competitive footing with outdated technology. The question becomes what is the best path toward the improvement and the transformation of their business processes and technology.

They realize that eventually they are going to have to bite the bullet and replace their old ERP system with a new ERP system. The interesting fact is that they all dread the project.

Why is that? Is it because they read about ERP failures and lawsuits in the papers? Is this fear driven by hype of media and consultants?

First let’s define failure. Many have defined failure as the project not delivering expectations. Expectations are usually defined in terms of schedule, budget, and ROI. Does this mean the project failed to be completed on schedule or on budget? This is not uncommon with most projects whether it is ERP or building a house. Reasonable schedule and budget variances are to be expected. ROI expectations are always difficult to define. If you listen to the ERP vendors, these projects are easy, can be done in 6 to 9 months and are going to save you a ton of money.

Or is failure defined as the project just never got completed – it failed. In this case there is no doubt that failure does exist. If we look more carefully at the cases that actually hit litigation, we often find multiple reasons for failure. As a 30 plus year veteran of the industry I would have to say that pure failure is occurring far less today the 10 or 20 years ago.

Why? The industry has matured. Vendors consulting organizations have matured. Vendor sale organizations have matured, and buyers have matured. The entire industry is approaching the projects with a much more practical approach. As a result we are seeing a lot more success stories in the industry. We see the failure rate much less today than 10 years ago.

The point of this article is that ERP projects do succeed. If you are considering a new ERP system do not look for the failures. They are not typical! Look for the successes and learn from their process.

In the coming months we will focus on the successes and the techniques, processes, and people that made the project a success.

On the surface it may be true. They all have basic ERP functionality. In fact, the opposite is true. In the past decade, most of the ERP vendors have begun to focus their products, product development, their sales organizations, and their ERP implementation teams on being the best at serving a vertical industry.

The largest organizations have the resources to focus parts of their organization on a specific vertical industry. Therefore they have resources in multiple vertical industries. For instance, Infor has an organization and a product set that just addresses the needs of the automotive industry and another that just focuses on the process manufacturing industry. Everyone, in that part of Infor, has a focus and specialization just on the automotive industry or the process industry.

Examples of Vertically Focused ERP Vendors

• The two largest ERP vendors, SAP and Oracle, have developed pre built configurations of their software for specific industries which include medical, food, chemical, aerospace & defense, automotive, telecommunications, electronics and more.
• Infor has a number of products that only fit certain vertical industries.
• Lawson, before the Infor acquisition, only focused on five industries where they could be the best.
• For years IFS has had a focus of only selling its products to certain industries where it know it had a good fit.
• Microsoft has urged its partners to build vertical industry solutions.

All of the top ERP vendors now have sales organizations that are organized by vertical industry. In the mid market, these same ERP vendors are urging their mid market partners to specialize and focus on a vertical industry.

So do not be surprised when you hear a vendor sales rep say, “We are not a good fit for your industry”. Not easy for a sales rep to say, but in this age of vertical industry specialization they only have time to be the best in their vertical industry.

At Ultra we have seen these vendor indirect sales channels mature at all the major ERP vendors. The companies that have become “resellers” and vendor partners have invested heavily to get “product” certified, become experts, and build effective marketing and sales resources to establish their presence. To incent partners, vendors will offer between 40% and 60% of the software revenue as a commission to these partners.

The vendors claim that these partners generate as much as 25% of their mid market revenues. At Microsoft they get 100% of Dynamics revenue from a huge base of partners globally because they will only sell through partners.

There are many partners for each ERP vendor. SAP has 75 certified reselling partners in the US Microsoft has 17,000 partners selling Dynamics worldwide. Both Oracle and Infor have many partners selling their various products. At Infor the partner network is usually specialized on certain products. Mapics resellers usually are different from Infor SL (Syteline) partners who are different than Infor Visual partners. The same is true in the Microsoft world. Often a partner grew up focusing on one software product: GP, Nav, or AX. As they have grown many have expanded their focus to multiple ERP products.

ERP vendor partners often have territory restrictions. The ERP vendor wants to avoid channel conflict so they will have rules so the direct sales reps do not bump into or conflict with re-sellers. The industry norm now is that if you are below $100 Million in annual revenue you will be handled by a partner who is reselling the software and providing the implementation services.

At Ultra we believe it is very important to find the right partner. This means knowing who are the partners, what is their geography, what is their product specialization, and most important do they have customers in your industry.

When you search for and independent ERP consultant to act as a guide for your ERP project, it is important that you confirm that the consultant understands all the facets of the various ERP vendor partner ecosystems.

If you are performing an ERP Selection for CRM, and you have the ability to bolt on a solution, Microsoft Dynamics CRM is a top-level tool to bring productivity to your sales force.

The biggest benefit is the look and feel is identical to Outlook, and it is completely integrated. Adoption of the sales force of CRM tools is the most important issue facing organizations who are adopting CRM for the first time. A critical benefit of MS CRM is its ability to use Outlook as the interface into CRM that offers a smooth transition for sales people familiar with Outlook.

The base tool offers a BI-like (Business Intelligence Software) home page for the sales person complete with a few metrics for each category (lead, opportunity, campaigns, etc). Integration with MS Word for campaigns is a click, and your mail list is merged with the document for that specific campaign. Results are tracked in the system, and feed the metrics on the home page of the sales and marketing associate.

Microsoft Dynamics CRM takes the basic functionality of Pipeline and Funnel creation through Campaigns, Leads, Opportunities, and Activity management; and wraps it in a tool set that manages the tasks so that the opportunity is not lost.

For smaller or midsized organizations the purchase cost is affordable, and the BI-like capabilities create additional value that may not be offered by other CRM tools.

So How Fast Can a Company Select a New ERP Software System?

Transforming your old legacy system to modern software solution is not a quick project. It involves a thorough review of the existing system, the evaluation of multiple ERP vendors, and an ERP implementation project that will consume a major part of your key people’s time. Having said this, it is very important to consider time to benefit with this initiative. You want to take the most direct route in your ERP selection and implementation process.

The ERP selection project is an important part of taking the most direct route to the goal line. If you do this step right, you can shorten the implementation process. Therefore do not short change this part of the ERP project or it will extend your overall timeline.

Most mid-market companies do not have much “currency” in modern ERP software. A few of your team members have probably used a more modern system than you currently have, but it is unlikely that they have gone through an ERP selection in the last year. Technology is changing so fast that it is impossible for your team to quickly understand all the factors in such a short period of time.

Successful ERP Selection Requires ERP Education

At Ultra we place a great deal of emphasis on ERP education in an ERP selection project. We see the entire lifecycle of transforming legacy systems to modern ERP technology as an educational process. The faster your team can learn, the faster the velocity of the entire project.

Here are the main steps you need to conduct prior to selecting a new ERP system:

• A thorough review of your current processes
• Getting educated on ERP “best practices” for your industry
• Defining what the future state of business processes will be

Once you have completed these steps you are ready to begin evaluating ERP vendors.

So the question should not be how fast can I select a new ERP system, but how fast can I get the team educated and ready to get through the project on the most direct path. Do not focus on ERP selection speed; focus on ERP education and understanding how new business processes in new ERP software will improve your business.

ProcessPro® Premier includes a MS Documents (File Manager) look and feel for navigation which is very easy to use. The reporting tools are BI like with dashboards and multiple level of report and graph creation (end user to more technical), and go directly at the live data.

The CRM tool is from SAGE and is very easy to use. The tab format of SAGE CRM offers the ability to see the customer 360 degree view, and drill into a specific person at the customer to see information as it relates to only that customer. It is fully integrated with both ProcessPro ERP and MS. Outlook.

For organizations who operate in a process manufacturing environment that is make to order, ProcessPro offers the ability to release a batch ticket for a specific customer order without the need to run MRP (recommended to run MRP daily/weekly). Also, the ability to bill as produced, or track consignment inventories, provide flexibility of ownership for customers.

ProcessPro has setup formula management in a separate R&D company to allow chemists to have and area to create new formula’s without affecting the manufacturing database. A quote (sample) can be created in the R&D company and the order can be created in the manufacturing company. The ability to manage formula’s in a separate company offers a PDM like tool without the extra cost. Some of the other capabilities include, formula audit trails, Active vs. Inactive, MSDS, and C of A’s.

The ERP product offers visual scheduling trucks for the dock, and a drag and drop scheduling board for production. Purchasing and Manufacturing offer standard process features.

If the company is a small to mid-sized manufacturer of food, chemicals, HBA, or other processed goods, ProcessPro® Premier ERP software is a good fit for the ERP selection short list.

X3 offers a web-based dashboard landing page for its users, where they can determine the information they want to see.   The end user is provided a role based menu system that provides information specific to that role, and graphical workflows to drive business processes via the software.  Also, there is a Google like search capability to find information in the system.  Sage X3 is integrated with Business Objects, and comes with five predefined cubes of data and 1000’s of metrics that do not require additional consulting dollars to configure when using the “out of the box” metrics.

Sage X3 has its own CRM tool (does not use Sage’s CRM) completely integrated.  Leads or prospects are converted to customers, and Projects are used to track opportunities.  With the addition of workflow the status of the project is tied to a person in the company.  When entering an order, there is the ability to check inventory of the finished good and the components inventory when the manufacturing order is created.

The software can track internal or external development projects.  These projects can be attached to quotes.  This allows sample requests to be tracked internally as it is processed, and shipped to customers.  Also, Sage is working with Formulator to bring lab formula management to X3.  Formulator is a full featured formula management tool.

In manufacturing, a test plan can be setup to perform in process testing of a batch.  And, the system offers a visual finite scheduling tool which can be used manually, or allow the system to put together best schedule.

Sage X3 is a very viable choice for a mid market process manufacturing company

Ultra talks to many manufacturing executives every year that represent the 50% to 60% that are evaluating that question. Is it time to replace an aged legacy system? This becomes a major decision for the management team and often can require detail evaluation.

Often Ultra is asked to help develop an ERP assessment on the current ERP legacy system. During this process the management team assesses the pros and cons of an ERP software replacement. Here is what we see.

Arguments for a New ERP System

Most of the arguments for a new ERP system focus on the benefit of a new system:

• Improve productivity of the ERP system users
  • Eliminate waste in business processes
• Improve access to information to make better decisions
• Increase customer satisfaction
• Increase the speed of communication
• Improve supply chain management of supply chain

Arguments Against a New ERP System

Most of the arguments against a new ERP system focus on reasons why an ERP project could be a bad idea:

• The transformation to a new system is a major project and the company does not have the resources available to be successful in the coming year
• The current system works, why change?
• ERP projects are risky and often fail to meet expectations
• ERP projects cost too much money
• We need to improve our processes first

All of the above points are valid. You can make an argument for a new system and you can make an argument against a new system. It is up to the company’s management to thoroughly understand these points and decide what is right for the company at that point in time.

At Ultra, we believe the key to this management process is education. Management needs to get educated on benefits of a new system, risks of an ERP project, options, and costs of an ERP project.

It is also important for management to understand that the question “why ERP” will not go away. Technology is progressing faster every year. Old ERP eventually will become outdated and will need to be replaced.

A Look Inside the DEACOM ERP Solution

Deacom’s home screen is a window within a Window format, where each window is defined for the user with dashboards and preview panels (list of information with drill down). The preview panel functions as a task list by function. An example of this would be the shipping department, where the task list would be a list of orders ready to ship. In all areas of the software these lists offer multiple filter capabilities to provide the userwith the exact information they need. Deacom also offers alerts, workflow, and reporting functions, but not a true business intelligence software tool.

Deacom’s CRM module is written by Deacom, completely integrated with the ERP system, and sync’s up calendars and email with Outlook. It has limited capabilities in lead and opportunity tracking. For sample requests, during the quote for a new product, the system is able to create a “project”, including the base requirements and characteristics of the product and assign it to an individual in the lab.

DEACOM’s Manufacturing Software Functionality

For those in the manufacturing and quality department, the software offers the ability to formulate products including MSDS, QC Tests, CoA’s, and will help with calculating the correct formulation. Deacom’s ERP formula management will “solve” the formula based on a specific value for a group of items (e.g. solids vs. solvents) or price.

In order to provide future price changes on finished goods to customers, the DEACOM package allows tracking of future and current costs. During scheduling, the system provides multiple filters to review the MRP messages by suppler, category of items, etc. Additionally, DEACOM supports multiple levels of a visual scheduling tool, which allows the end user to grow into the more advanced features.

While we reviewed the DEACOM software package at a chemical manufacturing company, the company’s process manufacturing target market includes adhesives, specialty chemicals, food & beverage, cosmetics, and pharmaceuticals.