I was recently reading the book "Beyond Talent" by John Maxwell, leadership and personal development author, and a section struck me that it applies to many of the potential customers we meet with. “One of the paradoxes of life is that the things that initially make you successful are rarely the things that keep you successful. You have to remain open to new ideas and be willing to learn new skills.”—John Maxwell
Many have not invested in new software or hardware for years and haven’t looked at how they’re doing things in decades. The excuse is usually the same that it’s the way we’ve been doing it and it seems to work yet revenues are flat, costs have increased, and profits are dwindling with increasing customer demands.
So I’ll borrow from page 120 of Maxwell’s book and see how it applies to your business. Here’s what to look for and how to focus your energy to get the kinds of changes in your business that will change it into a more productive, more efficient, and more profitable enterprise:
1. Don’t change just enough to get away from your problems—change enough to solve them. Do you know what problems there are in your business? A band aid doesn’t work or hasn’t worked. Time to solve the issue at hand and move on.
2. Don’t change your circumstances to improve your business—change your business to improve your circumstances. Shouldn’t you be looking for ways to say to your customers, “we can do that” instead of avoiding the “geez we’ve never done that before”? Putting your business in a position to say “yes, we can” might just increase revenue and profits.
3. Don’t do the same old things expecting to get different results—get different results by doing something new. There’s that definition of insanity that says doing the same things over and over and expecting different results. Maybe it’s time to take a good hard look at your processes and see what tools are available that can make it more efficient.
4. Don’t wait to see the light to change—start changing as soon as you feel the heat. Well if you haven’t felt the heat since the Great Recession, I’d like to know if you’re feeling ok. The pressure has been immense over the last several years. Your hardware is old and outdated, and your software hasn’t had an upgrade in 5 or 6 years. It’s time to start making moves before you get burned.
5. Don’t see change as something hurtful that must be done—see it as something helpful that can be done. No one likes change and your business is no different. Isn’t that why nothing has changed in decades? Every member of your team has to buy into that the change will do you good.
6. Don’t avoid paying the immediate price of change—if you do, you will pay the ultimate price of never improving. We recently met with a small manufacturer & distributor that was used to using spreadsheets and only paying $300-$400 every other year for accounting software. But when they saw the financial price they would have to pay to meet their goals, they balked. They may never become more productive and more efficient because they’re unwilling to make the immediate sacrifice.
You will have to make some sacrifices to institute changes in your business. Your employees might have to alter their job descriptions and the immediate financial investments might be steep. But if you can become a more productive, more efficient, and a more profitable business, why not start to change today?
Download this ERP Guide from Ziff Davis to see what software changes you may want to make:
Increased productivity, greater efficiency, and bigger profits. If you’re ready to dump your outdated ERP software or implement new ERP software, you should have these as your objectives. None of this will happen overnight. It will take time, patience, persistence and most of all planning.
First you have to look at what’s wrong with the way you are currently operating that makes you think making this change will help. Is your outdated ERP software lacking in functionality that is limiting your company’s growth? Are spreadsheets your best friend? If you are constantly doing work in both your ERP, on spreadsheets, on a Word document, or in a database program, it may be time for a change. You’ve become inefficient. Now’s the time to get your team together and discuss reasons for changing the way you’re doing things. Your inefficiencies are holding you back. Once you’ve identified your reasons for new software, it’s time to do some research as to what might be the best fit.
I’ve seen estimates that there are over 300 ERP software vendors in the world. Fortunately there has been consolidation among vendors over the last 10 years. Some of the old familiar names have merged or been acquired, and sometimes more than once. So how do you choose? ERP software that offers the functionality you need is appropriate for your industry and is supported by the developer and its partners that understand your industry will be the best fit for your business.
There’s one last piece of this puzzle that most forget or give the least thought to. And it’s implementation and training. Here’s where most companies try to spend the least money or cut back. And it’s why many will say that the software never worked for them. If the new software isn’t implemented correctly and your employees aren’t trained properly, you’re doomed to failure. It can be avoided. Make sure everyone understands why using the new software will be helpful to them and to their fellow employees. It’s a team effort and everyone can win.
So you think you’re ready to transform your business into a more productive, more efficient, and highly profitable machine? You’ve figured out what functionality you need, you’ve identified the right software, and you’ve got a plan for implementation and training. You’re ready for success and bigger profits then.
So are you looking to guarantee failure of your new software implementation? I hope not! But let me show you why so many companies fail when implementing new software especially MRP or ERP software. It’s about money, change and communication.
First, let’s discuss money or budget. If you’re used to spending only a couple hundred dollars on some simple accounting software plus you use some spreadsheets, you’re in for a rude awakening. I’ve seen simple packages start at about $3,000 and then skyrocket up to over $100,000 easily. But it’s not just the investment in the software you need to plan for. Can your hardware handle the new software? Did you budget for implantation, modifications, and especially training? A simple rule of thumb is for every dollar you spend on software add another dollar or two for implementation, modifications, and training. Even for a simple $3,000 investment in software, be prepared to spend another $3,000, bringing your total costs to over $6,000. Working with a small manufacturer recently that was used to spending only a few hundred a year on software, they were in shock that they had to invest over $15,000 for only software to accomplish their new objectives and they hadn’t thought of the implementation, modification, and training costs. Make sure your budget is realistic and be prepared to go over.
It’s not just about the money. Are you prepared for the changes you’re looking to accomplish? Implementing a new MRP or ERP software solution involves big changes to your organization no matter what the size. Your current processes or lack of any need to be addressed. That’s why you’re looking at new software. But the software is only a tool. If no one is ready to embrace the changes that are about to happen, you’re looking at wasting an awful lot of money. These changes in business processes need to happen in order for you to achieve greater productivity and efficiencies and bigger profits. Your co-workers and employees need to understand this. According to a recent Panorama Consulting report, 38% of respondents cited lack of employee buy-in as the biggest problem facing ERP projects. Get them involved in advance of implementing new software.
Getting your employees or co-workers to accept these changes or embrace them involves communication and listening. This isn’t a top down approach. It involves talking about why these changes are necessary and listening to what your employees’ concerns are. They may have some insight as to what may work better. The people who will use the software the most will need to have some input into the decision or else you’re doomed to failure. Keeping your employees convinced of ERP’s inherent value and the transformation that needs to happen is not a simple meeting in a conference room for an hour. Constant and effective communication is a key to keeping everyone on the same page and motivated. The owner/CEO and all departments are in this together in order to overcome the challenges and ultimately achieve success.
Hopefully you’re looking to transform your business into a more efficient and productive machine that will generate bigger profits. It will take not only money but a willingness to accept and implement changes plus effective and constant communication. Look to guarantee your success.
Change can be painful. I know it’s an odd way to start talking about ERP implementation but let’s be honest about it. When you implement a new ERP software system in your organization, you’re disrupting the whole organization. That’s painful BUT it doesn’t have to be. Let’s start with my first tip for success.
Have you chosen the right ERP vendor? This may be the most critical step in selecting which ERP software to implement. The ERP vendor’s product better be the right fit for your industry and business model. Here’s one you may not have thought of: vendor culture. Your ERP vendor’s culture is trickier to evaluate but does it match your culture. They will be a big part of your business during the transition to a new system and you all better get along well. Picking the right ERP vendor is a huge step in the right direction for ERP success.
You next need to consider how you’re going to manage change. Change management will be a highly important contribution to the project’s success. Everyone in your organization needs to understand the business reasons for the new system and at least be accepting of this change. There will be a large group affected by this change and you need to communicate with them effectively and often. If you want long lasting success, your people need to embrace it and use it as designed.
But your executive team MUST be committed to the implementation of the new ERP system. This really comes down to leadership. If your CEO/Owner and whomever they’ve appointed to lead this effort are committed to ERP success, then it will be easier for the rest of the organization to follow suit. There’s a commitment that certain members of your team will have parts of the project to work on. It all must get done and there will be compromises along the way but in the end your team leaders must stand firm that success is inevitable.
The last tip is to know when to change a business process or how to adapt it. At some point you will have to figure out how to conform to the out-of-the-box ERP business process or you will have to do some customization to the new ERP. Every situation we’ve walked into they tell us that their business is unique. Sorry, not true. More than likely some bad habits have been formed and you now being asked to conform to what are the norm for business practices since that is what ERP systems are based on.
There are no guarantees in life except for death and taxes. So I can’t guarantee success if you’re implementing a new ERP software. This is only a partial view of what it takes to have a successful implementation. You can click on the report below to see what ERP Focus says on this topic.
So do you? Most of the small to mid-size manufacturers that use either QuickBooks or Sage 50 (formerly Peachtree) don’t even think about it but plug along using spreadsheets, Word documents, and a paper trail with their accounting software. If you’re going to grow your business, and want the ability to forecast and plan for demand, it’s time to move forward and get off the way you’ve been doing things since you started the business years ago.
A successful ERP implementation goes well beyond just putting it into place. Successful manufacturers tailor ERP in reaction to business change and needs. Mobile access and adding new functionality might need to be included. Certain performance indicators will help in your decision on whether you’ve successfully implemented an ERP system. Have you reduced inventory? Do you have greater accuracy? Have you streamlined your processes? Are you able to deliver on-time to customers keeping costs low, pleasing them which leads to greater profits? For the small manufacturer, keeping costs low while continuing to improve customer satisfaction is a major factor in their quest for growth. Are you growing?
You can’t streamline your business and grow it without a strategy. It’s a journey and you can get good results. The journey though needs vision, a roadmap, influence, drive, and budget which can only come from a leader. You can identify the right fit if you focus on key activities. If you have a solid foundation and have made a correct assessment, you will achieve significant improvements in performance.
I recently read a report by the Aberdeen group that stated 18% of companies with revenue under $50mil are not utilizing ERP (Enterprise Resource Planning) software and still favor spreadsheets and accounting applications. If you’re one of these companies, you’re not keeping up with your competition. Think about it. Over 80% of your fellow manufacturers are using an ERP application. Are you curious as to why?
Here are the top 5 reasons they are using it:
- Must reduce costs
- Need to manage growth expectations
- Delays in decision-making from lack of timely information
- Must improve customer response time
- Need to be easier to do business with
The number one reason, cost reduction, has been a leading pressure on small manufacturers for the last decade. If you’re adding new employees, adding business units, new products, and new processes, you need to find a way to control costs. The data and capabilities contained within ERP can be used to promote visibility, collaboration, and efficiency in your organization.
Are you looking towards implementing or changing your ERP in 2013 so that you can be more agile in your decision-making and your ability to interact with customers and business partners? Before you make a move you should consider your current technology infrastructure and applications, whether your outdated business systems can track business processes and integrate effectively and promote data sharing, and ensure standardized procedures are enforced throughout your organization. You can achieve tangible business benefits through a well formed ERP strategy. Let 2013 be the year you improve your organization and move your business forward.
Download the Aberdeen report "ERP and the Small Business"
When I talk with customers or potential customers, they inevitably say at some point, “If it ain’t broke, don’t fix it” so I don’t need to spend the money. Now, I’m typically talking to them about their server/network or their accounting/ERP software. BUT I have to point out, is it going to break in the future? Is 2013 the year you lose out and it finally collapses on you?
Got a call last week and the young woman asked me how long will her Peachtree(now Sage 50) make it? I had to point out that since she hadn’t upgraded in over 2yrs and her database had outgrown the program by 2 times the manufacturer’s recommended usage, it could be any day. The future for her is now but she doesn’t want to spend the money.
According to an article in American Machinist 10-31-2012, “There’s no consensus on whether US manufacturing is truly undergoing a recovery, but one sign suggests things are improving: More manufacturers are investing in enterprise resource planning systems(ERP).”
So should you be keeping up with your neighbors lifestyle? Things have been tough since 2008 and many manufacturers were reluctant to invest money into ERP and it’s been that way for years. However, there’s a cost to this approach.
If the economy is picking up and your competition down the street or nearby town does make the investment in a new ERP system, could they have found ways to process and manage information better and faster. Your neighbor might be able to serve customers in a more cost effective and responsive way. If you don’t respond in kind, your business, your livelihood, is going to be in trouble fast.
ERP software has advanced significantly and is now more robust, flexible, and configurable than they were even 5 years ago. Most people are surprised at the improved functionality and user access to needed information for their organization.
The future is now. 2013 could be the year it breaks. You owe it to yourself to protect your business by starting to investigate it now.
You can register for our informational webinar on Infor Visual below. It's being held on January 31st, 2013 at Noon.
Last time I wrote, I ended with 3 questions of which one was, “if it ain’t broke, how can we make it better?” So how can ERP makes things better? A successful Enterprise Resource planning (ERP) solution has to address all key areas of business management and include every facet of the operation, from research to manufacturing and marketing. ERP software gives you a full suite from estimating, work-in-process management, CRM, and accounting functions. These software packages can turn an estimate (quote) into a budget for project management, and then match invoices to project status and allocate job costs. Though if you’re a small manufacturer, you sometimes have to choose between a new piece of equipment and new software. You need a cost effective solution that’s easy to implement and use. What benefits do can you expect from the software? You should expect a strong return on your investment and a good system can provide hard dollar efficiencies.
Are there additional benefits? Absolutely!
Better planning and resource allocation. You need better data and greater insight into the actual money costs of inventory, people, and equipment which is one of the benefits of software. If you’re using QuickBooks or Peachtree (now Sage 50) and some spreadsheets, can you get really granular in your information? Better data and greater insight will also give you actual time costs for each step of the planning and production process.
Greener operations. It is the rage right now to be “green”. How green is your operation? You will generate less waste and scrap, reducing environmental impact which you get from better planning and tracking of your operations. Again, will QuickBooks/Peachtree with some spreadsheets really get you the desired results?
Support for lean manufacturing. The goals of lean manufacturing result in better planning, more efficient resource allocation, and reduced waste. Lean manufacturing will only lead to better quality products, more revenue, and bigger profits.
Compliance with increased government regulations. The types of material you use, the raw materials you consume, or the products you manufacture are now subject to even more strict regulatory requirements and documentation. ERP software can generate much of the required documentation due to ordering and receiving materials and equipment.
Forrester Research projects that the global ERP market will grow to over $50 BILLION in 2015. So who else is running ERP? Apparently the State of Georgia, Twentieth Century Fox, Disney, and Department of the Navy all run ERP software. QuickBooks/Peachtree with some spreadsheets was ok to run your business throughout much of the last decade but now is the time for you to seriously consider upgrading to ERP. A report from the University of Greenwich concluded, “ERP is now considered to be the price of entry for running a business.” Whether you’re a small manufacturer, regional company, or a global enterprise, ERP has become the software solution of choice.
If you’re like most of the manufacturers we’ve met, you’ve bought your ERP system in 1995, or 2000, or even upgraded in 2005. BUT you haven’t done anything since. Your revenues haven’t changed or decreased, your profits are either the same or less. But yet, you haven’t changed your ERP software since you bought it. Roger von Oech, author of A Whack on the side of the Head, says “Almost every advance in art, cooking, medicine, agriculture, engineering, marketing, politics, education, and design has occurred when someone challenged the rules and tried another approach.”
I’m someone who is always looking for options. No idea is perfect and it can always be improved. Maybe you’ve been using QuickBooks or Peachtree (now Sage 50) with some spreadsheets for years. That’s ok for some but not may be for you. You want more revenue, more efficient operations, and bigger profits. Can you get that from your QuickBooks or Peachtree (Sage 50) and some spreadsheets? You haven’t for years so maybe it’s time to CHANGE. Would you like to have the power to:
Plan production quickly, without mistakes,
Schedule jobs efficiently,
Make quality intrinsic, from design to delivery,
Give confident answers when customers ask about delivery dates,
Manage inventory more effectively,
Deliver consistently profitable results,
Manufacture at a level of speed and efficiency that makes the best use of the resources you have?
The right ERP software with the right implementation and training provides you with the structure to create a more predictable process and get a firm grasp on how every change affects your business. There are add-on packages to your QuickBooks or Peachtree (Sage 50) that can help if you’re not ready for an integrated ERP solution. There are easy-to-implement ERP solutions that provide manufacturers and distributors with multiple scheduling options so you can start improving performance right away. So if you’ve been saying to yourself, “if it ain’t broke, don’t fix it”, maybe you should start to ask:
If it ain’t broke, how can we make it better?
If it ain’t broke, when is it likely to break in the future?
If it ain’t broke, how long will it serve as the world changes?
DISCLAIMER: we offer Infor Visual, Sage 100 ERP as well as MISys to help the small and mid-size manufacturer.
The internet is awash in information on ERP selection and implementation articles, whitepapers, eBooks, and reports. Yet with all this information, many firms seem to still not get it right. May be it’s because businesses are like people and no two are exactly alike. Here are 7 simple ways to avoid these mistakes:
1. Start With Solid Footing.
You have to be on solid ground or have strong roots. It’s all about planning and preparation. Who uses it? How do they use it? What information do they need to achieve their expected results? The CEO or owner is practical: show me the numbers. But the employees who use it?? They will have every day experiences with what they want and are looking to see out of an ERP system.
2. Know Your Business
You have your own way of doing things, little quirks or necessities. Key features and a cookie cutter solution may not work for you. What exactly do you do and how can you do it better? ERP should help you achieve these goals.
3. Be Prepared
Do your homework. ERP systems vary in what they can do for different industries. Interview peers in your industry to see what works for them. Dig deep. Ask tough questions.
4. Expect Results Not Miracles
According to most ERP vendors, your business will be transformed into a highly efficient and profitable machine if you go with their system. You need some patience to see tangible results. Success can happen and will happen if the people involved make it happen.
5. Make a List And Be Like Santa, Check It Twice
Document every step in the process. There’s nothing wrong with being like Santa and checking over your evaluation system to track and measure growth. Selecting an ERP may not be like Christmas time but can you really be too careful in the selection process?
6. Don’t get Carried Away
Your ERP system should be able to go into miniscule detail about your sales, services, manufacturing, distribution, or whatever you do. But should you? Someone in your organization needs to input all that data. Time + Effort = Money don’t go overboard analyzing every aspect of your business because you can.
7. Use Decision-Based Reporting
Your collecting data but for what purpose? It better help you make better, more informed decisions. Use it to affect change not to impress your business associates or friends.
There will be highs and lows while you implement your ERP system. If you’ve done your homework and are prepared, you should be able to achieve sustainable business objectives. In the end isn’t that your ultimate goal; to get demonstrable results and improve the work you do.
If you're currently looking at ERP software, check out what's new in Sage 100 ERP: