Don’t want to get burned when implementing an Enterprise Resource Planning (ERP) system? Janice Pearce, Pivotpoint's vice president of market development, outlines how resource-constrained IT shops can meet the demands of an ERP implementation—without feeling too much heat.
ERP implementation: Strategy is everything
TechRepublic: What strategic suggestions does Pivotpoint offerclients planning for an implementation?
Pearce: Pivotpoint's target market is made up of small- to medium-size manufacturers, and most of our customers have small IT staffs. Therefore, our clients are very resource-constrained, and they usually find maintaining interfaces to be a huge burden. To help solve these problems, we put as much functionality as possible into one integrated package. This approach is different than that of tier-one ERP providers who work with large customers.
Tier-one providers take a best-of-breed, bolt-on approach because they have the staff to maintain interfaces and keep package revisions in sync. Customers need a system with the functionality they want and that is simple to execute and maintain on an ongoing basis. We either develop the new functionality ourselves, or maintain the interfaces our customers need. CRM is a perfect example of this integrated functionality. Our Point.Man extended enterprise application offers seven distinct business processes—customer acquisition, order to cash, product development, procurement to payment, production, post-sale service, and financials. If you just look at the customer acquisition, order to cash, and post-sale service processes, customer relationship management encompasses close to 50 percent of the functionality within an ERP application. Our belief is that having all this functionality integrated in one place is important for clients planning an implementation, because there are a lot of complexities in maintaining multiple systems. If you had a different system for after-market support, you would have many different databases that would need to be constantly synched up. When we partner with a company, we build as much functionality as possible into the standard product, and make sure that we maintain interfaces and keep data in our data model.
The Woburn, MA-based Pivotpoint offers business systems to mid-size manufacturing and distribution companies. In December 1999, the ERP vendor MAPICS announced that it would acquire Pivotpoint.
The five phases of an ERP implementation
TechRepublic: Does Pivotpoint focus on a hard ROI or a more efficient business process?
Pearce: The first thing we do with customers is work with them to set realistic implementation expectations. Most business software manufacturers and ERP vendors just work to get the customers off their old systems and onto something new—then everyone celebrates and says, "We're doing okay because we're live." But getting live is really when the implementation should begin, so to speak, because now they've got a foundation in place to truly improve business processes. We tell customers about the five important ERP implementation stages of building an infrastructure that allows return on investment. From the very beginning, we help outline the customer's objectives, because sometimes their objectives are not financially motivated. Sometimes, their objectives are Y2K motivated or they need to upgrade their systems to survive competitively.
Other times, customers need a new system to handle multiple businesses they've acquired. Certainly, everyone wants the investment to be cost justifiable.
The first phase of our process is laying a solid foundation, really getting customers off the old and putting them on the new system, while moving quickly in order to minimize the cost of having two systems going at one time. We try to get companies live between three to five months after their purchase. During that time, we migrate their data, map out the business processes, and design any new business processes that need to be incorporated. This effort includes knowledge transfer for both sides: we teach the customers about Point.Man, and the customers teach us about their businesses.
In the second phase, we help customers streamline their business processes. We focus on reducing paperwork, automating forms, and eliminating any non-value-added tasks to gain efficiency out of the implementation. The third step is the extension of the enterprise beyond the four walls—by providing some types of inquiry, so that the suppliers and sales force can check the status of customers, and customers can return parts or shipments online. The fourth step involves giving customers the ability to reach out to their customers and to use the Internet for data entry. Customers start to share planned purchase orders, or allow their customers to share schedules and enter orders online.
During the fifth phase, customers begin to move ahead of their competition by communicating electronically and quickly with their customers. At this point, they're offering 24/7 global support and are beginning to use e-business as a differentiator. We've got customers in every phase of that process—some are market leaders who are pushing us to take the product further and faster so that they can continue to outdistance their competitors. We plan events for our customers to talk to each other, such as user group meetings and our "Customer In Action" groups, which are virtual teleconferences where customers give us feedback on design and specifications, and test new releases. These events allow customers to learn what the leaders in our customer base are doing as well as gain a comfort level, so they don't feel alone when they start to move up the ladder of progressive implementation.
TechRepublic: How do you help customers set realistic expectations for an ERP system?
Pearce: One of the final phases of any implementation we do is a full pilot test. We go all the way through the system, replicating the live database with a test database. During the pilot, we walk through the complete transaction flow with participants from every aspect of our customer's business. Everyone learns entire business processes and sees how their mistakes affect other members of each process. We then sit down with the CEO to address "readiness"—whether the individuals are ready and trained. In order to make a go/no-go decision, it is crucial for us to let the CEO know where the company stands at that point and note potential risk factors. The executive team may say, "It's important enough for us to meet our 'go-live' date that even though we may not have everything defined, we'll go live and continue to add information as we go." Or, the team may decide to delay it by another week.
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