In the second in his exclusive three-part series, ERP expert Bill Isherwood examines two more factors that can make choosing the right ERP solution so problematic.
In my first article, I started analysing some of the factors that have contributed to the perception – often correctly – that choosing the right ERP solution is an extremely difficult task, and one that requires due diligence and care at every turn.
In this second instalment, I want to pick up where I left off, and look at four more factors that can (and likely will) affect your ERP project from the very outset.
Maybe it’s my age, but the fashion sector changes at a dizzying pace. In my youth, in the North West of England, we were surrounded by cotton mills, spinners and manufacturing organisations of all shapes and sizes. Sadly (in at least some respects) these days have gone. Global production continues to chase low-labour-cost area, which can shift from continent to continent as prosperity brings about lifestyle changes and makes low wages unsustainable. Who knows? Perhaps in the future the UK will become a low-cost manufacturing territory again, although this doesn’t seem terribly likely at the moment.
Domestic product had its share of problems, but offshore production – now the norm rather than the exception – brings with different issues and opportunities, both caused by the complexities of conducting detailed and time-sensitive work across oceans: Product Development, Planning, Supply Chain management, Stock policies, Compliance and Costing.
Yet at the same time, the local sales landscape has changed significantly over the past very few years. Major retailers have put more and more pressure on suppliers in terms of cost and stock availability, whilst the growth of Business to Consumer, Internet-based organisations, Direct Deliveries and Click and Collect have made huge changes to the customer-facing side of fashion production.
Similarly, the speed and power of computing devices and communications has been explosive, making offshore product development and production practical in a way that it simply wasn’t before. And while garment technicians and sourcing managers the world over consider email to be the bane of their lives, none of them would argue for a return to the days of international fax or Telex machines!
While we do consider ourselves to be well-versed in the industry, WhichERP as a whole does not claim to know precisely what will happen to the RFA scene in the next decade. We can say with some certainty, however, that it’s inevitable that the rate of change will only increase – more Business to Consumer, more customised/personalised products, more ranges or seasons per year.
Retailers and brands invest heavily in planning, forecasting and trend analysis in order to keep their products competitive and future-forward, but it’s sobering to remember that the same consideration needs to be given to the selection of their ERP systems. Whether they realise it at the time or not, companies are picking a solution that will have to satisfy their requirements – known and unknown – for ten or more years.
And while they may not necessarily be able to predict the precise shape of things a decade from now, those who plan ahead know that they will almost inevitably require more speed and better communication and collaboration as standard. This is without considering some of the other changes that are likely to characterise the future: increased rates of product development, integration with extended PLM (often 50 or more solutions in a large organisation) solutions, supply chain management and transparency requirements, and the ability to work across a host of modern devices such as smartphones and tablets.
All of which boils down to the fact that those people within your organisation who will be responsible for selecting an ERP solution must understand where things are headed. If your IT department, for example, is not keeping abreast of new trends and industry projections, they may simply lack the knowledge they need to properly define your current and future ERP needs. Here at WhichERP, we have worked on enough projects to know that keeping up to date with trends and best practices is the only way to safeguard the future potential of any project.
Of the number of time-consuming (and potentially expensive) traps into which companies seeking out ERP can fall, this one is by far the most common. A retailer or brand creates an implementation checklist based on their own requirements, but neglects key functionality or competencies because they consider them to be “standard” or think that they “must be included in every ERP solution”.
More often than you might realise, a company passes the contract stage with their supplier, only to discover that the solution does not cater for a crucial part of their business, leading to costly customisation and development.
Sometimes this stems from duplicity on the part of the vendor, but in many cases the customers themselves are to blame. An example: your Finance team is exceptionally busy, so to save time when the products are being presented to you, they brush things off, saying “as long as it has a decent set of Ledgers, we’ll make it work”. Then, when functional gaps are discovered later in the implementation, those same people are first in line to criticise the product itself.
And the same can be true of suppliers, of course. In the same scenario as above, the supplier themselves may dismiss a team member’s request for more information regarding reports, claiming that their solution has more than enough pre-built reports and enquiries to cater for anybody’s needs. Unless someone from the customer selection team investigates further, it may be much further down the line that you discover the reporting capabilities of your chosen solution are not up to scratch.
In the plainest terms, if you simply hope or assume that the ERP products you select will contain everything you need – or if you come away dazzled by an impressive customer list of brands, but neglect to ask whether their needs match yours – then you may be taking too much for granted. It’s much better and safer all round to ask the simplest, easiest questions and satisfy your curiosity than it is to soldier on under the misconception that everything you need is in place.
If this sounds unnecessary – and it will to many people, since they assume ERP products all share baseline functionality – then you should consider exactly how ERP systems tend to develop. Rather than there being any sort of master template from which every solution is derived, most ERP products begin life as bespoke applications for a small number of clients. Others have retail, footwear and apparel functionality grafted on to a generic, multi-disciplinary framework. Either way, it’s the needs and requirements of that initial client base that shape the solution, and its development path and new functionality will have been influenced by their demands.
If a potential client identifies a “must have” during their selection process which is not present in the package, the supplier will then have a strong incentive to add it, either as standard, or at a favourable cost. This is especially true if the prospect is a large or important company (or if it happens to be near a key Quarter End for the supplier, and they’re prepared to work harder to clinch a last few deals). You may find yourself in this lucky situation, with a supplier who is willing to develop their solution to meet your needs, but you should remember that you always have the option of looking elsewhere – potentially somewhere that you could find basic functionality that better fits your needs.
If this kind of customisation and development doesn’t arise until the time of implementation, then, by definition it is “Out of Scope” of the contract both sides have signed. So, as you can see, identifying functionality gaps early can be extremely beneficial, whereas leaving it too late to notice (and making assumptions) can lead directly to potentially huge additional costs.
If the latter does occur, the best way to progress development is typically via a User Group, which in theory should be able to exert a strong influence on the supplier’s product roadmap. In reality, though, the priorities of existing customers often pale in comparison to the needs of new customers (and new revenue), so you may find your vital functionality placed in a queue and not have it delivered for several years.
You do, of course, always have the option of addressing this lack of functionality through a work-around, which will of course attract its own cost since it will be a bespoke project in its own right. Even the most elegant use of work-arounds is also dependent on the skills and experience of the practitioners in charge of your project, and it can be easy to assume (that word again) that you can patch things up when in fact building the work-around can cost considerably more than making sure the capability is in place from the outset.
WhichERP strongly recommend you document each and every “must have” during the selection process, and include these into your product presentations to ensure they are satisfied – however obvious they may appear. This will amount to hundreds of topics, and that can be a scary prospect, but ERP is a complex subject and must not be taken too lightly or superficially. A few seconds needed to present an “easy tick” in your checklist will not be resented by the supplier’s presentation team, but the omission of a real show-stopper could lead to considerable cost and delay, or even project failure in the longer term.
And whilst failure of your project is important to the supplier (particularly in terms of brand perception), they will by this time have your licence money, have billed much of the project, and have proportionally less reliance on your success and ongoing business. As with several of these factors, the risk is predominantly yours.
In the next and final of these articles, I’m going to look towards the future again, and explain why I believe that proper preparation and planning can help to soften the blow when it comes to the difficulties of selecting the right ERP solution for your needs.