ERP Package Selection A Well Rounded Evaluation

Transcription

1 ERP Package Selection A Well Rounded Evaluation Session ID#: Selection should consider many factors. Align the selection with your long term strategy. Prepared by: Stephen Coco Managing Director SpearMC Consulting REMINDER Check in on the COLLABORATE mobile app

2 Agenda This is a subtitle or bulleted list

3 Agenda About SpearMC and Your Presenter Introduction How a Selection Typically Occurs Introduction of Evaluation Criteria Using Evaluation Criteria For Selection For Negotiation Third Party Information How to get to an Answer Questions

4 About SpearMC and Your Presenter

5 About SpearMC Founded in 2004, SpearMC is a technology and professional services firm specializing in PeopleSoft Financials and Supply Chain Management PeopleSoft Human Capital Management and Payroll Application Development Project Management Change Management Inc. Magazine recognized SeparMC as one of the Inc Fastest-Growing Private Companies in America 2013 #1, #2,418 The San Francisco Business Times named SpearMC one of the 100 Fastest-Growing Companies in the Bay Area 2013 # #66 ERP Training

6 About SpearMC Services & Competencies Technology and Business Consulting Full-service ERP and BI Selection, Implementation and Integration PeopleSoft JD Edwards Oracle EBS Hyperion Dynamics AX ERP Training IT Transformation, IT Strategy and IT Infrastructure ERP Bolt-On Applications Development Capability Assessment Program and Project Management Project Management Office Project Portfolio Management Business Transformation Operations Improvement (Six Sigma, Lean, etc.) CIO and CTO Advisory Services Strategy for Pricing and Revenue Enhancement Change Management

7 About Your Presenter Stephen Coco Managing Director 22+ Years experience Managed global, large scale ERP implementations, mergers/acquisitions and business transformations Financial and operational expertise used to drive an increase in client s financial performance and deliver operational efficiencies. Managed full program/ project lifecycle for multiple global clients. Expertise implementing financial applications, including Six Sigma design and Sarbanes-Oxley controls.

8 Introduction This is a subtitle or bulleted list

9 ERP Selection Journey ERP Selection is a vital process a company must employ to acquire modern information technology that will drive business process and business performance improvement. An ERP Selection project is a key component to a successful ERP implementation. Implementation projects that fail to attain expectations can be traced back to poorly executed ERP Selection projects. Business process definition (both current state and future state) drive evaluation projects. Your objectives should drive the required ERP selection criteria and align business processes in your industry.

10 Is Functional Fit and Cost the Only Criteria? ERP Selection Projects Evaluate Vendors Based on a Proven Set of Criteria Software functional fit to the future state business process needs Vendor s presence and strength in our client s industry Vendor s technology direction Vendor s support ecosystem Total cost of ownership

11 Is the Selection Process Like Shopping at the Store? The Software Selection Process Should Deliver Results Identification of vendors A vendor interview process Development of evaluation drivers Decision criteria table Process driven demonstration scripts A vendor product presentation and evaluation process Evaluation vendor implementation capabilities Vendor price and contract negotiations

12 Assessment Approach Based on the vision, overall business objectives, and external factors, you should define the current systems gaps, changes required and the recommended direction. What factors are driving change? How is industry responding to these drivers? What are the linkages between the finance, HR and marketing visions? Develop World Class System Attributes Determine Business Needs Assess Current Systems How are the business needs addressed by the current systems? Assess Incremental System Changes What major gaps exist between the vision and the current systems? Evaluate and Compare Costs Comparing the incremental approach with integrated replacement - what option best suits ABC s short and long term needs?

13 Determine Your Strategic Objectives Current State Opportunistic Strategy Rear-view Mirror Personality based organization Unlimited Flexibility Loose Federation of Business Function / sub-function (piecemeal) view Desired State Calculated strategy Planning/forecasting Consistent processes and metrics Common practice Discipline & rigor Integrated Enterprise Systems /holistic view

14 How a Selection Occurs This is a subtitle or bulleted list

15 Threads Systems Evaluation Methodology A System Evaluation Methodology that is broken down by phases and threads. The purpose of the phases and threads is to ensure interlocking checks and balances for every aspect of the selection process. Phases Current Needs Scoping and Planning Visioning & Requirements Definition Vendor Analysis and Selection Procurement Support Project Management Project organization risk management planning monitoring communication budgeting staffing quality assurance Business Processes and Applications Information Technology and Infrastructure Change Management Business processes and enabling systems requirements improve business performance benefits business process modeling Defining technology requirements and the evaluation and selection of vendors capable of meeting the identified requirements Leadership commitment organizational design and change readiness performance measurement

16 EXAMPLE - Process Segmentation Quote to Cash Process Maintain customer Account Info Suggest Products/ Services Solution Design and Capture Orders Configure and Calculate Order Price Manage Back Orders gatp Planning gatp check execution Internet Sales Call centers E-Business Process Inquiries Manage and Track Orders Process Complaints Bill revenue Close loop on sales channels with Mktg. and SCM Manage Customer Credit Manage Rebates Manage Chargebacks Investment/ Process Design Focus Strive for Best in Class Strategic Differentiators Core Processes Provide Field Support and Service Manage Warranties Manage Repairs Manage Returns and Exchanges Process Receipts Process Manual Receipts Manage Collections Manage Deductions Strive for Low Cost Infrastructural Processes

17 EXAMPLE Demo Script Vendor: Reviewed by: Reviewed date: Script Category: Return Transactions Objective: To verify that refund transactions are processed accurately. Step Test Condition Execution Steps Results Comments 1 Refund of Gift Cards Exceeds Expectations Met Expectations Below Expectations Not Acceptable 2 Even Exchange A) Exchange same item B) Exchange two different items C) Exchange with different tax rates Exceeds Expectations Met Expectations Below Expectations Not Acceptable 3 Price Adjustment Exceeds Expectations Met Expectations Below Expectations Not Acceptable 4 Uneven Exchange A) Return of buy 3/4 th free but only return of 3 B) Exchange with different tax rates C) 2 nd exchange for same customer with refund due (will this pull original payment method) Exceeds Expectations Met Expectations Below Expectations Not Acceptable

18 Evaluation Criteria This is a subtitle or bulleted list

19 Evaluation Criteria and Weighting Company Profile Background: Rate the general information describing the number of years in business, global coverage, software revenue vs. service revenue. Partnering: Rate the companies strategy on partnering with customers and in the your industry. Stability: Rate the companies financial performance and strength in the market place. Product Strategy / Direction: Software offering by module and platform. Measure and rate the intended direction and functionality for your. The software version they want to install at ABC Company and the intended upgrade path. Industry Focus: Rate the companies commitment to the your industry and your current and intended strategy around the supporting software solution. your Customers: Measure and rate the number of your companies that use your software and the percentage of vanilla software vs. custom. Executive Commitment: Rate the partnering strategy and what is the software companies executive commitment to ABC Company s transformation. Global Footprint: Evaluate where the software company is imbedded around the globe. Include sales offices vs. product development and support.

20 Evaluation Criteria and Weighting Product Functionality General Supply Chain Requirements: Measure the overall rating of the general supply chain requirements defined in the RFI. What was the response by the vendor and who did the functionality perform in the demonstration. Key/ Signature Processes/ Sub Processes: Measure and rate the key process and sub process functionality that makes ABC Company unique as a wholesale distributor of semiconductors. Some examples include mass maintenance, quoting, pricing, ship and debit. Unique requirements specific to ABC Company but required: Measure and rate the key requirements that are specific to ABC Company, but necessary for everyday business performance.

21 Evaluation Criteria and Weighting Technology Scalability: Measure and rate the software providers ability to scale to the large volume required by the your semiconductor business. The rating need to include number of users, transaction volumes and number of data records Architecture: Measure and rate the architecture environments and the software solution(s) that work in that setting. Does that fit with the current ABC Company architecture (Sun with a Oracle database)? Infrastructure: Measure and rate based on the required infrastructure requirements and how that fits with ABC Company current footprint. Tools: Measure and rate the tools that are required to install and run the software solutions. Development Tools: Measure and rate the ease of use for developing in or along side the respective software. What do they recommend to work with their software. Integration: Measure and rate the interface architecture and standards they support. Security: Measure and rate the security controls for screen, user, roles, etc. Workflow: Measure and rate workflow capability and application. Compliance SOX: Measure and rate the Sarbanes-Oxley compliance capability and monitoring of the software and intended company direction.

22 Evaluation Criteria and Weighting Implementation Number of implementations ABC Company s size: Evaluate the number of implementations and success rate of software transformations equal to ABC Company s size. Number of implementations in your industry: Evaluate the number of successful implementations in the your industry. Specify if specific to semiconductor distributors. Methodology: Measure and rate the method for implementing the vendors software, the version, the development required and the upgrade path. Tools: Rate the tools required to implement the software, run the software and upgrade the software. Resource types and availability: Measure and rate the resources typically required to implement and run the software. On time successful implementations: Rate the number of on-time implementations. Include a review of which modules implemented and the global footprint.

23 Evaluation Criteria and Weighting Total Cost of Ownership Benefits: Measure and rate the benefits projected by ABC Company and/or the software vendor. Include the direct and indirect benefits. Payback: Measure the payback timeline. Include development cost and factor in the next upgrade. Total cost including run: Measure the total cost including 2 years of run and the next upgrade of the software. You may want to factor in strategic company direction such as mergers, acquisitions, divestitures, etc. Cost of upgrade: Measure the cost of upgrade and alignment of the software vendor product strategy with ABC Company s future needs. Cost of upgrade with modification: Measure any cost that includes development and integration of modifications

24 This is a slide title that can be up to two lines of text without losing readability ERP Support ERP vendors have a number of ways to support their client. The larger firms have significant support ecosystems to support their market. Buyers should evaluate all of their support systems including the following: Consulting organization Implementation methodology Education ERP implementation methodology Maintenance and phone support User groups Partner network

25 Evaluation Criteria and Weighting Company Profile Drivers and Evaluation Criteria Background, Partnering, Stability, Product strategy/ direction, Industry Focus, Consumer Business Customers, Executive Commitment, Global Footprint Product Functionality General Supply Chain Requirements, Key/ Signature Processes/ Sub Processes, Unique requirements specific to ABC Company but required Product Demonstrations Demo 1 & 2 combined Technology Scalability, Architecture, Infrastructure, Tools, Development Tools, Integration, Security, Workflow, Compliance SOX Support Weighting 20% 20% 5% 10% Implementation # of this size, # in MFG and Consumer Business, Methodology, Tools, Resource types and availability, On time successful implementations 25% Cost of Ownership Benefits, Payback, Total cost including run, Cost of upgrade, Cost of upgrade with modification 20%

26 Evaluation Criteria and Weighting Company Profile Product Functionality Technology Implementation Cost of Ownership Total Drivers and Evaluation Criteria Background Partnering Stability Product strategy/ direction Industry Focus WD Customers Executive Commitment Global Footprint General Supply Chain Requirements Key/ Signature Processes/ Sub Processes Unique requirements specific to ABC Company but required Scalability Architecture Infrastructure Tools Development Tools Integration Security Workflow Compliance SOX Support # of this size # in your Methodology Tools Resource types and availability On time successful implementations Benefits Payback Total cost including run Cost of upgrade Cost of upgrade with modification RFI 20% 50% 20% 10% 100% Vendor Demos 5% 70% 15% 10% 100% Reference 5% 15% 20% 50% 10% 100% Checks Site Visits 5% 15% 25% 50% 5% 100% Business Case 5% 5% 90% 100%

27 Using Evaluation Criteria This is a subtitle or bulleted list

28 Strategy Functions Demo - Rank Based on the vision, overall business objectives, and functional needs.. Ability to take an order? What is need to grow the company? Demonstrate the System and how it supports our business Determine Business Strategy and Functional Needs What makes our company unique? Demo Strategic Functionality Revenue recognition occurs this way? What major gaps exist? Does the solution support future direction? Rank how the solution will work for your business What is the right fit for our business? What option best suits our Companies short and long term needs?

29 Software Vendor Ranking Drivers and Evaluation Criteria Weight Joe s EZ Software Company Profile 20% 3 7 Product Functionality 20% 5 5 Oracle JD Edwards EnterpriseOne (E1) Winning Highlights $35.6 billion vs. $2.8 billion sales 36 vs. 11 years in business 13% vs. 6% market share (2012) E1 vs M3 installations Both can satisfy ABC s business requirements M3 pre-configured Strategic Mgt reporting E1 lag & consensus forecasting capabilities Product Demonstrations 5% 7 3 Related well to ABC Company business Technology 10% 5 5 M3 is easier to support than E1 Faster turn-around of ABC user requests User level productivity & personalization Enterprise-wide document search capability Import / Export data with validations Implementation 25% E1 vs M3 installations 300+ E1 vs. x M3 projected 2013 new customers Cost of Ownership 20% 7 3 Total 100% Rank 2 1 Integration cost equal Software & Maintenance cost 50% more $185K Difference in Software & Integration

30 Using Third Party Information This is a subtitle or bulleted list

31 WHAT ABOUT THEM? Gartner s magic quadrant Tier 1 vendors vs Tier 2 Understand the difference Which is the better investment for you business Quadrant breakdown Leaders Challengers Visionaries Niche Players Is up and to the right correct for our business? Use independent resources

32 What did the Experts say: 2012 ERP Magic Quadrant Magic Quadrant Figure 1. Magic Quadrant for Single-Instance ERP for Product-Centric Midmarket Companies Challengers Broad and mature ERP system Strong international presence Can be configured to midmarket companies Use of latest technologies Will not disappear as a software or vendor Stable consulting and support structure Satisfied customers and industry base Source: Gartner (June 2012) Niche Players Solution is functionally adequate Can be good solution for many seeking ERP systems Lack the full depth and breadth of the robustness of functionality No vision for attaining the next level of nextgeneration ERP product Lack broad experience of new ERP clients May have lack of skilled consulting resources

33 Getting the Answer This is a subtitle or bulleted list

34 How do we decide? Scoring your vendors using the criteria More than function and cost Third party analysis should be considered Gartner s magic quadrant Quadrant breakdown and what that means to our business Planning for the next steps Time to negotiate A high level view of the implementation/transformation What can we commit to? Not just the software solution, but also the commitment to Change for the better: short and long term

35 Key Discussion Points for Vendor Ranking Maturity of Company and Solution Current number of Product installations Project number of Installations Resources for Support Product roadmap External Analysis and Expertise Selected Vendor for ABC Company? Method and Implementation Approach Global capability Business transformation capability Tools and Accelerators Resources for Implementation Function fit for current & future business Capability and ease of use The right answer for ABC Company is? Functional and Technical Fit for ABC

36 Questions This is a subtitle or bulleted list

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38 Other SpearMC Sessions at COLLABORATE14

39 Get in touch Stephen Coco Managing Director

40 Please complete the session evaluation We appreciate your feedback and insight You may complete the session evaluation either on paper or online via the mobile app