ERP Software is a People Business

May 31, 2010

It’s always interesting interviewing candidates for sales positions. Given that the interviewee is effectively trying to sell the interviewer, it’s important to watch the candidate’s technique very carefully. One should pay particular attention to their listening and questioning techniques, of course – it always amazes me when a candidate cannot repeat back to me basic facts I shared about the company 5 minutes earlier.

I also like to take careful note of the attitude towards sales prospects. Candidates who tend to “de-humanize” prospects are a big red flag. The most profitable and rewarding customer-vendor relationships are always the ones with a high level of mutual respect and integrity. A salesperson who sees each person as an individual and treats them accordingly may not necessarily sell more, but will bring in more profitable business.

As the above video illustrates quite effectively, the same can be said of the customer service people at a business software company. Where the technical support department uses a “one size fits all” approach, a significant percentage of customers end up dissatisfied with the responses and solutions provided. Same thing where rules of engagement on implementation and consulting are rigidly applied without first understanding the specific customer’s situation.

Food Distribution Software: Not What You Think?

May 26, 2010

What’s in a name? Particularly when we use industry jargon, that question may be beyond Bill Shakespeare. (See the previous post on ERP and Accounting Software.)

Take the term “Food Distribution Software”. At my company, the meaning is clear: business software targeted at food distributors. And until this morning I had never considered another meaning. Then an email from someone who found our web site in error opened my eyes to other possibilities. This person had been searching for something (not really sure what) and found our site by searching for “food distribution software“. He (or she – not clear) completed our online form, supplying bogus email and identity information, and accused us of being misleading – because our software doesn’t actually distribute food!

So to set the record straight, it’s true – our accounting and inventory management software does not actually distribute food. We leave that to the people who work at food distribution companies. We simply provide business / accounting / ERP software to those companies (and others).

There are other search terms that may lead people to us, and to pre-empt future criticism, I’d like to assure you that our software does not distribute “wholesales”, nor does it actually perform service and repair activities on equipment.

But it does brew a mean cup of coffee…

SaaS or On-Premise for ERP Software?

May 18, 2010

Software-as-a-service (SaaS) now rivals the traditional on-premise license model for many companies considering implementing or changing ERP software. So what are the pros and cons of the two approaches (in fact, there are 3 approaches, but that’s a subject for another day).

As a vendor of Inventory Accounting Software, I bring some bias to this discussion, even though my company offers both models. But I found this really interested and informative, and totally impartial, presentation on this subject here:

The author / presenter makes some very good points, many of them obvious but frequently overlooked. I think any company looking at an ERP or Accounting Software Package could benefit from spending 10 minutes on this presentation.

Accounting Primer – Deferred Revenue

May 14, 2010

If you collect money from your customers before you’ve finished delivering the products and / or services covered by the payment, at what point have you actually earned the cash? The accounting or bookkeeping staff at many small and medium-sized businesses (SMB) are not sure how to account for these appropriately, and frequently simply recognize the revenue at the time the cash is received or an invoice is generated. In fact, usually the accounting software package they use does this automatically (which is good), and no further action is taken (which is bad).

This is a problem, because for example if you accept payment of $12,000 for a one year maintenance contract, and invoice the customer on day one of the contract term, you haven’t really earned any money on that day even though the accounting software will probably post the $12,000 to an income account. You will have to provide services over the next 12 months which are in effect prepaid by your customer, and it is as you provide those services that you actually earn the revenue.

In our simplistic example, you would earn $1,000 per month during the term of the maintenance contract. So after 4 months, you would have earned $4,000, and the remaining $8,000 should be reflected as a liability, probably called either “Deferred Revenue” or “Unearned Revenue”.

Why should the SMB owner care? Because if you have a bunch of contracts come up for renewal in one period, and many fewer in subsequent periods, your revenue and profitability in your monthly management reports are skewed – one month you think you’re doing better than you are, and subsequently things look bleaker than reality.

And you all do use monthly financial reports to manage your businesses – right?

Identity Crisis – ERP? Accounting Software Package?

May 10, 2010

Here’s an object lesson in the dangers of relying on your industry jargon when chatting with customers (or prospects). The software my company develops is known as ERP, or “Enterprise Resource Planning”, software. At least, it’s known as that by those of us in the business software industry, and by both technical and management people at larger enterprises.

Accounting Software Package
ERP? Accounting Software?

But to most people who own, or even work at, smaller owner-managed companies, “ERP” is a meaningless acronym. Many would refer to this type of software as “accounting software”,  despite the fact that it does a while lot more than accounting. So perhaps companies like ours should refer to their product accordingly. However this may be just as bad, because many will assume that an “accounting software package” does not include inventory management, purchasing, order processing, etc.

So what should we call it? Business Software? Too vague. Inventory Management software? Too narrow – that implies no accounting functionality. I honestly do not have the answer.

Please leave your suggestions in the comments section below.

Top 5: Don’t Train Employees on Accounting Software

May 5, 2010

Here are the top 5 – um – let’s call then “reasons” to not train employees properly and thoroughly on the business and accounting software / ERP software in use at your company.

  1. Our employees enjoy doing things the hard way, and changing to more efficient and productive processes would spoil their fun.
  2. We are never very busy or rushed, so we can afford to spend as much time as necessary fixing the errors caused by using the software incorrectly.
  3. Our customers are very patient, and they always understand when we ship the wrong products or bill them the wrong amounts. They only ever object when we (frequently) forget to collect money from them.
  4. When we hire new people, they particularly enjoy that initial settling in period when they don’t have a clue how to use the tools that are critical for the job performance. Happily for them, that period lasts a long time because we don’t bother them with training.
  5. Money is not an object here, so we’re happy to leave on the table the tens of thousands of dollars we could be saving, rather than spending a fraction of that amount on training.
Being serious for a moment, here’s an example of an actual customer’s savings, based on average time saved per employee, after training nine employees as listed in the table:
Training Employees - ROI

Training Employees - ROI

And the total training cost, including an allowance for the time cost of having the employees trained during working hours? Less than $7,000.

Agree? Disagree? Let’s have your thoughts on the subject.

%d bloggers like this: