8 years ago we first published a series of posts entitled “Software That Matters.” It was an ERP implementer’s point of view, culled from long experience, on why and how to purchase a business management software system. Later, we turned Software That Matters into a popular white paper that has since been viewed hundreds of times.
Now eight years later, we thought it was time for an update, to reflect lessons learned since then. (We also did a 2015 update three years ago.) Much of what we wrote then remains every bit as true today. But we decided again to carefully retrace our steps, re-edit our paper, add some comments and present it as a series of blog posts that will carry us through November, 2018. We think that’s timely, as many companies at this time of year tend to reconsider the software they use to run their business — and how they might do better.
In our series we will again try to convey what’s important, what to measure, how to buy, what works, what it costs… and the many other business considerations required of this strategic investment, in what is probably the most important (and expensive) software a company will ever buy. In other words, the Software That Matters.
If an ERP system is a “strategic investment” in one’s long-term business improvement strategy, it is helpful first to look at a few examples of the benefits that investment yields. Such success stories serve to validate the investment. We’ll reveal some here though because of the public nature of a white paper and a blog, we won’t name names; however, our examples are all culled from our own actual Case Studies.
The examples are cited not to hoist our own flag but simply to relate real-world success stories that demonstrate how ERP pays for itself – usually, many times over. It’s an effective way to convey actual results – and what better way than from firsthand experience?
These success stories serve to reinforce some of the principles we’ve outlined earlier: that as a strategic investment, ERP returns its costs many times over, by eliminating waste and redundancy, streamlining operations while providing more actionable information, and preparing the foundation for growth.
On the smaller business side of things, one client spoke of the number of new people she did not have to hire. This Chicago-based manufacturer of small electronic components uses ERP to handle all purchasing, payables, receivables and invoicing, not to mention quoting, planning and generating work orders – all utilizing pretty much just one person. She stays on top of bills of material and order flow, generating the reports she wants, when she wants them. On the shop floor, automated bar-coding creates labels for parts and bins and makes work order tracking not only foolproof, but totally accurate and simple. The right material gets issued to the right job, every time. Paperless invoicing completes the cycle. The firm has eliminated hundreds of thousands of dollars of labor cost, materials and waste, by its own reckoning. And that’s a typical outcome. Given this company’s relatively modest system costs, the ROI is probably at least ten to one, if not better.
Another example: A Midwestern manufacturer of rubber gaskets and seals shared some of their business results with us after implementing ERP software to greatly streamline distribution, warehousing, manufacturing and accounting. The firm was able to consolidate all production formerly done in two (and sometimes three) shifts into one. Sales, given greater sales capacity, increased by 35%. They were able to reduce staff count by 40%. These are their numbers. Moreover, they say they can put out more quotes with fewer reps, in half the previous time… with a 75% improvement in accuracy. They ship with 99.9% on-time fulfillment. Again, all these are the customer’s own numbers and words.
The common denominator: a well planned, budgeted investment in improving processes to eliminate waste, streamline procedures, remove redundancy, consolidate functions, and improve shop floor workflow and final product delivery. A plan which, the customer notes, was executed on-time and on-budget.
In other words: aligning business strategy with effective technology solutions.
Before moving off case studies entirely, in our next post we’ll look at two more, from the manufacturing sector of small business. After that, we’ll look at a typical customer profile and “who benefits.” Stay tuned…