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Easyflow gets an ERP system

Easyflow gets an ERP system

This case study is a composite of real events, but represents what is happening in organisations everyday, and provides pointers for those wrestling with critical decisions involving ICT.

Disaster! Easyflow secured three new contracts in quick succession, after discovering a substantial market for the company’s premium hose connectors outside the industry where it usually operated. Work orders from just one of these new customers, Global Maritime Engineering (GME), now made up almost 35 per cent of total sales.

So why were Julie Mason, Easyflow’s manager of information systems, Sam Emery, head of finance and general manager Neil White now looking so glum?

Yesterday Tony, who ran the warehouse, had called to say they had mis-shipped their biggest ever order — to GME. They had spent hours generating reports to try and sort the mess out. It should have been fixed in five minutes, but they were still in the ridiculous situation of batch-generating reports at the end of the month. The bottom line was that Easyflow had outgrown their financial system.

‘You shouldn’t have let it come to this,’ said Neil, staring at Julie.

‘No – I shouldn’t.’ What else could she say?

Sam had been silent for most of the meeting. Julie had asked him many times for budget to upgrade Easyflow’s system, and Sam had always refused.

‘How much longer before the corrected shipment goes out?’ demanded Neil.

‘Within the hour, Tony tells me’. Mentally, she crossed her fingers.

Neil stood angrily. ‘Getting that contract with GME was the best thing that could have happened to this company. It took six years to get there. We can’t afford another disaster like this.

‘OK. From everything you’ve told me, we’ve got about four months to get a new system working before we’re in real trouble.’ He stood up. ‘Bite the bullet and get it done.’

The search begins

The next morning, Julie transferred the heat to Easyflow’s technology provider, Digitek. ‘Chris, we’ve been one of your best customers for years. Why did you leave the software fix for so long? We asked you to look at it months ago.’

Chris shifted in his seat. ‘Julie, I know we messed up. We shouldn’t have put it off. I’ve got my two best programmers on their way.’

‘Promise me they’ll stay until it’s fixed,’ said Julie. ‘Look, the good news is everybody is on board with an upgrade. Start looking into options for us and consider about what you’d recommend.’

‘That’s easy,’ said Chris. ‘We should be looking at getting Easyflow on to FinanZ. It’s cutting edge; it will definitely scale with your business; and it’s very flexible.’

Julie left Digitek feeling less than happy. FinanZ was the last word for Chris since he’d secured exclusive distribution rights for it the previous year, and had trained all his team to use it.

But from what she’d heard, it would need a lot of customisation — which would mean paying out big dollars to Digitek, or to someone else if they didn’t deliver as promised.

Right now, Julie didn’t want shoot-from-the-hip answers. She wanted a technology partner prepared to look objectively at all options and tell her which one was best. She wasn’t getting that from Digitek. She would have to trust her own abilities and do the evaluation in-house.

Documenting requirements

It took two weeks to set out Easyflow’s requirements. Julie had help, but her small IT team was overstretched, so she did most of the work herself. She met with each department, starting in sales and procurement and finishing with visits to the warehouse and the manufacturing plant. Getting all the managers together in one place was rarely practical, and most of the real work was done in one-on-one meetings.

The person she saw most regularly was Sam. They got along well, but he was opinionated and influential, just about the only person in the company that Neil always listened to. Julie knew she needed Sam on board to make sure what she put forward was accepted. She took extra care to keep him informed.

Julie was surprised by how many Enterprise Resource Planning (ERP) software packages were out there. She had expected four or five good candidates, but after reading through the latest analyst reports and specialist websites, and ringing round her industry contacts, she had 16 possibilities. A friend who was IT manager at a big insurance company, suggested she send them all a ‘request for information’ to narrow the field before requesting quotes, but there simply wasn’t time.

A nasty surprise

It was nearly 6.30pm on Thursday. Julie was putting the finishing touches to her ‘request for quotation’ document, when Neil rang, asking her to come up to his office immediately. She grabbed the latest draft from the printer and headed for the stairs.

She wasn’t surprised to find Sam already with Neil. Judging from the empty coffee cups, Neil and Sam had already been in a lengthy meeting.

Neil smiled and waved her to a chair. ‘Tell me, Julie—how is the upgrade going?’

She brought him up to date, finishing with the news that the requests for quotes would go out to all the candidates the following morning. Before responding, Neil glanced at Sam. ‘Now, as you know better than anyone, we don’t have a lot of time up our sleeve. Honestly, wouldn’t it be less risky if we just went with FinanZ?’

Julie felt as if she had been punched in the stomach. But she remained calm and rational. ‘We already know what it’s like to be on a financial system nobody uses and nobody supports any more. We owe it to ourselves to make sure that whatever we choose comes from someone that will be here in five years’ time, and that there will be plenty of skilled people out there to look after it. We have to do this properly — not commit suicide.’

There was a long pause. Sam had gone bright red. Neil’s eyebrows were raised in surprise. Finally, he began nodding. Then, to her relief, he said: ‘You’re right Julie. Go ahead and send out your requests.’

Afterwards, Sam caught up with her in the corridor. ‘Why did you do that to me?’ he demanded. ‘You made me look like an idiot – especially using emotive words like “suicide”. You know I was the one who suggested it might be better just to go with FinanZ.’

She certainly did know. ‘And I also know Chris has been in your ear and FinanZ seems like the easy solution. Let’s make a deal. Come and talk through any issues you have with me, before going to Neil. This whole process isn’t going to work if we don’t communicate. Then I don’t get undermined and you don’t get embarrassed.’

They walked downstairs in silence. As they reached her office, he turned to Julie. ‘OK, I’m with you,’ he said, and they shook hands.

Gamma versus B-Plan

Once she had received all the proposals and consulted the other managers Julie culled the candidates down to four. Each would give Easyflow what it needed without expensive customisation. Each was well supported and came from a company with strong financial credentials. And each was affordable.

Now they had to evaluate the software in action, and the quality of the people who would install it. Julie arranged demonstrations, and representatives from all departments participated in the scoring.

Midway through the last presentation, Julie realised she had a new problem. She could see Tony and others yawning. The guys from purchasing were answering emails on their laptops.

Two days before, all the accounts people, warehouse staff and even the plant manager had fallen in love with the Gamma system. Their presentation had been flawless, and it looked an easy system to learn and use, an important attribute. Now a couple of inexperienced sales reps were doing a poor job of selling them on the merits of B-Plan. Julie already knew that when the scores were in they would not top anyone’s list. The problem was that B-Plan stacked up well. It came with manufacturing industry templates, meaning it would require relatively few changes to fit in with Easyflow’s existing processes. She had also established that there were plenty of people out there with the skills to support it. These vital factors were less appreciated by her colleagues.

The following morning, when she met with Sam and the department heads to review the results, it got worse. Sam had made up his mind. ‘Gamma looks like coming out a clear winner,’ he said. ‘It got top scores from yesterday and I heard great things about it from some of the guys at the finance forum I was at.’

There were nods and grins all around the table, revealing a lot about the pressure everyone had been under.

‘I hate to be difficult, Sam,’ said Julie. ‘But it’s not a clear winner yet. Its total score is only marginally ahead of B-Plan. And they have stronger technical qualities, after all.’

Then she presented her trump card. ‘And we still have to do the reference checking.’

Tony buried his head in his hands and then looked straight at her. ‘Julie, don’t do this to us. We’re within an inch of the mother of all disasters. It’s a miracle we haven’t yet lost GME.’

Sam waved at him to shut up. Then he added, ‘Julie, I understand where you’re coming from, but it’s worth thinking about making a decision. We’ve already passed our four-month deadline. Gamma scores well, has good press and more reference checking is only going to take time we don’t have.’

‘Give me a week,’ she said. ‘I’ve got appointments and flights booked from Monday. I’ll be happy to go with Gamma or B-Plan — but the reference checks are the clincher.’

Reference sites seal it

It was a hectic week. In five days, she visited eleven companies in Christchurch, Wellington, Tauranga and Auckland. At each she spoke to people from finance, manufacturing, sales and distribution. As well as getting feedback on their systems, she asked numerous questions about the support and assistance available to run them. She was pleasantly surprised at the amount of time everyone gave her, and made a mental note to remember this when the roles were reversed.

She walked into Sam’s office at 8.30am on Monday. He looked up expectantly.

Julie smiled, sat down, and pushed a copy of her final report across the desk. ‘Sam, we should go with B-Plan.’

He didn’t argue, but listened carefully as she described her findings. Then she summed up. ‘The reference checks were very enlightening, especially on customer support. Both Gamma and B-Plan have had problems to deal with, but B-Plan is consistently quicker in following up with good solutions. And their customers are happier.’

Sam took his time. Then he said: ‘All right, I’ll go with you on this. But what about our process? Practically everyone in the company was invited to be part of a consensus decision. They all want Gamma — and now you’re going to tell them to take a running jump.’

Julie smiled. ‘I’ve already ruined my chances of winning the popularity contest. I’ll take the heat. We’ll budget for plenty of additional training for everyone. But…’ and she looked directly at him, ‘we go with B-Plan.’

Sam looked at his watch. ‘OK. Give me an hour to read your report. We’re meeting Neil at 10am, so let’s get together 20 minutes before that and make sure we present a united front.’

From the author:

The story reflects the findings of a research study conducted by S2 Intelligence in 2007. It draws on narratives from 20 mid-sized organisations, from the point when they decided they needed an ERP system, through to when they actually acquired one. While Easyflow’s story is fictional, it is effectively a composite of many real events, and representative of what is happening in organisations every day.

There is no ‘perfect process’ for acquiring an ERP system, and organisations rarely have the luxury of conducting a solid, step-by-step evaluation in the way they would like.

The reality always involves hard work and compromise and boils down to making the best decision possible for the given circumstances.

The research revealed:

  • Many mid-sized companies are driven to seek a new ERP system when the business suddenly outgrows its financial software, causing considerable time pressure.
  • Many are in the painful situation of running software that is no longer widely used, supported or kept up to date.
  • Compromises are routine: steps in the evaluation process that are considered essential in large corporations are often skipped in mid-sized companies.
  • Asking multiple departments to get involved in evaluating solutions and then ignoring their input is commonplace.
  • Politics play a strong role: important decisions are often taken by just one person, or by two executives that have a relationship outranking all others
  • Software resellers or technology partners are typically important influencers, for better or worse.
  • Decisions on what software to buy and which technology partner implements it are almost always mutually interdependent.
  • Companies that took the trouble to visit many reference sites found it a powerful tool for deciding between short-listed solutions. Those that didn’t visit reference sites invariably wished they had.
Dr Bruce McCabe is managing director of S2 Intelligence and has researched IT and business innovation since 1995.

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