Guest Editorial

Decoding the decision process

By David Morgenstern

Avoid typical pitfalls to ensure a new software system is installed successfully 

guesteditNovember 2011 - As today’s metals companies look at an increasingly competitive market, some are turning to software technology to increase efficiencies and improve customer service. However, selecting and implementing an enterprise software system can be a daunting experience.

Many metals companies run legacy systems that are 10, 15, even 30 years old or older. Often, the original software is no longer supported or the software company has ceased to exist. In other cases, the software was developed internally and has been updated and maintained throughout the years. Almost always, these systems have not evolved and various manual, paper-based workarounds have developed around the software gaps.

Different events can trigger the search for a new software system, from a new owner to a new line of business.

Experiences with unscrupulous vendors have led companies to develop defensive approaches to buying software. In an effort to keep vendors at a safe distance, buyers request vendors fill out an RFP and perform demonstrations of their software. Although both RFPs and demonstrations can aid in a decision process, very little meaningful interaction is established between the two companies.

Address concerns
Buyers tend to focus on the functionality aspect of the solution, and vendors are happy to comply. A series of demonstrations can get team members excited, but does the functionality demonstrated address true business pains and challenges?

A business-focused vendor can bring helpful experience to the table. Together, both parties can investigate the goals of the business, prioritizing the areas of value that need to be met to provide the maximum areas of return. Once this understanding has been established, a trustworthy vendor will help perform a gap analysis to determine if the solution meets the defined needs. Through collaborative interaction, the company and vendor can establish a realistic implementation plan to achieve the understood business goals. The total cost of the solution should correspond with the defined value that the business will achieve after completion of the project.

Most buyer-vendor interactions do not follow the above paradigm, however. Buyers tend to focus on technology and pricing. Vendors tend to focus on the features that differentiate them from the competition and will be the most impressive in a demo. Not enough attention is paid to implementation methodology and project-management skills the vendors bring to the table.

Avoid pitfalls
In the software business, large projects often end in failure and over budget, with the original project supporters being fired. How can today’s metals companies benefit from the tremendous advantages a new software system can bring while mitigating risk?

Determine the cost of the problem. Before undertaking a software implementation, a company should measure the cost of the problem. If there is not a significant cost, it is not worth fixing. Some software companies can help with this exercise, but many apply suspect ROI formulas, which are generic in nature and whose only goal is to provide a justification for their price.

Establish clear business goals. What are the concrete goals the business wishes to achieve? Increased productivity? Increased sales? Automation of shop floor processes? Determine clear metrics for how these goals will be measured, and measure your progress against these goals during and after the project.

Engage senior management. Leaders must be fully committed and engaged. The decision and support of the implementation process cannot be relegated only to IT or a project manager.

Don’t select a vendor based on a demo. Despite common belief, most software vendors have relatively comparable systems. Certain vendors will be stronger in some areas, which other vendors will compensate for elsewhere. Communication is as important as the software: Does your vendor speak business or technology? Does your vendor listen and ask questions or simply tell you why the software is their best choice?

Choose on ability to deliver, not lowest price. How realistic is the implementation quote? Be suspicious of implementations that sound fast and easy. Was the vendor’s implementation staff involved in creating the quote? What is the vendor’s project management and implementation methodology? Ask the vendor to provide a detailed project plan.

Appoint a full-time internal project manager. Don’t expect the software vendor’s project manager to handle all aspects of the project. It is important for companies to have an internal project manager who can keep the project on track and on budget. He or she must command adequate respect within the company to get things done. When a roadblock occurs, the project manager should have no qualms about asking for support from senior management.

Remember, despite what vendors claim, each project is unique. Just because a vendor says they have implemented their software at another service center, coil processor, tube mill or fabricator, does not mean the solution will fit your business. Choosing the right software vendor partner for your company can be a critical step in the direction of growth and increased profitability.  MM

David Morgenstern is vice president of marketing and sales at Verticent Inc., Tampa, Fla. He has more than 14 years of experience marketing and selling enterprise software.

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