Are You Stuffed?
Are You Stuffed?
As the extended family gathered for Thanksgiving dinner, Howard, CEO of a growing $30 million cosmetics distributor, already felt satisfied and, indeed, pretty full of himself. He’d bought a new Enterprise Resource Planning (ERP) system for his company, and it was going to take things to a whole new level: streamline invoicing, connect orders with the 3PL warehouse, and keep track of customer interactions.
And now, Howard looked forward to bragging about his new software acquisition to his brother-in-law, an Information Technology expert who’d flown in from out of town for the holiday. He was sure Ted would be impressed with the fancy system that Howard had bought, bulging with bells and whistles.
Howard made sure to find a seat next to Ted and once their plates were full - with Howard's plate maybe a little over-full - Howard started in with the conversation he'd been fantasizing about for weeks. "So, my company went ahead and purchased a full-blown ERP system last month," he told Ted.
Ted was interested.
His first question was, "What system did you buy?"
"I bought TaDah!" Howard answered.
"Oh, did you use a system selection advisor?"
"No." Howard blinked.
"Do you have a project manager?"
"No. Why would we have needed either of those?"
Ted smiled slightly. "Never mind that for now. Your company distributes cosmetics products to retailers, right?"
"That's right. We’ve been struggling with QuickBooks, so we made the big leap. And now we're going to implement an ERP together with a whole bunch of cool add-ons."
Ted dug a fork into his yams. "I'm sure your business will profit from the ERP. Past due, if you ask me."
Howard's smile dimmed a little. "Well, maybe I did put off purchasing a system for too long, but I made up for it by buying a Cadillac."
"This system does absolutely everything. Automatically! Or at least I’ve been told it will once we finish the implementation."
"Everything?" Ted queried, pausing with his forkful of yams halfway to his mouth. He turned to Howard. "What, exactly, did you buy?"
Howard started ticking off the add-ons the software vendor had presented to him. "In addition to full financials, we bought demand planning, a full warehouse system, and an e-commerce module." His chest puffed up with pride as he recited the list.
Ted put down his fork. He was not smiling. "Great on the financials, but why do you need the warehouse system? I thought you outsourced your warehouse operations?"
Howard remembered what the salesman had explained to him. "Sure, I don’t need it now, but in a couple years, I might need it if I get my own warehouse."
Ted shrugged. "Maybe. "But what about e-commerce? Don’t you sell directly to retail stores? Your customers wouldn’t be pleased if you sold to consumers directly."
Howard had an answer for that, too. "The salesman told me the future is on the web. Everyone has to be there. Besides, he told me he couldn’t promise me the same price later if I put off buying the e-commerce module."
Ted was frowning. "Maybe it would have been a good idea if you’d hired a systems selection advisor or a project manager as I mentioned. A project manager would have been able to help you figure out what you needed now and what would have been better to put off until later."
Howard waved a dismissive hand. "I’m tellin’ you, this system is gonna rock!" But now Howard was thinking about the extra licenses the salesman had convinced him to buy just in case Howard expanded his business and hired more people. Sure, he’d gotten a good price on the licenses, but he was also paying licensing fees for people who didn’t yet exist.
Ted smiled. "Oh, I’m sure it will rock. It’s just maybe a little overweight, with all the extra software you're probably never going to use."
Howard was scowling now. "I shouldn't have even mentioned it to you."
Ted tried to do damage control. This was Thanksgiving, after all, and Howard was his wife’s brother. "No, no, no. I'm very impressed that you bought an ERP system. I know you're going to be very happy with it, and you did a great job picking out a good system, something that will serve you well for years to come."
That's what Ted said, but it wasn't what he was thinking.
Ted was thinking how important it was for business owners to keep in mind what they actually needed despite what the salesman wanted to sell to them. Without a project manager, Howard had been a guppy in a room with a shark. Howard wouldn’t have been aware of a host of potential negotiating points, such as the length of the licensing agreement, possible promotional discounts from the vendor, and flexible seats under the license. Ted also knew that quarter-end timing of the purchase could greatly affect the negotiating on price concessions.
But Ted couldn’t resist one last dig. "Of course, buying the system was the easy part. The implementation is really when the rubber meets the road."