Read the Fine Print on Software Vendor Quotes

March 29, 2013

Read the Fine Print with Software Vendor QuotesComparing software vendors can be a difficult process, but with due diligence and by knowing what to look for, you can arrive at an informed decision. Let’s assume for the purpose of this discussion that you have narrowed down a list of a few vendors to those who offer the functionality you need – so now you’re in the process of comparing several quotes or proposals.

“Compare Apples to Apples”

Are the numbers you are looking at directly comparable? Vendors differ in the way they price their product, so the first thing to do is reduce the pricing into costs that are comparable. One of the easiest mistakes to make is to miss the fine print details regarding the implementation and services involved.

Most vendors these days are up front and honest in estimating these costs, but there are a few software vendors who tend to lowball these costs to a customer – in the old “bait and switch” approach. If some vendors seem to have a much lower cost for implementation than others, this raises an obvious questions: why the difference? If one vendor specifies service costs of $2,000 and the other $20,000, there is likely a big difference in the scope of the services being offered (see below).

Differences in Data Migration

Perhaps you plan on manually keying in data from your old system to your new one. This is a common thought but in practice is rarely feasible except in the case of a startup business. (See this detailed post about data migration considerations.) Even if some data has to be entered manually, you still need to consider such data migration issues as: sales history, order history, opening balances at go-live, and other accounting history.

Ask for a detailed description of the type of data migration included in each quote/proposal you have received. Some vendors, as a default, include no allocation for data migration costs. Other vendors, on the other hand, will help you scrub your data, restructure it according to your desires and perform the entire import for you. And then there are many somewhere in between.

Differences in Training

Differences in training offered are often as big as those in data migration. If not detailed specifically, training often merely includes training resources (such as videos) with no live training. Implementing an ERP system without proper person-to-person training is generally not a good option, so you will end up opting for proper training which may double a quote that didn’t include it from the start.


The North American Apparel Industry | Apparel Inventory Software

March 22, 2013

Guest blog post by Samantha Hornby.

Apparel Inventory Software & Industry Infographic

(click the image for the full infographic)

The following is a transcription of the above infographic discussing the North American apparel industry, statistics on apparel ecommerce and what apparel inventory software is all about.

The global textiles, apparel and luxury goods market had total revenues of $3,049.5 billion in 2011.  In 2010, China’s textile industry processed 41.3 million tons of fibre, which accounted for 53% of the world’s total production. Read the rest of this entry »


The Distribution Inventory Software Mystery

March 18, 2013

Office workers in meetingNotes from the casebook of Detective Ivan Toonow…

The scene: the desk of ace salesperson Myrtle Beech

The suspects: Myrtle, her sales manager Pierre Groop, and the CFO, C. Ash Mann.

The crime: Myrtle closed the biggest sale of the year last month, an order of 10,000 macro-widgets at a selling price of $100 each (yes folks, that’s a million dollar order right there). She wrote this up as having a gross margin of $250,000. Pierre approved the sale. Now, however, on reviewing sales reports, it turns out that the unit landed cost was $99.55, yielding a gross margin ($4,500) less than the included freight cost.

The cause: well, that depends on whose story you believe.

Myrtle: “I looked up the cost in our system when I entered the order, and it said $75.”

Pierre: “I too looked up the cost before approving this order, and it was $75.”

C. Ash: “Look right here, on-screen, it shows a cost of $99.55.”

Myrtle: “The software must be defective, I know for sure I saw $75.”

Detective’s conclusion: Myrtle’s right, folks – the guilty party here is your software. That’s because you have system that allows you to alter transactions after the fact. Someone originally received these items at $75. Later on, they realized that they’d made an entry error and fixed it, and then finally after month end another person realized they’d not factored in duty and brokerage, so they just altered the purchase transaction retroactively yet again.

To avoid, this, implement a proper distribution inventory software system, and implement it properly. The reason for this post is to emphasize that, as a business grows, the need for controls becomes more apparent, as does the value of setting up clear, coherent and appropriate procedures and training staff properly – preferably before you start losing money!


Lot Tracking Defined: Understanding Common ERP Jargon

March 15, 2013

Lot Tracking Defined

This post is number two in a series of posts discussing commonly misunderstood ERP software terms. 

Lot tracking can be an important concept to understand, and for some businesses, it’s an integral component of distribution inventory software.  So what exactly does lot tracking mean? If you guessed a system that ensures Bob the accountant stops stealing your parking spot at work – you’re incorrect (although a system like that would be nice). No, lot tracking refers to a system that has the ability to properly track product lots (as in manufactured lots or batches)along the entire supply chain – a requirement for  businesses that deal with perishable or potentially harmful products.

Read the rest of this entry »


ERP Data held hostage with Ransomeware? Call for backup!

March 11, 2013

ransomware-screenAt least two of our customers have been hit by ransomware in recent weeks. Briefly, this is malware that encrypts the data on your hard drive (or server hard drive), and you are then asked to pay a ransom to obtain the key to unencrypt your data. This article provides a recent example of a victim, and additional background. But the bottom line is: if you get hit by ransomware, you’re either paying them money (a very bad idea, obviously) or formatting your drive, and recovering your data from the most recent backup.

At which point many victims say, “Oops! Backup? Hmmm…”

It continues to amaze me that so many businesses still, in this day and age, get caught without usable recent backups of their key business data. They’ll spend all kinds of money, time and attention choosing ERP Software to run their business, but pay no attention to securing the key business data the system relies on.

One of the affected customers had not performed a backup since 2010. And I’m told by many others in the industry that this is still quite common.

This is perhaps yet another compelling reason for smaller businesses, those without IT people on staff, to move to hosted software-as-a-service solutions, and take both the threat of cyber-attacks, and the risk of having no usable data backups, substantially out of the picture.


Custom Software vs. Out-of-the-Box ERP Software

March 8, 2013

Comparing Custom and Out of the Box ERP SoftwareWe wrote previously about the benefits of customization and the importance of finding a system that is a perfect fit for your business, but the question remains: which is better, custom software or out of the box ERP software?

There is rarely a straightforward answer for this question. In this post we will explore the benefits of each option and make some recommendations.

Feature-Fit

There is no question that a custom system should be able to accommodate your specific business processes better – after all it was designed specifically with you in mind – however, does that always make it a superior option? Not necessarily.

For instance, many businesses may discover that their unique processes are unique for a reason – they are not the most efficient or the best way to do things. Adapting business processes to a software package that works well for a given industry may introduce efficiencies that were not even considered to begin with. Conversely, though, changing good processes to fit the straightjacket of a software package can cause loss of competitive advantages.

A flexible out-of-the-box system can employ minor customization to existing robust features to accommodate business process variations without having to start from scratch with costly development.

Flexibility

Flexibility varies greatly from system to system. Some ERP software systems are very flexible while others are rigid. Custom software, by its very nature, should be quite flexible but be sure you are not putting yourself in the hands of a single developer.

We often hear from businesses who are desperate to find an off-the-shelf solution after their sole developer retires, passes away or ceases support for their custom system.

Support & Upgrades

Custom systems are typically built by a single individual or a small team as a one-off project, so support will vary. Because projects differ so greatly from client to client, each project is unlikely to be able to take advantage of development on other systems.

Out-of-the-box software, on the other hand, can pass advancements or customizations on to other customers via future upgrades and since the core functionality is common across customers, it is easier to support each customer.

Cost

Overall accounting, order entry and contact management features tend to be similar across businesses in a given industry – so finding a software package suited to that industry means the vast majority of your needs are covered without a single line of new code being written.

Custom software, on the other hand, will typically have fewer bells and whistles, and may be more expensive because most, or all, of the development is from scratch. For the sake of the evaluation, both solutions may be of comparable cost.

Time to Deploy

Out of the box ERP software can take anywhere from 2-6 months to install (data migration, training, installation etc.) whereas custom software has an indeterminate timeframe and will vary greatly from project to project.

It goes without saying, however, that custom software can be expected to take much longer to develop and implement.

Final Verdict

For very unique businesses in unique industries, custom software may make sense. The average business, however, can almost certainly find a well-suited solution with out-of-the-box software, perhaps taking advantage of some mild or moderate customization for truly unique processes.

Software Buying Guide


How to be an unsuccessful eCommerce business

March 5, 2013

ecommerce-ERP-integrationI spend much time each week chatting with companies who are looking at replacing or updating their ERP, inventory and accounting software. Naturally enough, these days more and more of the conversation revolves around eCommerce, whether its business-to-business or business-to-consumer. It’s quite striking how some companies seem to be very successful selling online, while others in the exact same industry do not. Taking a lesson from the second group, here’s how to be unsuccessful in the eCommerce sphere:

  1. Look at eCommerce in isolation, and ignore the impact on the rest of your business.
  2. Choose the cheapest eCommerce platform and vendor that you can find.
  3. Don’t even think about search engine optimization.
  4. Don’t link your eCommerce site to your back-end inventory system, thus ensuring that the one or two people who accidentally stumble upon your site will order product that you don’t actually have in stock.
  5. (This step encompasses the above ones): avoid having a coherent and well-funded strategy to succeed online.

Of course we could expand each of these steps in multiple facets and examine them further – but that would only matter if we wanted to find ways to avoid being unsuccessful. If we did, we’d instead research areas like eCommerce and ERP Integration.

  • Sadly, it appears that many entrepreneurial businesses have been following the above advice. Please don’t make the same mistake.

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