15 December 2009

The New ERP – Part 26

Vendor demonstrations

It is an unfortunate fact that, if our foundation is wrong, chances are the rest of the building will not be too great either. This is certainly the case as we come to the matter of vendor demonstrations in a traditional Everything Replacement Project. Consider the typical steps that have been taken to get the firm to the "vendor demonstrations" stage in traditional ERP:

As we have been discussing all along (see prior posts), none of these steps, when undertaken in with traditional ERP in view, are designed to focus the effort on those few things that need to change in order to make the enterprise more effective at producing profit. Instead, an almost egalitarian approach is assumed in which the "concerns" expressed and "requirements" supplied by department X carry equal weight with those expressed by department Y. After all, it is only fair.

This remains precisely why traditional Everything Replacement Projects so seldom deliver really dramatic results in terms of increase profit. And, when they do, it is mostly serendipity that delivers the improvement. Likely it was because three or five things that actually needed to change got some or all of the change they required, and the remaining several hundred things that also changed in the traditional ERP effort did not do enough harm to overwhelm the benefits delivered.

When we, then, extrapolate this lack of focus down from "requirements gathering" through "software selection," and "vendor selection," we arrive at the prospect of sitting through vendor demonstrations that are equally unfocused. People from several – perhaps dozens – of departmental silos are invited down to view essentially redundant demonstrations of how the proposed new software will replace the way they presently execute the same basic tasks.

Vendor demonstrations in the New ERP – Extended Readiness for Profit

If you and your management team have been following along with us (see prior posts), then you will immediately see that preparing for vendor demonstrations in the tightly focused environment of the New ERP would be and should be dramatically different. Rather than sitting through long and (usually) somewhat boring vendor demonstrations of how General Ledger, Accounts Payable, Accounts Receivable, or Purchasing works, or even generic (though somewhat more exciting) demonstrations of how the warehouse will operate with the new software in place, the management team in our example company has laser-like focus on crystal clear and measurable objectives. For this team, the vendor demonstrations are not generic, at all. Instead, the vendors are called upon to demonstrate "proof of concept" around tightly-defined metrics.

Rather than giving the selected vendors a 32-page "demo script" that covers elements of every module to be part of the traditional Everything Replacement Project, your well-prepared executive management team has handed off "Proof of Concept" requirements to the selected vendors. A "Proof of Concept" requirement might read something like the following (in our example company):

  • Demonstrate how your bar code printing solution can be integrated with our existing inventory system and how bar code label printing will be performed in connection with receipt of goods and manufacturing production operations. Explain how leveraging your existing APIs (application program interfaces) will hold the cost of development and deployment of your bar code printing solution below $X.

  • Demonstrate how ASNs (advanced shipping notices) will be automatically generated via integration with our existing technologies. Furthermore, demonstrate how ASNs will be transmitted to the appropriate destinations by retrieving data from our existing back-office accounting and sales order entry software. Explain how you will leverage your integration engine to hold total cost of development and deployment below $Y.

  • Demonstrate how your combination of hardware and software will lead to essentially paperless pick-pack-ship operations. Further, demonstrate how your solution will permit us to process (on average) N orders per hour through the entire pick-pack-ship process. Show how you will keep the total cost of development and deployment below $Z.
Notice that the goals of discovery for vendor demonstrations under the New ERP are two-fold: results within budget. Of course, this implies something on the part of your organization, as well. You should note, for example, that there is no "touchy-feely" language in these "Proof of Concept" requirements. This lack of UI (user interface) formulation suggests that, if you can get to the results you require within the budget you have established – based on return on investment (ROI) – then your organization is willing to adapt their business processes to the demands of the new technologies.

This really makes superabundant economic sense from a business perspective. You and your management team have already identified what needs to change and what the change should look like using the Thinking Processes (see earlier posts). You have also set rational budgets for Investment (I) based on the ROI formula. Now it is up to the technology vendors to demonstrate how they intend to effect the required changes within the Investment budget.

Once your management team has reviewed the "proofs of concept" offered by the vendors, you can make determinations if any adjustments need to be made in the benefit or ROI calculations. Such adjustments, however, should be relatively minor – not a major overhaul of the intended target.

[To be continued]

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