April 22, 2015
As a general rule, there are differences in software implementation time-frames, dependent on the tier or type of software being implemented. When it comes to inventory and accounting ERP software, Tier 1 or Introductory Systems (such as QuickBooks), usually take anywhere from a couple of days to a couple of weeks to get set up; Tier 2 ERP systems can take anywhere from several weeks to several months to get set up; and Tier 3 or Blue Chip systems can take the longest – from several months to a year plus. These timeframes correlate with the sophistication of each tier of system and the complexity of business processes. This also means that the work included with software implementations will vary by tier, and also by software vendor within each tier. This makes it very important to read the fine print on all software vendor quotes in order to compare apples to apples when making a purchasing decision. Because of this, it’s important to begin the software search when your current systems are still in good working condition, and the search has not yet become a critical need in order to maintain business operations. It’s unrealistic to expect vendors to complete the implementation process immediately after a signed quote is received, for reasons outlined below.
One of the most time consuming parts of an ERP software implementation is the data migration process. This aspect not only greatly impacts implementation timeframe, but also total costs. Data migration consists of transferring data from your existing software systems or from spreadsheets, and importing it into your new software. This process can be further broken down into 3 parts:
- Extracting data from the existing system
- “Massaging” the data – clean up and structuring
- Moving the data into the new system
Essentially, data is mapped from the old system to the new according to labels, titles and structures, and additional “massaging” or “cleaning up” gets performed to ensure bad data is not brought into the new system. This process usually happens multiple times in order to get the most accurate and up-to-date data before Go-Live. As you can imagine, for software vendors that manage the entire data migration process, this is not a quick and simple task – especially when dealing with companies that have 30+ years’ worth of data to migrate. Certain software vendors will put the onus on the client to extract the data and manually enter it themselves, which can lead to quicker implementation timeframes and lower costs – but this logic works mostly in theory and not reality. Relying on the client to perform the data migration can mean that the massaging process gets ignored, some data gets missed during the process and employees must take time away from their daily work to complete the task. Read the rest of this entry »
December 30, 2014
Data migration is just one part of the entire ERP implementation process, but tends to represent the largest percentage of implementation costs aside from employee training. Data migration involves mapping information from old software to new, according to labels, titles and structures, and includes additional “massaging” or “cleaning up” to ensure bad data is not brought into the new system. Common examples of data that gets transferred are vendor, customer, and product information, as well as historical sales data, A/P and A/R outstanding, open sales orders, GL account numbers and balances, inventory quantities – essentially any data that is necessary.
The high costs associated with data migration are easily understandable when dealing with older companies who may have 30 plus years’ of information to accurately move over – often from outdated systems. However, even as a start-up or newer company, there is usually some amount of data migration in the form of inventory items and customer or vendor information that will need to be imported into your new system. Aside from cutting down on costs, there are also other benefits to reducing the amount of information being moved over into a new ERP system. These include decreasing implementation time-frames, and preventing garbage /outdated information from polluting your database.
One option to cut back on data migration costs is to perform your own “data migration” by manually re-keying information into a new ERP solution. Although less costly from a software purchase perspective, this method involves a lot of man-hours, meaning time and labor costs. In addition it can be error prone and very cumbersome. As a truly start-up company this may be a viable option if the amount of data to migrate is negligible, however the amount of work necessary to manually perform this task generally outweighs the costs. It also does not account for the expertise needed to update data already migrated prior to Go-Live, in order to have the most up-to-date information.
Instead of trying to entirely eliminate the need for data migration, explore your options for reducing the amount of data to migrate, and determine exactly what information is necessary to keep. Bear in mind that you can continue to maintain your existing database of information on its own computer for the rare cases that you do need to look up very specific historical information.
December 2, 2014
When your company decides to invest in an ERP software system, the term ‘implementation’ will undoubtedly be used on a frequent basis. If you are unfamiliar with ERP systems and are in the initial stages of your software search, you may be unaware of the sheer number of factors present in a typical ERP implementation, and how vendors provide quotes on the process. To help demystify the inherent ambiguity of the word itself, the following list provides an overview of a typical ERP implementation process:
Definition of Scope
The definition of scope, or requirements analysis, is the process associated with analysing and documenting a company’s specific business needs and expectations, and developing a project plan to ensure those needs are met.
Installation, although self-explanatory, is the actual set-up of the software by the vendor’s product experts on your company’s servers (or the vendor’s servers if it’s a cloud based application) and represents the central component to any implementation of ERP software.
Configuration & Integration
Configuration means setting up the software with your company’s existing information, users, and personal settings. In addition, integration is the configuration of the software to enable communication to existing and external systems.
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November 5, 2014
Investing in an ERP software system is an important event in your company’s history. Your company is growing and you have decided to eliminate the redundancies of outdated manual processes, to take advantage of the operational efficiencies inherent in ERP software. As you begin your software search, before evaluating different vendors, it is always good practice to establish a ‘ball park’ estimate to ensure that your expectations are aligned appropriately with the vendors that you are meeting with. To determine a rough estimate, you need to establish your software cost to services cost ratio. Have no fear, it is much simpler than it sounds, as many experts agree most firms will adhere to a 1:1 ratio. That is, a company should budget double the price of the software to account for the services needed to install and maintain an ERP system.
The first step involved in calculating a ‘ball park’ estimate is to estimate a software list price for the number of users that you need, then double that number in order to account for the software to services ratio. If the number you arrive at is one that you are uncomfortable with, it may be time to adjust your company’s expectations of an ERP system, or perhaps reconsider if you’re even ready for the investment. However, if this number is something that is reasonable and within consideration, you have passed the first barrier and are ready to answer 6 additional questions to gain a more accurate figure:
- How many users will you require?
If the number of users is relatively small (less than 5) you will often pay more for services. This is because many ERP platforms require a minimum number of users, which is often five or more. Certain vendors may also sell user licenses in packs as opposed to single user licenses.
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September 16, 2014
ERP systems are costly. They also involve a significant investment of other resources to implement and maintain, including human resources and time. So when choosing a system, you want to go with a solution that will grow with your company and not require replacement in a couple of years’ time. Investment in accounting and inventory software does not end after the check is signed, and there are several options for extending the life of your system over many years, long after go-live. In order to get the most bang for your buck, consider the following:
Sign up for maintenance.
Maintenance is an extra option provided to businesses that can vary from vendor to vendor, but is generally designed to cover the cost of annual software upgrades and keep the application in warranty. These fees usually amount to a percentage of the cost of software licenses, and can be paid on a monthly or annual basis. The idea is that since most software vendors are continuously adding new features and improving on the technology of their systems, every year or so they release an upgraded version of the software. Paying for maintenance means you receive these upgrades whenever they are released, as opposed to having to purchase a newer version outright. It makes the transition to new technology and features easier if you’re upgrading every year instead of every couple of years. When negotiating maintenance fees with vendors, pay attention to the costs to make sure they also include the cost of the actual implementation and consulting time required to manage the upgrades. If they are not included, these additional fees can exceed the actual maintenance fees themselves.
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