It seems that once a month I get a very pleasant email from a well-meaning consultant asking if I would like to respond to a Request for Proposal (RFP) or Request for Information (RFI) in response to their client’s ERP selection. The first few years of being in practice, I took a day or two to wade through pages upon pages of questions about features and forced to answer “yes”, “no”, “with customization”, etc. to questions that could have easily been asked of a doctor’s office. Very few RFP’s for ERP selection are written in such a way that the key business issues are highlighted. Instead, they are VERY broad and limited in specificity. So now I just say, “No, thank you.” and move on with other projects.
You may ask why I do this and why would I walk away from an opportunity. In general, companies that spend $20k with an outside consultant on an RFP for a $100-200k project have bigger issues to address than ERP selection. My experience shows that for companies with sales volume of $5 million-$200 million, there are four to five primary providers of software for the formula manufacturing sector. A subset of that group is typically in every opportunity that I see.
Here is a secret: each of these four to five applications do a fine job for their clients and have a full range of functionality from financials through distribution and manufacturing. So, the key should be placed on finding those industry-specific applications and spending time differentiating the implementation firms, and less time on RFP’s.
Here is another secret: As a young consultant with Arthur Andersen and Deloitte & Touche, I was engaged in generating many of these RFP’s. A number of companies paid my firm big money for a list of 100-200 features to include on a checklist. That did not make for a good RFP.
So, how should a formula manufacturing company go about ERP selection if not by RFP?
- Ask your suppliers and customers. Those who are happy with their systems are willing to tell you what they use.
- Attend industry trade shows and have your attendees look for applications while they are touring the expo.
- Take a look at the industry publications and websites.
- Search the internet for keywords to your industry (“chemical manufacturing ERP”, “food manufacturing ERP”, “batch processing software”, “MSDS”, “COA”, etc).
- Look for formula manufacturing add-ons to the more popular ERP solutions (Microsoft Dynamics, Sage, SAP, etc.)
- Contact a consultant with industry background. If they cannot name four software applications without hesitation, then move on to someone who does.
Once you have a list of names, then run them through an acid test and shorten your list.
- Look at their website. Does their product focus specifically on formula manufacturing or do they treat all manufacturers the same? (See the Vicinity Manufacturing website for a good example of this.)
- Have a fifteen-minute phone call with a company representative. If they don’t use industry terms, then move on.
- Obtain a high-level web demo (no more than an hour each) from the best solutions using demonstration data.
When this is complete, you should have a good idea of what applications have the best chance of meeting your objectives. The next phase is to communicate your primary business issues and your vision on how to address the issues. Once the vendors understand your needs, they will be in a position to provide a comprehensive presentation.
During your ERP selection process, it is fair to assume that all the applications perform accounting functions well. They all cut checks and print invoices. Instead, focus your attention on business issues such as reducing inventory levels, identifying and addressing batch yields and generating compliance documents such as MSDS and COA’s. This will focus both you and the vendor on topics that will result in positive results for your company.
So, in the end, if you are working with someone that knows your business, the ERP selection process is not as difficult as it might seem. In today’s software environment, there are plenty of good industry solutions available… the trick is finding them. Once you do find them, the difference will be obvious.
Just be sure to resist the temptation to pay a consultant for them to learn what you need, only to communicate to other companies in the form of a features checklist. Take it from a software supplier: they really are not helpful, cost you a lot of money, and, in many cases, turns off potentially viable applications from consideration.
Good luck on your ERP selection search and remember that there are a number of good companies out there waiting to help you address your business challenges.