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Systematica Inc, Sara Corbett

Save Money on Your ERP Implementation


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Did your business boom this year, significantly increasing the workforce and record breaking bonuses?  Is your house, for most people their biggest financial asset, worth more at the end of this year than it was in 2009?  Are you feeling good about the Christmas gifts that you just put on your charge card?  If your answer to most or all of these questions is NO, then chances are you are in a similar position as the rest of us.  This makes the subject of this blog all the more relevant.

If your company is finally fed up with its current antiquated or non-existent ERP application, then now is a great time to do something about it.  In addition to the typical reasons you hear: software vendors are discounting their products, consultants rates are down, business resources are available to work on the project, etc., I would like to highlight some additional tips that are applicable in any economy for completing a cost effective ERP implementation.

Buying the Software

  • Timing is everything – Software vendors behave like most any public companies in that they try to meet their numbers on a quarterly and fiscal year-end basis.  If you have patience and luxury to wait for the time to be right, you can catch a sizable discount.
  • Buying just what you need – For Microsoft Dynamics, software is licensed on a concurrent user basis.  So if you figure out how many users will actually be in the system at the same time and buy only what you need you can save significantly.  Not to mention, if you figure out later that you need more a software company will always be happy to sell them to you then.  The only caveat is to beware of price breaks.  If you are at the threshold of receiving a per user discount if you buy more that maybe the better approach.
  • Take advantage of external reporting tools – Microsoft Dynamics GP offers online reporting, analytical and portal functionality that is available at a fraction of the cost of a full user license.  If your executives and managers are just running reports and analyzing data, don’t include them in your full user count.
  • Buying the maintenance plan that is right for you – Microsoft Dynamics maintenance plans, or software assurance as it is known, are available in 18 or 25 percent of your software list price (SLP).  What varies is the quantity of support tickets and the response time.  If you plan to use your implementer primarily for support, go with the less expensive plan.  Again, you can always upgrade later.
  • Reuse the licenses you already own – When purchasing Dynamics GP you are obligated to have Microsoft Windows Server and SQL Server licenses.  Do you already own these within your organization for another application you are using?  If so, there is no need to buy additional ones.  If your previous licenses are still applicable, just reuse what you already have.

Finding a well-priced vendor

  • A proposal says a thousand words – How is the proposal from the vendor written?  Is it cryptic such that you have no idea how they came up with the cost estimate?  Or does it read more like a menu in that you know exactly what you are getting?  Beware of the former.  Unless you know what is included be prepared for billing in excess of your estimate when you ask for things that you thought were included but actually were not.
  • Games with hourly rate – Is the proposed hourly rate extremely high and upon questioning the vendor comes back with all kinds of discounts?  Or does it start out reasonable from the start?  Aim for the latter as that is a good indication that the company is a straight shooter and is not playing games with you.  If they start out with the used car salesmen approach, be prepared for a rough relationship.
  • Be reasonable – Admittedly there is always room for bargaining in a proposal, but try to resist the urge to aim too low.  The last thing you want it is to award a contract to a vendor that treats you like a second class citizen as the relationship is not profitable for them.

Perform your preparation ahead of time

  • Migration from your old system – A lot of vendors offer standard migration tools from your current system to their system.  Although these save a lot of time, it is very much what you see is what you get.  Are you not happy with the setup in your existing system?  Is your customer list, chart of accounts or vendor list getting a little out of date?  Chances are after the migration you are left with the same poor data integrity that you started with.  It may be worth the extra effort to opt out of the plug and play migration if it gives you the opportunity to improve data integrity.
  • Data clean up – If you know your data is in need of a little housekeeping, start cleaning it up now.  Chances are you have the skills in house to do a little Microsoft Excel analysis to consolidate duplicate customers, vendors, and inventory items.
  • Process realignment – Do you have some weird practices around the company that you have always asked, “why do we do it that way”?  If you don’t change your ways you will need to put a lot more effort into customizing your new software or developing complex workarounds that hopefully can be avoided.  Not only do customizations cost you more money up front, but chances are there is always a little bit of overhead associated to upgrading them in the future.

During the Implementation

  • Stick to your original scope – Scope creep equals a change request which equals more money.  If you can, limit changes to the original scope.  If something was missed that must eventually be addressed, try to delay it to a latter phase.  In my experience in about 50% of the cases you will find that you no longer needed the additional functionality or you have since found a better way achieve your objectives.  Ensure there is a central person or board that approves changes.  If you leave it up to the end users the list can become quite unruly.
  • Change management – In software implementations, as in many things in life, perception is reality.  If the end users are happy and think the application is great, they will adopt it as their own and try to improve things along the way.  If you don’t involve them during the requirements gathering and surprise them at the end with a fancy new system, chances are they will hate it.  It is similar to the Christmas gift that you never asked for.  If they feel vested as opposed to along for the ride, you can avoid rework and save some serious time and of course, money.

Anyone have additional tips?

By Mike Marcin, Systematica Inc.Microsoft Dynamics GP California Partner

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