3 Things I Wish My Clients Knew That Would Save Them Tons of Money
Sometimes on the plane traveling to my next client, the person sitting next to me will ask what I do for a living. I tell them, “For the last 13 years, I have led teams that install accounting, inventory and reporting systems for mid-size companies.” I usually get a blank stare and another question in return, “What is that?”
“You know how you have a personal check book?” I respond. “Well, if you were running a business you would need to have a checkbook on steroids that would send out hundreds of checks a day, pay your employees every two weeks, keep track of your inventory, provide monthly profitability reports for your board of directors and be the backbone of your business.” The response is nearly always “Oh, that sounds complicated!”
But it wouldn’t be as complex if clients would adhere to the following principles.
Principle 1: Get an ERP Winning Mindset
First and foremost an ERP project requires hiring the right firm to help deploy the ERP, which is an art in itself, but choosing the right firm is one of the easiest steps. An ERP project is like a marriage. A marriage won’t be successful, even if both partners are wonderful people, if one partner is not giving the marriage enough time and attention. One partner can be doing all the right things, but if the other partner is out running around, the marriage will not be successful. It’s the same for an ERP project. Even if the consulting firm is awesome, if the client ignores the project or doesn’t give it the proper level of respect, the project will not be successful.
Lesson: Be prepared to commit time, money and people to the project.
Principle 2: Keep it Simple
There are four different types of technical activities that dramatically hike up the cost of ERP projects:
- Making the software do something its not designed to do.
- Paying your consultant firm to build large numbers of reports.
- Building interfaces between systems.
- Bringing over historical data from the old system into the new system.
Don’t do first action unless you want to devote 30% of your budget to customizations. It’s complex and compromises the integrity of the system you purchased. Plus, statistics show that many of these customizations won’t actually be used years post deployment.
For number two, you want to teach your employees to build reports themselves. Not only does this save you deployment money and teach your team new valuable skills, it makes your reporting team self-sufficient and gives them the ability to do all kinds of cutting edge and creative strategic reporting that push your profits higher.
Building data-exchanging interfaces between systems is usually a necessary evil and can’t be avoided completely. Interfaces can be difficult to build, require loads of testing and often will have to be adjusted as time progresses. A cost-conscious client will confirm all interfaces are absolutely required to make money and not be overly complex.
Bringing over too much historical data sounds like a good idea at the time, but it’s expensive, and two years after using the new system you won’t need that data. Legacy data can be put it into a database and used as the driving force to build a true reporting strategy using a real reporting engine. Don’t try to do complex reporting from your ERP.
Lesson: Let the software do what it’s designed to do. It will bring big improvements to your company as is. Plan on doing a Strategic Reporting project.
Principle 3: Be Prepared Before You Start the Project
Put people on the project team who know your current business processes and have documented them at a high level. I hate to see clients pay us to interview their teams to determine their current business processes, document them and then get it approved to make sure its accurate. It’s such a waste of money. The best thing is for your team to present to us how they do what they do today, tell us what they don’t like about the business processes they use today and most importantly the problems they need the new system to fix.
Depending on the size of the company, prepare your C-level executives to be involved in the project at least four to eight hours a week. At a minimum, you will need them to solve cross-departmental issues, prioritize items, review new scope and provide strategic guidance as needed. Additionally, all C-level executives must be involved in the Change Management activities of the project – pre and post deployment, including:
- Your CFO needs to be involved in the creation of the new chart of accounts and the new financial reports.
- Your CEO will be the person to approve the project phasing so that the first phase adds value to the company. The CEO will also approve that the system is tested and is ready to go into production based on the recommendations of the project team.
- Your CIO has to add the ERP project and all of the support needed from the business team into the overall IT Budget and Portfolio management strategic plan, and adjust their ITIL support processes to be ready to support it.
As a stretch goal and for extra savings, prepare your accounting team to think about the current chart of accounts and how to redesign it in the new ERP. One of the biggest issues I see on projects is that accounting departments aren’t informed on how ERPs handle chart of accounts, aren’t ready to change their current chart of accounts and/or don’t want to spend time reconciling the old way of reporting to a new way of reporting.
Don’t waste this ideal opportunity to set up your company to do strategic reporting of cost and revenue data. Wouldn’t it be nice to easily see how many widgets were sold in which company, in which country during a specific time frame? Plus, the sooner these changes are made, the faster and more effectively the project will proceed.
Lesson: Basic preplanning will reduce your ERP project costs. Put the right people on your project team. Prepare your C-level executives to be involved. Revising your chart of accounts to support the company’s future goals will provide a nice return on your investment, especially if you complete that activity early in the project.
Clients who implement these ideas will save money, reduce stress on the project team and provide a foundation for a more successful ERP project.
Ready to discuss your ERP project with Hitachi Solutions? Contact us today.