10 Ideas For Completing Due Diligence And Discovering

The Truth About ERP Vendors

10 Ideas For Completing Due Diligence And Discovering The Truth About ERP VendorsIn search of greater revenue growth, improvements in product quality, greater supply chain visibility, and improved operational efficiencies, your company recently initiated a search for a new Enterprise Resource Planning (ERP) system. Given the depth of knowledge and expertise you and your team have of your manufacturing operations, senior management has given you the responsibility of selecting which ERP vendors your company needs to consider. At last count, there are over 250 different ERP vendors globally, which makes the task a potentially very challenging one. The good news is there are many ways to isolate the top ERP vendors that have the greatest depth of expertise in your area of manufacturing. These ten ideas for completing due diligence and discovering the truth about ERP vendors of interest is a good place to start.

Think of yourself as an investigative reporter working on a special assignment that your readers are very interested to gain insights from. You’re on assignment to get beyond the veneer of what ERP vendors are telling you and your senior management team to see what the truth is. Pulitzer-prize-winning investigative journalists have a passion for going after the truth and uncovering what’s going on. Get in the mindset of an award-winning journalist and develop a passion for understanding what the ERP vendor’s core strengths and weaknesses are. Great detectives are the same way, they go after clues and construct a framework to piece together what’s going on in a case. It’s fun and fascinating to approach due diligence with this mindset and challenge yourself to see what you can find out and help your company to make the best decision possible on a potential ERP provider.

For many manufacturers, the ERP system they purchase is often the largest IT expense they will have. Completing a thorough appraisal of each ERP system under consideration is a must-do strategy to reduce risk and ensure the best possible system is selected. Due diligence is the series of investigative strategies to gain greater insights into the potential risks and unforeseen conditions of working with a potential trading partner and in this case, ERP systems provider. The following are the top 10 ideas for completing due diligence and discovering the truth about ERP vendors:

www.iqms.com 1.866.367.3772 sales@iqms.com

No. 1: Ask for customer references from each vendor including an introduction via e-mail.

Getting beyond the many brochures, presentations, sales calls and product demos of ERP providers starts by requesting customer references early on in the evaluation process. Don’t settle for the name of a customer company; dig deeper and get the contact information including e-mail addresses and cell phone numbers. Ask for references that are in your industry and that have a comparable supply chain, selling and service challenges. It’s worth the airfare to fly out and see companies like yours who are running a specific ERP system and well. Dig into these references and be thorough about what went well and what didn’t during the initial implementation., and what the customer references would have done differently as well. It’s a good idea to create a questionnaire to fill out on each prospective vendor. You’ll be able to create a quick comparison matrix and quickly see which ERP providers have the potential to deliver the great value to your business.

No. 2 Make a point of visiting at least three customer references from the top two or three ERP vendors you are most interested in. There is no substitute for visiting with companies actively using the ERP system you’re considering and seeing how their production operations are going. Getting to know the management teams who chose a given ERP system you’re considering over all others is a great way to get beyond the brochures and presentations to see what’s going on. And you’ll be making valuable contacts with members of the user community as well. Large-scale manufacturing companies including Airbus, Boeing, General Motors, and many others are rigorous about visiting suppliers and rigorously vetting them. It’s the same with selecting an ERP provider. With so much of your company’s future on the line with the ERP system selected, it’s imperative to gather the greatest amount of information available. Be sure to use the questionnaire creating for the first step as well.

No. 3 Go to the user conferences and regional events the ERP providers you are interested in are hosting. What often leads to the best ERP selection decisions are open dialogues with customers when they are attending the annual user conference. Be sure to attend the user conferences hosted by each of the ERP vendors you’re the most interested in. It’s good to get in the habit of attending these as the conversations with companies in your industry can turn up valuable insights and intelligence on if the ERP vendor is a good fit, and how to make the relationship work. And the best-run conferences allow customers and prospects to explore the many exhibits and sessions freely. If you’re being micromanaged at a user conference that’s a sign that the ERP vendor has something to hide, and they may not be the right one for you.

www.iqms.com 1.866.367.3772 sales@iqms.com

No. 4 Check Out The ERP Provider’s reputation on Capterra, G2Crowd and analyst firms if you have a subscription to one. In addition to the ERP provided references, be sure not to overlook impartial reference sources. A few websites, such as Capterra and the Technology Evaluation Center (TEC), offer third-party, unbiased software reviews, either submitted by software users or a panel of experts. And while consultants may have good advice, take it with a grain of salt. Many consultants imply that they are neutral, but on the side are participating in “pay to play,” a process that involves ERP vendors sponsoring consultants in exchange for a recommendation.

Additionally, be sure to check with organizations that you belong to, such as SIIA, APICS, MAPP, etc. These organizations are specific to your organization, and their purpose is to help you succeed, so they should recommend ERP vendors that work well with other manufacturers in the industry or suggest more references.

No. 5: Search for LawsuitsOpen up your web browser of choice and do a quick search for lawsuits your potential ERP vendor may be embroiled in. For example, type into Google, “XXXXXX lawsuits,” where XXXXXX is the ERP vendor’s name. Is the ERP vendor being sued? Why are they being sued? Is there a pattern to the lawsuits, such as multiple cases regarding botched implementations that go over time and budget, resulting in a detrimental loss of sales for the new ERP customer? How often does the ERP vendor get accused of overpromising and under delivering? One lawsuit could be an outlier, but an extensive history of non-performance always has a ring of truth to it.

Alternately, is the ERP vendor suing anyone? If they are suing clients that have not paid, is it because their clients are unhappy and refusing to pay for something that wasn’t delivered or doesn’t work as planned?

No. 6: Assess TransparencyWhy does it seem like all of the important information you need to make an informed decision about a new ERP vendor has secured away, hidden behind passwords on client-only pages? Why does it feel like you are on a need-to-know basis with your prospective ERP partner?

Most ERP vendors consider annual investors report to be a display of openness. But with more transparency comes more accountability. Search out the ERP vendors that give prospective clients access to critical information such as approved software enhancement requests and customer discussion forums upfront.

www.iqms.com 1.866.367.3772 sales@iqms.com

If you can immediately see what developments are being made as a prospect, then you know the ERP vendor has a company culture of transparency and openness with its clients. The accountable, transparent ERP vendor may be a rare breed, but they do exist and are worth pursuing

No. 7: Examine Software UpdatesAs the manufacturing industry continually evolves, so should your ERP software to help you maintain competitiveness. Keeping current with the latest technology and gaining new features that are useful and relevant to your business is essential. When checking references, be sure to ask about upgrades. Are they free with your annual maintenance fees, or does it cost more to get the newest version of the software? Can you upgrade on your schedule for proper validation and testing, or are updates made automatically whenever the ERP vendor feels like it?

Ask about the frequency and usefulness of the updates. How often do customers receive upgrades and service packs and are the upgrades chocked full of new features and changes, or are they sparse and mostly bug fixes? Does it feel like the software is truly evolving or does it feel like the ERP vendor is treading water to preserve your maintenance fees?

Finally, examine the development process. Does the ERP vendor have an open door policy for software enhancement requests? Is your voice being heard and your feedback encouraged on

ongoing development to make sure you receive the changes you need?

No. 8: Verify Vendor Stability and LongevityVendor stability and longevity could be one of the most important clues you investigate

when performing your ERP sleuth responsibilities. Be sure to ask questions such as Does the ERP vendor carry a lot of debt? A stable ERP vendor only grows as large

as they can afford. Additionally, is the ERP vendor constantly seeking out venture capital? Even the worst sleuth can see that it isn’t really in your best interest

when your ERP vendor’s main focus is to position the company to earn more investment funds, rather than working for you. If the ERP vendor is desperate,

they may try to “buy” your business by almost giving the software away. Beware, sometimes “free” is too expensive when your company relies on

the system to be successful.

How about acquisitions? Has your prospective ERP vendor been rapidly acquiring small ERP companies to fold into their mix?

Frequently when this occurs, you end up with a bolted together ERP system that was not designed from the very beginning to

interface together. This ERP system is very cobbled, and it will feel that way.

Or is the prospective ERP vendor positioning themselves to be acquired, hoping to pass the software along to a

larger conglomerate? When this occurs, most often the customers suffer the most as their support net

falls away and they become just another number to the larger ERP vendor. Updates become

slow or non-existent, and often customers are forced to change to a new program as their

software is folded into the larger whole.

www.iqms.com 1.866.367.3772 sales@iqms.com

No. 9: Find out how stable their workforce is by checking out their Glassdoor scores and CEO ratings. Just as ERP providers have major differences in the quality, stability, and relevance of their code to your needs, each also has a completely different culture too. The best ERP vendors find ways to keep their key employees continually engaged and focused, and they are also often earning bonuses for excellent work. Their scores on Glassdoor, a site where employees can leave anonymous reviews of companies and CEOs, is a prefect place to see what the internal culture of the ERP provider is. Be sure to check out Glassdoor periodically to see what employees are saying about the ERP provdieer4rs you are considering going with. Vault is another site where you can see what’s going on in an ERP provider.

No. 10: Inspect for Bait and SwitchRecently, more and more new ERP customers are finding themselves victims of bait and switch and saddled with a system that does not perform as promised (See No. 1: Search for Lawsuits). Manufacturers are forced to severely change their business processes or sink a lot of money into customization.

How does this happen? Most often, the new ERP customer gets inadvertently taken advantage of by the ERP vendor’s sales team. Only interested in closing sales and moving on, some sales reps will say, “Yes, we can do that,” to any problem you need to be solved, without properly examining your business processes.

ERP shopping should be a discovery process between you and the ERP vendor. A good ERP vendor will sit you down with one of their technical sales specialists and take the time to understand your business and your needs. Playing more of a consultant role, the ERP vendor will not redirect you with showy demos, grand promises, and big discounts, but instead, try to determine if they are truly the best fit for you. A good ERP vendor is looking for a long-term relationship that benefits both sides, not a one-stop sale.

Unfortunately, many of the perils above exist in ERP vendors. Lawsuits, bait and switch sales processes, infrequent software updates and rapid growth for future acquisition are all problems that can hurt your future ERP selection. If you do your research, you can avoid these common pitfalls and end up with an ERP vendor for life. You are ready! Using this list of tools and your powers of deduction, you will not fail. So grab your magnifying glass and get sleuthing. The truth is out there; it is just a little less obvious for those who don’t want to dig for it.

About IQMSSince 1989, IQMS has been designing and developing ERP software for the repetitive, process and discrete manufacturing industries. Today, IQMS provides a comprehensive real-time MES and manufacturing ERP software solution to the automotive, medical, packing, consumer goods and other manufacturing markets. The innovative, single-database enterprise software solution, EnterpriseIQ, offers a scalable system designed to adeptly grow with the client and complete business functionality, including accounting, quality control, supply chain, CRM and eBusiness. With offices across North America, Europe and Asia, IQMS serves manufacturers around the world.

If you would like to learn more about IQMS’ comprehensive ERP solution, please visit www.iqms.com.

www.iqms.com 1.866.367.3772 sales@iqms.com