This is Part 3 of a 4-part series on ERP pricing, and the why companies first need to complete a Business Process Analysis before acquiring a new software system. It reflects the cumulative lessons gained from 25 years’ experience implementing ERP and MRP systems. The first post is found here.
The Analysis Process
Clients who really think through their needs eventually come to the conclusion that some kind of workflow and process analysis is necessary in order to begin to solve their problems, increase efficiency, reduce costs, improve inventory, lean out processes, eliminate redundancies, and ultimately keep them competitive, support their growth and boost their bottom line.
That’s why at our firm we do the BPA as a separate engagement. Clients are under no further obligation to us after that. If you determine you don’t want to go with our recommendations or services, you can still use the BPA as a project roadmap to select other software. We do this deliberately for two reasons:
- It protects you the customer by having you commit to a tiny part of the overall project, before you make a costly commitment to any specific software.
- Over the past 4 years, we have not done an ERP project without first doing a BPA. We can honestly say that every client expressed satisfaction with the results of the BPA. They learned about themselves, their processes, their gaps and their opportunities. They were engaged.
We start by reviewing a client’s process and workflows. This typically requires two or three of our most experienced consultants, on-site for two or three days, meeting individually with up to a dozen key members of the client’s team – including the CEO and CFO. We delve into the arcane details of every key department and process, gaining knowledge about how each functions, the obstacles they face, the challenges they see. We talk about what they like and don’t like about their current system. We review their answers to questionnaires provided in advance of our first BPA visit.
We will later map those processes through flowcharts, often comparing ‘current’ and ‘future’ states. We’ll identify technology touch-points that will make them more efficient, remove redundant data entry, eliminate steps and roadblocks and integrate disparate areas, reports or software. We’ll try to strip away the superfluous and redundant, and plan for software and very experienced consultants to help move them, carefully, to a leaner state.
The end result is a written ‘Summary of Recommendations,’ typically of about 30 pages that will map everything we’ve learned, suggests key priorities, breaks efforts down into prioritized phases wherever possible, and yield a final report that we’ll discuss in person, usually before any decision has been made about which system is right for you.
And yes, there is a cost associated with this effort. The good news is that it’s a lot less than you might think. But it still isn’t cheap. BPAs run from $10,000 to $15,000. But the good news is that they can (1) save you many times their cost, and (2) let you know in advance if what you thought was an $X dollars project is more likely a $2X (or $3X) dollars project. With the BPA designed as a separate engagement, its small investment can save you a lot of money, or make you a much more informed buyer when you become one.
When all our hours are added up, it’s really a loss-leader from our perspective. The hours charged rarely match the effort rendered. It’s simply our way of ‘putting a little skin in the game.’ We put a substantial effort into mapping your processes, and then charge a fraction of what we should to (1) show you good faith and (2) prove our competency.
In our final post, we’ll look at Results. Stay tuned…