Real Issues. Real Answers: Investing in new technology

Real Issues. investing in technology
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Sales software and ERP systems are at the heart of every sale made by a lumberyard. And the capabilities of a good system can create efficiencies that strengthen a company’s bottom line. Yet, the expenses of installing and implementing new services are significant, and training employees on updates takes valuable time out of everyone’s day. That’s why LBM dealers are heavily invested in which system they use, and don’t take changes or upgrades to their systems lightly.

Investing in new technology

This month’s Real Issues. Real Answers question comes from a dealer in Colorado who is wrestling with the question of when to invest in new technology. Their existing software and technology tools are okay, but they know from talking with other dealers that new ERP software could help them work better and smarter. Do they pull the trigger now, or wait until business slows?

Just over 150 LBM Journal readers responded to our questions on behalf of the Colorado dealer. Of those, 61.4% are from lumberyards and building materials dealers. Respondents from specialty dealers, wholesale distributors, and manufacturers or service providers made up nearly equal percentages of the remaining respondents.

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To get a fair idea of when is the right time to invest in new technology, we first asked respondents to indicate when they last made the investment themselves. Of the roughly 150 who answered the question, 34% said they had made the change in the past year. Another 28% have made their latest software investments within the past two to three years. Surprisingly, nearly 10% of respondents say it has been more than 15 years since they’ve made an investment in technology.

Real Issues chart
Nearly 10% of respondents say it has been more than 15 years since they’ve made an investment in technology.

Finally, we asked readers to weigh in on the Colorado dealer’s question about the right time to make the technology investment. Here’s what they had to say:

Responses from lumberyards, building material dealers, and speciality dealers/distributors:

“After our experience simply changing software versions to add some much- needed features, I’d recommend doing your research and quoting in advance. The learning curve could be steep, so being prepared ahead of time and doing the real transition during your slow season is what I’d choose.”

“The new tools provided with a systems upgrade will streamline most aspects of your business and make your day-to-day tasks easier, not to mention building historical data on stock, sales, etc. You name it, it can be done!”

“Waiting for a more ‘opportune’ time is nothing more than procrastination. There is no more opportune time to do it than now.”

“If there are productivity enhancing tools, properly vet them out in your environment, then undertake the project. There will never be a perfect time to do so.”

“The time will never be perfect. If it’s a go, just do it. Don’t wait for the right time. I agree with the technology thought; there will be advanced technology as soon as you’re done implementing the current solution. But I think that’s the nature of the game at this point.”

“If you pay monthly for your ERP system, there is a good chance you have already paid for your upgrade. Why not use what you already own?”

“I would pick your slowest part of the year and update.”

“I think your key issue is being stretched thin with manpower. Changing software is without a doubt a stressful process that will involve most of your key management team’s extra efforts. It takes a good six months to ready yourself for the change and then a good six months to work through the kinks once you go live with the new system. My opinion…wait until things slow down. A big disruption during busy times could cost you customers and employees.”

“A wise saying: ‘He who hesitates is lost!’ Another wise saying: ‘Look before you leap.’ The hard part is knowing when which saying applies.”

“Embrace new technology. It makes you better, offers higher service levels, and sets you apart from those like yourself who are waiting.”

“There is not always an ideal time to do a software update. Ours was done over a long weekend, and was ready on Tuesday when we arrived back to work.”

“If you’re stretched thin, then wait until business slows.”

“Make the investment. Go through the pain and move forward before you get left behind.”

“It needs to be a priority and you need to find someone on your team who has passion for the project.”

“Even though times are difficult, you have to invest in technology.”

“It will never be easy to upgrade, and while the argument could be made that when you are busy you will feel disruption more acutely, I would argue that when you are making good money is the precise best time to upgrade; you can deal with the expense, and when business slows you will reap the benefit of better systems.”

“If your team is already stretched thin, it may benefit your employees and business to upgrade now. The software and technology may help the employees service the customer better and more efficiently.”

“Stay in touch with the industry. There are too many new things in the software that were not available three to four years ago.”

“We’ve updated our software in the past three years as corporate rolled it out—when it was our turn, it was our turn. We went through the update during the summer months when business was cranking. We were also on the beginning of the trainer’s travel schedule and they were still working out the best practices, some that we found were not our best practices as we are over a $100 million in sales at our location. Long story short, there is no good time to complete the upgrade and there is always the latest and greatest coming out. Whatever system you change to I recommend making sure it works with your dispatch and delivery system that you have currently. Change is most difficult on the more seasoned veterans and the sales team is always quick to point out how much easier a task was in the old system even though the new system has perks too.”

“The longer the wait, the bigger your problems become. Staffing shortages show no sign of letting up. Think of investing in technology as way to make your employees more efficient, which will also make them happier. Not to mention the customer satisfaction that will bring. Our organization implemented proof of delivery during a record- breaking summer. It was a good amount of work, but the key was planning and listening to all the employees the changes it will impact. If you can sell the technology to your people, it is easy to implement.”

“We implemented an ERP platform roughly two years ago. The platform is worth it, but we suffered from mainly self-inflicted wounds. The initial implementation and integration should not be under-resourced or poorly planned. As to timing, I would not impose this level of change on a team already stretched thin. It does not sound like a 12- to 18-month delay will negatively impact the business.”

“If it’s not broken, don’t fix it. There are too many other pressing issues: supply chain, commodity inflation, transportation, etc. Why add another one?”

“There’s never a good time, so get as much buy-in from the key employees so that others will come along for the transition. Find employees who see this as an opportunity to advance and it is a win-win.”

“You buy ERP to leverage technology. With payroll for you and your customers getting increasingly difficult, technology is supposed to replace menial tasks and give you new processes you would never dream of throwing payroll dollars at before. If you can get more done and offer more value, then invest now with a supplier that can meet those requests consistently.”

“There will always be a new shiny penny; sometimes you just have to move forward.”

“Get it now. The benefits of the new software will help your staff and business. There will always be better upgrades, but if you never make the leap you will never see the benefits.”

“Wait for business to slow, which will allow more research both into the current software provider as well as current and future platforms offered by competitors within your industry. Speak to other entities similar in size and scope to your business to obtain their set up experiences—both good and bad—prior to deciding.”

“If the technology will help improve sales and make your team’s jobs easier, I wouldn’t wait. Do your research and talk with other companies that currently have the software. See if they had any challenges in upgrading. No upgrade is ever going to go completely smoothly, so find out what you can predict and what you can do to prepare your team for the unpredictable issues.”

“The sooner the better. Inefficiencies will eventually catch up and bleed you to death.”

“There will always be new products with all the bells and whistles, but do you really need them? Or is it a want/would like to have?”

“Changing ERPs is a big undertaking. Do your research now as to which you may want to switch to, and take your time. Make sure you find all the hidden fees. Then, start your switch just before the slow season to give yourself time to implement and learn it.”

“Upgrades are always tough especially if you have older technology that you are working with. Having done upgrades at slow times of the year and busy times, I would do slower times if possible. This gives you time to train your salespeople, which means that the implementation has to start at the end of your busy season. This will put more pressure on your management team, but it can be done with planning.”

“Just do it. I’m dealing with this question right now. There is never a good time. If you wait until it’s slow, you perhaps will not be in a position financially to make the investment.”

“There are several factors to keep in mind: How much training would the team be given prior to going live? How tech savvy is the team? How closely does the new software resemble the old? It could be a real challenge during these very busy times. Only you know if your team can handle it.”

“Get the software. Your employees will be happier and more productive. It is an investment in future prosperity and organization.”

“We updated our software in 2005 and for the most part think our software company has made improvements that have allowed us to get by with the software we are using. I still feel the pain of upgrading in 2005, so my recommendation is to upgrade at least when you are seasonally slow.”

“We upgraded from paper tickets to a new ERP four years ago. We would not have made it through COVID-19 without that ERP. But, we chose an ERP that was too small for us. We are out looking again. We don’t have time, but we have engaged a specialty firm to help us correctly choose this time.”

“Two questions: Is there ever a good time? What makes you think your business will slow? You could be waiting forever and giving up all the profit dollars that come with it. I’ve also found that if employees are busy, they are more motivated to learn the new system and have ample opportunity to practice on live customers. They may be frustrated at first but ultimately will learn out of necessity. Just make sure you follow back up when things do slow down to make sure they are using the new software correctly and to the fullest potential.”

“Do it. We’ve done the same thing and now we’re in a situation where the updates are significant, and the unknowns create more work from our limited staff than the learning curve of a new software package. We’re doing the research this year. There is no good time. If you’ve got a strong set of corporate departments that can handle the back- end changes, training the sales and operations staff should help ensure a smooth transition.”

“Just do it. If you wait for all the stars to align, you will never do it.”

“To me it depends on ‘if’ your present software information can be moved to the new software. If it can, this would save a lot of work. Also, with the new software can you do what needs to be done to operate and add more later as time allows? It will also make a difference on who you have/don’t have on staff. Having the right people makes a big difference.”

“I worked for an ERP software firm a few years ago before returning to the lumberyard setting. I’ve seen both sides of this and all I can say is train, and set a hard deadline. Don’t keep making excuses and pushing things off. Make a plan and follow through. New advances come out every day, and a good software company will keep up with those changes.”

“There is never a good time. If they start preparing now, the timing may wind up very good or at worst, the same as today. I would suggest moving forward.”

“We started our ERP conversion late in 2019 by purchasing software and assembling an implementation team, thinking that we could possibly hit a mini recession at the end of 2020 as we were rolling out the new software. Instead, we hit COVID-19 and the significant uptick in demand. We’ll complete our conversion about six months behind schedule, but we’ll still get it done. My advice is to not wait. Start when you’re making pretty good $$$s and that will make the sticker shock easier to stomach when your conversion goes way over budget.”

“From experience, take the ‘something much better will come out’ out of the equation. There will always be something new and supposedly better. Look at your history of monthly sales and do it in the least busy month. We did it at the end of August and it was total chaos. Involve your main players in the decisions so when something goes haywire (and it will) there will be less griping and moaning because it was a group decision on what and when to do it. Good Luck.”

“In my honest opinion, I would hold off until business slows. Based on my knowledge of upgrading and/ or replacing the current ERP system there are always a few hiccups that your organization will have to iron out. In most instances the issues will be minor but there is also the possibility of a catastrophic issue as well. I have encountered both when transitioning ERP systems so my suggestion would be to hold off until business slows. There will be a learning curve for the team in general to train on the new software, not to mention if there was an integration issue with the data from the old to the new ERP system. Play it safe and wait until business slows.”

“I personally would wait until it slows. While overall it will be worth the effort, trying to make that much of a change in these times would stretch resources even thinner and put more stress on an already stressed staff.”

“I work on the premises of ‘If it ain’t broke don’t mess with it.’ As long as it works and I have good support, I’m happy.”

“We just switched in the last couple of years, and it will not go as they tell you it will go. Just be prepared for it to take longer and it be more difficult than they tell you. Also, make sure whichever you choose to go with will guarantee you support after the sell. It will take a year or so to get comfortable with it, but in the end it is worth it.”

“Do you need to upgrade for a specific reason, or do you have FOMO— Fear of Missing Out? Is your current software no longer supported or does it lack a specific feature you need to stay competitive? Be sure you decide to upgrade for the right reasons, or you will spend much time and resources to end up with shiny new software, a large bill, and the same functionality you already have now. If you determine you do need to upgrade, there is no advantage to waiting. The long-term efficiency gained will offset your short-term pain in implementing the new software. Above all, identify your internal project champion—someone within your business who owns the project, has the necessary skills, and wants the project to succeed. If you rely solely on your software supplier and consultants, you will likely be disappointed with the results.”

“No time is ever going to be a ‘good’ time to make the change. Invest the time up front to understand what is required to cut over to new software. Build a transition plan and have a few key folks who are subject matter experts. It’s going to be a challenge, so acknowledge that from the start and have open conversations with your team members.”

“Make sure you have the right team to ensure your upgrade goes as smoothly as possible. It’s never perfect, but ask around and know how to handle the things that could go wrong (What specific issues has the software vendor had on recent installs/upgrades and how did they resolve them?) Don’t wait until business slows. Chances are, it won’t!”

“Wait until business slows and have knowledgeable trainers on site to help with the conversion.”

“Advice from experience: Please make sure that a software upgrade is not being driven by one part of your company with no real advantages to others. For instance, accounting may just love a new system, but it really won’t help sales or purchasing. If you are going to buy, then buy now and upgrade only when you are dead slow. Customers won’t be happy when they have to wait around for a computer.”

“There is never a convenient time to upgrade. It depends on the advantages of the upgrade compared to the dollar and people costs.”

“I think unless you feel the software is really putting you at a disadvantage, I would schedule and make the change in the fall. Also, if they have any training modules, you could start getting staff familiar with how it works over the summer.”

Responses from wholesale distributors, manufacturers, and service providers:

“New technology and third-party partnerships are designed to reduce workload and improve efficiency. The key is finding the right partner, budget, and timeline that works in your industry. The answer is always that efficiency and improvement is necessary and important.”

“There is never a good time to change. Rather, ask yourself this question: How much is it costing me to not change and how relevant is the company compared to the current market?”

“Set the money aside while you are making money. Don’t interrupt your business and employees’ lives implementing it when things are as crazy as they are now. If you can wait, muddle through.”

“Hire a third party to assist integration and train employees. Up-to-date technology is very important and will keep employees sharp and improve long term results.”

“I would not go through a systems migration for the next shiny feature. The reason to migrate is because you are not satisfied with your current system.”

“We believe there is no better time to upgrade than now. Upgrades will provide efficiencies that should relieve pressures on personnel, allowing growth without more staff. Upgrades only work, however, if the system will handle the needs of our company. This is what has kept us from upgrading before now. We think we have found a system that will work.”

“Rip off the bandage! The timing will never be right, and software is never perfect. There is always something better in technology two seconds after implementation.”

“Do it, now. Run with what you have at your disposal.”

“Being a believer of the tech approach to things makes me lean more toward upgrading every time someone offers me a newer, quicker solution. I can honestly say that it does not work. I found it is smarter to keep existing solutions and software that are in place and currently functional for the business I am in.”

“Invest in new technology only when you are 100% confident that your company will derive clear and material benefits from doing so. Do not underestimate the amount of time required for user training and implementation. Set specific expectations for vendor support during go-live and build them into your contract (including the number of vendor personnel to be onsite for how long). Despite our best efforts, we are dealing with a train wreck.”

“Research as much as possible. Reach out to others that have gone through the same transition. Understand that it will take longer, and cost more than you were quoted…but don’t wait. Once you are too far behind in technology it’s difficult to see what is possible.”

“I’d re-check with the ‘horror stories’ to see what transpired. Whichever company helped the retailer might be worth a second look. Otherwise, look at the benefits/cost ratio; if you’re close to retirement, this investment may not be worth it. If it will help with your ‘turns times earns,’ shrinkage, and make record-keeping easier, then go for it! New technology may also help with your company’s value. Weigh all the options.”

“If you’re struggling with your current system then you must update. I wouldn’t worry about future-proofing, just try to find a system that can be updated or improved every five or 10 years.”

“Plan for a date in the immediate future and do the work needed in the meantime to prepare your staff and get your ducks in row. Then do it. You may want to invest in a tech savvy employee to head this transformation up as your current employees are already stretched thin, but let them also know that they will need to be a part of this and the cooperation is required.”

“There’s no rush! Selecting a new ERP system is a big task. Now, during the busiest time, is the time to figure out where you need the most help, and where new technology will actually be beneficial. This is the planning stage. Only once you have a solid plan for what software you’re working towards, what goals you hope to achieve with it, and how to train your employees on this new software, will it be time to implement.”

“There are several tried and working software firms out there. They are evolving, and the stories are those of initial and first-time attempts allowing those who follow to reap the rewards of past failures.”

“It’s time to do it. If business slows, you may put it off even longer due to financial constraints.”

“Unfortunately for us, an ERP system was chosen four years ago, and a lot of people were involved. However, it was not a suitable choice as we could not integrate the right TMS and WMS systems, and TMS could not manually take the time to set-up every truck so a lot of time and money was spent, people were training and at the end of the day we are still using software from 20-plus years ago. My advice would be to ask a lot of questions because you do get what you pay for.”

“If you are already stretched thin and your system is not broken, I would wait until you are truly ready to dedicate time to do it. While upgrades are necessary to keep you relevant and efficient, when you do not have the time and manpower to dedicate to these types of upgrades it can cause more headaches and be less helpful.”

“First, you need to have a very clear idea of what you want the software to do for you. The horror stories most likely come from a company not knowing exactly what it wants, then when they implement the software, it doesn’t do what they need or expected. You must ask a lot of questions to find the best solution for your business. I know very specifically what I want, but I am still having to work very closely with the software people because they are human and make mistakes. I spent about two years pursuing one software solution (during the pandemic so progress stopped for a while) just to have them drop us when they realized they couldn’t provide what I wanted. The only upside was that I was much better prepared on the second go around. I found a solution that was a better fit for us, but it is still taking a lot of my time to make sure it is ‘right.’ Implementation can take months—you don’t just select an option, install, and go. And just a caution: Beware of new products—they often do not have all the bugs worked out. I’ve been a programmer, and problems crop up in unexpected places, which is why the big companies put out so many updates.”

“I don’t think it is ever convenient for a system upgrade. We did a lot of things behind the scenes and set a hard start date. We kept to the start date knowing that there would be many challenges, and there were!”

“There will constantly be improvements in programs, but waiting for the perfect time puts you even further behind. Give your due diligence but move forward.”

“Go with a system that is focused on your industry.”

Hundreds of readers share their insights for this every-issue feature. Have a Real Issue? Contact Rick@LBMJournal.com.

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