The Definitive Guide for Choosing Business Management Software - CHAPTER 10
NaN-tic Feb 23, 2019
CHAPTER 10 - 10 QUESTIONS YOU HAVE TO DO
SUMMARY:
If you only have time to read a chapter, read this one. It concentrates our experience and raises the 10 questions that must be done to any potential supplier of an ERP or similar. If you follow the questionnaire you will get the information necessary to make the right decision.
KEY IDEAS:
- Ask about current and future software features. Do not keep the tool that does more things, but the one that does what you need or may need.
- Do not tie your hands and feet. Be clear about the links with your suppliers and what margin you will have to change if you want to do so.
- Before buying the program, hire the training to learn how to use it. Either you will convince yourself that you really need it or you will save a lot of money by discarding it.
10 ESSENTIAL QUESTIONS BEFORE CHOOSING YOUR TOOL
Here’s our experience, condensed in ten key questions. When meeting up with potential suppliers, follow this questionnaire in this order, and you’ll obtain the information you need to take the right decision.
#1 Does it do what I need? This probably seems like an obvious question, but you need to ask it. Remember that the answer might not be as simple as you had imagined. Business applications usually come with a wide range of possibilities and different ways of tackling problems. What’s more, it’s also easy to have too many features. Does the application you’re thinking of buying do much more than what you really need? Does this affect the cost or make using it more complicated? Does it affect its performance?
Think, for example about a tool for managing production that requires information to be entered for planning, when this is a need you don’t have. You could find yourself having to compile and enter information that will only be used to keep the system ‘happy’, because it has been made in this way, and not because its real need for the business.
#2 Will it do what I need tomorrow? Companies evolve and if they don’t then something is wrong. The market is dynamic and needs appear constantly. The question is therefore clear; does the tool allow modifications to be made in the future? Will it allow you to grow or will it limit your expansion?
As we’ve mentioned before, an ERP should be useful for a business for many years. It is therefore highly improbable that in all this time, the company’s primary ‘motor’ will not need adjusting, that no changes will be made in legal regulations (e.g. tax increases), or that no issues relating to production, storage or distribution will be changed. What happens when all of this takes place? What are your options with respect to the tool?
Never buy a program that contains many more features than those that you really need, but never purchase one that will limit growth.
#3 What do annual maintenance costs amount to? What hidden surprises await me? As you want an ERP and are prepared to pay for it, remember that you’ll also want to use it in future years. This means that you’ll have to continue paying, despite what some salesmen might try to tell you. Ask for a cost simulation on 1, 3 and 5 years. Find out about costs related to changes of versions, licence renewal, after-sales services, and the training of new users.
Ask about collateral expenses too. Will you need new hardware when you install this new software? Do you need to modify your databases? Do you have to implement or replace an already-existing program? Demand openness and clarity right from the start. You’ll need it.
#4 What about licences? We’ve already talked about this, but here’s an added factor – in the area of proprietary programs, you generally need one licence for each program user. If your company has 30 employees who will need to work with the ERP in one way or another, you will have to take on the cost of 30 licences. And of course, if things don’t go as planned, you won’t be able to return the licences or get a refund on them, you’ll have paid for a whole year; and there’s no way out of it.
Evaluating the pros and cons of the licencing system compared to open source programming is a good idea. The latter option will allow you to make as many instalments and acquire as many permits as you want, without any repercussions on software costs. The same goes for the delicate matter of annual renewals.
We earn a good living thanks to clients who are not willing to pay the abusive price demanded for annual licence renewal. We know what we are talking about.
#5 What about new versions? The updating of versions should be good news for a company, as these are improvements on the original program, however it sometimes seems that they are designed merely to instigate panic. On the one hand, you should clearly establish as to whether software updates are included in the price, or if you have to take on an additional cost, and on the other hand, you have to hope that any updates do not involve a modification of processes, which up until now functioned correctly. Furthermore, when a new version is available, you need to look at the improvements involved and above all, what adaptations are affected.
Having said this, a slow pace of updates may also be a problem, as it may indicate low levels of program flexibility on incorporating changes and the improvements needed.
Insist on this issue, a salesman needs to explain in detail how this matter is resolved and what resources you will need. If he tells you that you won’t need to pay anything, you have every reason to doubt him. There are large manufacturers who only provide technical service to the users of their two latest program versions. The toll, in this case, is high and often hidden.
#6 What’s my relationship with the supplier? Reading the small print is highly unappealing, but changing your supplier is even less attractive, believe me. Because when you change it’s a bad sign, it means that you don’t get on with your service provider, that you don’t believe that their staff are competent enough or that they’re not charging you a fair price.
It’s also unappealing because it’s not necessarily simple. Contracts with suppliers, or partners, for management tools may include hidden clauses that all too often are not explained when the sale is made. There are manufacturers who oblige their clients to pay a yearly fee simply for benefitting from a supplier’s after-sales services. Others reserve exclusivity over the installations of new versions. In short, this point needs to be hammered out and defined.
#7 Who gives me support in the future? Who’s going to help me? Having an ERP is easy, but making it do what we want isn’t such a simple task. Taking this premise as a starting point, and in our experience, we can assure you that you’ll have to consult your supplier in order to resolve all types of incidents, and often. Some issues may arise at source, others may be unforeseen, due to new needs or regulatory changes. New versions will also emerge that may affect adaptations made previously. This final issue is highly important, because you cannot avoid it. The scenario is as follows, as your company has several specific needs, you’ll be making modifications to the program. However, will these adaptations work when new program versions arrive? Will you need to re-adapt them? And if so, at what cost?
It’s a good idea not to underestimate the value of after-sales services, they should even be considered as a key factor when taking your final decision. The questions you need to ask in this point are the following: Who will provide me with support? When I have a problem, who will help me solve it and how? If the incident is due to a program error, can someone resolve it for me? Will the manufacturer shirk responsibility? Never forget that all programs have their errors, and if you are told otherwise, it’s because the support you’re being offered is either poor quality or non-existent.
To put it another way, not only do you have to seek out a good program, you should also look for a good supplier. Search for someone who you feel you can trust, who is technologically prepared and above all, who understands your business and the way that you work. We also recommend calling some of your potential supplier’s clients (use the ‘client success story’ section on their website) and ask them about the after-sales service they offer. A couple of calls could save you a lot of time and hassle.
#8 Is there a chance of getting a ‘demo’ version to test? Imagine that you’re about to buy a 25,000 euro car. Would it be wrong to ask about a test drive it beforehand? In reality you’re about to purchase software that may cost you two or three times more. So ask for a demonstration. But not one where someone comes along with a computer and shows you a demo version. Ask them to install the program in your computer for a couple of weeks, so that you can try it out and get used to it. You need to have questions to ask, and find out what you like and what you don’t. You need to simulate your company’s procedures with real data, like how you manage exceptional processes, so that you can check that the program’s logic matches that of your company. The idea is that the software should adapt to your needs and not the other way around.
You might find that some sales representatives might not like this idea too much, but insist. There’s nothing better than trying out what you’re thinking of buying.
#9 Should I get training before buying the software? This is not a common question, although it is a very important one. Once you’re sure about which tool seems to be the best, which adapts better to both your company’s current and future needs, we recommend taking a training course with the supplier before buying the program or contracting their services. This is something like a couple living together before they decide on getting married.
You’ll not be wasting money with this training course. Firstly, because if the program is the right one, you’ll already be trained to use it. Which means you’ll be ahead of schedule. But if it turns out that the program isn’t the right one, the training will have helped you not to make the wrong decision, which is no small victory. Not marrying the person who isn’t for you is a good thing, right? But what’s more, you’ll have acquired new know-how on the possibilities regarding the types of tools you want to purchase and the technology available on the market. This will allow you to seek alternatives and re-evaluate those which in theory you had discarded before. In all events it’s an investment in knowledge that will remain in the company.
Conclusion, take no notice until you are totally convinced, and take note of TIP NUMBER 6: Take a software training course focusing on the program you think you’ll end up buying, but don’t take your final decision until you’ve finished the course.
#10 Does it respond to my company strategy? This final question is one that you will have to ask and answer yourself. Once you have the answer to the previous nine questions, you’ll have, on the one hand, a lot of information and knowledge, on the other, you’ll have a lot of salesmen hysterically pressuring you to buy their products.
It’s time to take the decision. The tool needs to resolve your current and future needs, and therefore responds to a business strategy and philosophy. Think about the management model that you want for your company and which of the programs you evaluated responds best to this idea. Also check if the tool can resolve the aims you established initially, or if in the meanwhile you’ve gone ‘off-track’ and are no longer thinking about the problems you have to tackle in the real world.
PREVIOUS CHAPTERS
CHAPTER 9: The General Manager opinion
CHAPTER 8: The Financial Manager opinion
CHAPTER 7: CTO opinion is a must
CHAPTER 5: Is open source the best option? Not necessarily, but you should always count on it
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