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Minnesota Technology Magazine - Summer 2004
Software...Hard Choice?

Finding and implementing the right software package can be a make-or-break decision. And with so many packages and vendors to choose from, how can you make the right choice? Here’s what you need to know to make smart decisions.
By Mary Lahr Schier

When it comes to software buying decisions, Douglas Belmore, president and CEO of Mankato-based Jones Metal Products Inc., believes in taking a measured approach. Buying a new system based only on information from vendors would be like “drinking from a fire hose,” he says. “You get just too much information, too fast.”

So when Belmore’s company decided to replace its entire computer system—which was more than a decade old—he chose to move carefully. The firm hired a software selection consultant and used a computer program to help define Jones Metal’s needs and the programs that could serve it best. The process took what might have been a subjective decision based on hunches and made it objective, Belmore says. Best of all, it worked: The company’s new system already is increasing productivity and improving its bottom line.

Jones Metal is not alone. “We’re at a point in time when many companies are ready to invest in software,” says John Connelly, an MTI business consultant, noting that businesses plowed money into software and hardware in the late 1990s in anticipation of Y2K, and then scaled back purchases during the recession of 2001 and 2002. As the economy perks up, more companies have found that their systems need to be updated or replaced, he adds. In addition, prices of some types of enterprise software—the integrated systems that manage multiple business functions—are falling, says Chris Heim, president of High Jump Software, a Minneapolis-based provider of supply chain management systems that saw increased demand during 2004.

That said, the plethora of available software systems makes choosing the right one a daunting task. About 450 integrated software systems are available for manufacturers alone. What’s more, frequent news reports of large companies taking losses because of software implementation issues can strike fear in the hearts of those placed in charge of choosing a new package. However, with a careful analysis of a company and its needs—along with the ever-important methodical approach—businesses can find software that will improve their processes and their balance sheets. “Software should have a return on investment,” says MTI business consultant Bill Laxson. “I encourage companies not to look at software as an expense you have to write off. Instead, they should look at it as a piece of capital equipment.”

Who are you, and what do you want?

The first step in selecting software should be a good, long look in the mirror. What is your company about, and what do you need from an integrated software system? Will the software be a point of differentiation between you and your competitors, or a tool to boost productivity? While most companies are seeking better back-shop management tools from their software, Laxson has worked with firms that view their software system as a significant aspect of their marketing and customer service functions.

“To do a good job on software selection, companies need to get their arms around strategic planning,” says Craig Thielen, director of application consulting at BORN, a Minneapolis-based technology consulting firm. What is the company’s growth pattern? What are its strategic objectives?

To help with that sort of initial self-analysis, a software selection consultant is one option to consider. A knowledgeable, unbiased third party can help sift through the alternatives and prevent you from getting doused with unessential information. The consultant should be familiar with your industry or the kind of system you expect to purchase.

Once you have the big picture defined and a consultant identified, it’s time to get into the gritty details of what kind of program you need. When Jones Metal began its selection process a year ago, Belmore and his employees knew the company had to update its systems. As a metal fabricator doing custom work in the heavy equipment and agriculture industries, the company needed to improve its scheduling and costing procedures. It also wanted to allow greater employee access to the information system and an increased ability to mine data to communicate with programs used by customer service and its other departments. Finally, Belmore wanted something with easy installation and training capabilities.

For help, he worked MTI’s Kent Myhrman, who used a software selection program designed SoftSelect System to help Jones Metal determine the features and functions that it needed from an integrated system. SoftSelect poses approximately 1,000 questions about how a company operates and its information needs to develop a short list of programs which can meet those requirements. The questions are extremely detailed and cover a broad range of topics—all with a goal of nailing down the specific information that the company needs.

In addition, at this stage, companies must be able to explain and map out their processes as they exist—and as they would like them to exist. For example: What is the current route of an order from sale to shipment? What is the most efficient route? In this initial phase, which typically takes about a month, the software-selection consultant will visit a company, meet with employees in affected departments, and begin to determine which needs are the most crucial. Throughout the process, it pays to keep your firm’s primary business function in mind. “If manufacturing is your core business, you should be looking at packages that have been designed specifically for manufacturers,” says Laxson. “Don’t buy an accounting package with a manufacturing module tacked on. You also should be focusing on the specific type of manufacturing you are conducting.”

Moreover, Laxson warns against being so impressed with a program’s bells and whistles that you forget to ask whether it can handle a basic process. “Never assume a program ‘must’ be capable of handling something you consider a standard business function,” he says.

In a similar vein, Myhrman encourages companies not to over-buy software. “Sometimes we work with companies that are trying to turn too many things over to the system,” he says. “First, they need to understand their own processes, get them as simple as possible, and then computerize them.”

Soon after completing its needs analysis, Jones Metal identified a program called JobBOSS as a potentially good fit. Produced by Minneapolis-based Exact Software, the program was designed for contract manufacturers and other job shops. It also works well for order-based businesses such as Jones Metal, and Belmore was impressed with the program’s functionality, expandability, and ability to provide information to help the company make better business decisions.

Once you have found software that seems to meet your requirements, the testing and checking process begins. While JobBOSS impressed Jones Metal’s software selection team from the beginning, the group also used Web-based demonstration programs to test other possible options. Those demonstrations validated their choice of JobBOSS. The company also did a due diligence investigation to ensure that JobBOSS’s makers would be around to provide support in the future. “Software can be glitzy,” says BORN’s Thielen. “You need to check it beyond features and functions. Is the [provider] viable? Is the software a good cultural fit with your company? Some companies don’t want to do any customizing of a program; they want the software to tell them how to do things. Others want to maintain their processes and are willing to do customizing.”

In addition, you also may need to accept that even the best program can’t do everything. Laxson says most companies find a program that does about 80 percent of what they want and then either customize it or work around its limitations to achieve the rest.

Up and running

Once you have chosen your software system, the hard work—implementation—begins. At this stage, many companies choose a different consultant who specializes in software implementation. To avoid surprises, it pays to know two key facts before you begin: how much the implementation will cost and how long it will take. Generally, you can expect to spend one month implementing each module of an enterprise system, says Laxson. He recommends companies begin with the most crucial modules and work out from there. Thus, if your inventory management system is the most important piece, start with it, then move to, say, job scheduling, accounting, human resources, and other less significant pieces. Let the best parts of the software begin working for your first.

The expense of an implementation varies widely, says Thielen. For some companies, implementing the software costs one-and-a-half times the cost of the software itself. In other instances, implementation can be as much as five times the cost of the software. However, Thielen notes that software consultants should be able to give companies a clear idea of the cost of implementation at the start.

While many companies use implementation consultants, getting employees involved in the process may make the transition to the new system go more smoothly. Thielen recommends that one or more employees be significantly involved in implementation so they can mentor and train other employees. Having employees who understand and embrace the new system also may reduce the amount of support you will need in the early months of using the system, and create enthusiasm for it throughout the company. Also, having to train other employees ensures the trainers will develop a relatively thorough understanding of the system.

The bottom line: Software selection doesn’t have to be confusing. Like many decisions in business, a willingness to do the necessary analysis and gather information up front can pay off in a smooth process later. Moving too quickly or without enough measured thought can lead to disaster. Says Belmore: “For the few thousand dollars you spend on the software-selection process, you take a lot of the randomness out of it.”

Mary Lahr Schier is a Northfield-based writer and frequent contributor to Minnesota Technology.

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