Knowledge is power. That’s especially true in the wildly competitive LBM distribution market, where accurate, up-to-date insights into sales, margins, deliveries, inventory positions and more can make a significant impact on a company’s bottom line. While today’s technology solutions for our business are more robust than ever before, transitioning to an updated platform is a big decision, and a big investment. That’s why this month’s Real Issue is: Transitioning to a new ERP/business software.
We first addressed this topic two years ago. Given the velocity of technological change, we decided to revisit it for this issue. The results of that 2016 survey included some unexpected information. For example, we learned that half of the respondents were using software platforms that were more than 10 years old. And nearly 20%—18.6% to be exact—were using software that was more than 20 years old. Considering how fast technology advances, and how far it has come in the past decade, this was surprising.
As we do each month, we sent an email survey to readers who’ve opted in to receive our email communications. A big thank you to the nearly 200 readers who participated in this month’s survey. If you’d like to participate in future surveys, just drop me a note at Rick@LBMJournal.com and we’ll add you to our opt-in email list.
First, we wanted to learn how long readers have been using their current software solution. As you’ll see in GRAPH 1 (above), the number of readers relying on software that’s more than 20 years old has dropped significantly to 9.1%, as opposed to 18.6% just two years ago. That result reinforces the fact that 23% of readers have upgraded their business software within the past three years.
It’s notable that 12.3% of respondents replied that their companies don’t use ERP/business software. The most common reasons for not using ERP/business software are the investment, concern about the time and effort to implement the system, as well as possible disruptions to their day-to-day business operations. The companies who supply ERP software argue that the savings from more efficient operations and reduction in errors typically covers the cost of the new system quickly. (For more on the features and benefits of the latest software solutions, check out InDepth: Tech Tools.)
Next, we wanted to learn how soon companies plan to upgrade their business software. As GRAPH 2 (above) shows, nearly half of respondents (44.9%) plan to upgrade or transition their ERP/business software within the next three years. The fact that nearly a quarter of respondents (24.3%) plan to upgrade in ten years or more shows that a healthy percentage of readers are not driven to own the latest/greatest technology tools. Also notable is the fact that just 5.6% of respondents selected “N/A—we don’t use business/ERP software.” Since that number is less than half of the 12.3% from the previous question, it’s likely that a number of companies who don’t currently use ERP software are planning to take the plunge.
Lastly, we wanted to know the reasons that companies choose to update when they do, especially given the pace of technological improvements. As GRAPH 3 (above) shows, the number one reason for not upgrading more frequently is the financial investment (58.6%). Satisfaction with current system and disruption to business came in a close second and third, respectively (50.5% and 49.5%). Of the 17.2% who checked “Other (please specify),” here are some representative answers. As you’ll see, there are a number of reasons dealers hold out on ERP upgrades.
“It’s a terrible distraction to change.”
“We only change when our current software/hardware is totally obsolete.”
“We upgraded four years ago, and our current system updates frequently to stay at the cutting edge.”
“There is a substantial labor cost and loss of productivity when taking time to buy the latest/greatest.”
“We upgraded in 2017. Our ‘go live’ day was March 20, 2017. A day that will live in infamy!”
“We are converting at end of year.”
“Older generation not ready to move forward.”
“Available systems not specific enough for our business. We would have to heavily modify any available system.”
A fellow LBM dealer is transitioning to a new ERP/business software system. What tips and insights would you offer to help ensure A) a smooth transition from an older system to the new one, and B) satisfaction with the final result? Also, if you’ve gone through a conversion recently, what would you do differently next time?
“Get started early and do a top-down approach to make sure everyone is on board.”
“A) Invest plenty of time in Research, Planning and Training. B) see A)”
“Clean up existing database. The information in your new system will only be as good as the information you transfer from your existing system. As they say, ‘garbage in, garbage out’.”
“From our experience, nothing you do will make for a smooth transition, but getting buy-in from the opinion leaders throughout the company will help build the enthusiasm needed to carry you through the nightmare without risk of employees suffering from post-traumatic stress disorder. Satisfaction will come in time, and there is a direct correlation between the attitude of employees and the sense of satisfaction with the final result.”
“Don’t assume that all the features you use today will be in your new system. Test all your business processes to make sure there are as few ‘gotcha’s’ as possible.”
“The key to success is more training for people who will be using the system. Also, more involvement of accounting staff during the transition.”
“Ask me in six months, upgrading now.”
“Training is the key. Have at least one employee per store, per dept. trained and proficient on the new system.”
“It’s important to know how effectively your database can be migrated to the new system. It’d be helpful to talk with any others who have migrated from your current platform to the new one. Are there any hands-on user conferences or ‘boot camps’ that you could attend prior to making a decision? It’s always good to have a chance to ‘walk in the shoes’ before you buy them.”
“Practice makes perfect. I suggest that users practice on the new system four times more than suggested. Allow twice as much time for implementation. Time spent upfront will pay dividends once the system is live.”
“My advice to a dealer transitioning would be to look at the prospective software company’s implementation and training process. The more comprehensive the process, the better the implementation will be. Make sure your people are thoroughly trained ahead of ‘go live’.”
“Prepare for a lot of planning, prep work, and training. You want to make the transition as pain-free as possible for all your associates, and to insure there is no negative impact to your customers. We are really satisfied with how things have worked so far with our new system. We still learn new things every week, and continue to tweak the software to get the most out of it.
“I would say the one thing we would do differently would be to do more training. You can never have enough practice and training. Our users who embraced the software from the beginning and put time into training had a very smooth transition.”
“Train everyone at the same time.”
“We upgraded two years ago. The system we chose really doesn’t do much to help anymore. It should have been my full-time job to implement.”
“Always choose a system that’s comfortable for you and your team.”
“We changed systems in 2011. Here’s my advice based on our experience. 1) Sign up early in the year to change the following year. If you sign up late, you get what’s left for trainers; if you sign up early, you will get better trainers. 2) Spend lots and lots of time convincing your employees that the new system is the correct decision, you don’t want them fighting the new system. 3) Lastly, you’ll find out what all of your bad habits have been. All of your info—vendors, item codes, payables details, etc.—all have to be accurate to work with the new system. If they’re not, you could end up spending a lot of time correcting item codes and adding vendors after you go live.
“Our satisfaction with the final result has been great. Just the credit card program alone saved us around $30,000 in fees the first year. Currently, after being on the system for seven years, we are still getting into new things that continue to help. No matter what a new system offers, realize that you aren’t going to be able to take advantage of everything at once, some things are going to take years.”
“We went through a conversion five years ago. I can’t stress enough the importance of doing your homework, and preparing like there’s no tomorrow. We transitioned in about a six-month period, and that was way too fast. Take your time, and make sure everything is in order the way you want it to be before you go live. We have spent a lot of time fixing things that would have been much easier modified beforehand.”
“Three things for your staff to do before installation day: Train. Practice. Practice more.”
“Don’t take the salesperson’s word for anything. Talk to others who have converted recently to set expectations and learn about potential problems. They’re going to be your most valuable resource. Next best are the help and installation staff from the software company.”
“Before pulling the trigger, make sure you have good availability to tech support. And make sure the new software handles data the way that you want.”
“We went through a transition 16 months ago. We were extremely prepared with lots of upfront training, but there were still issues. I strongly suggest that the dealer meet with existing customers of that software company and compile a list of unexpected issues that they’ve encountered in order to better prepare for the transition.”
“In my opinion, no provider is competent. Have your own expert employee capable of managing your system with little or no help from the software company.”
“Ensure the system provider offers support, and that a healthy amount of support is included in the purchase.”
“Patience, Patience, Patience. Think of it this way: One the day you go live, your entire company are essentially new hires. What was intuitive is no longer, everyone has to think about what they are doing. In six months, you’ll wonder how you managed prior to the new software.”
“Training is crucial. Also, consider streamlining your workflows during the selection and implementation process.”
“Choose your technology partner carefully. Be sure the culture is a good fit. Then, once you’ve chosen your system, test, repeat.”
“Make sure you understand from the company the background of the trainer so you don’t get someone training your people who doesn’t understand what you do. It’s critical that they understand your business.”
“A) Pick a better or less busy time of the year to make the switch. B) Train all users ahead of time and have support on-site or ready for the first few days or first week of conversion to manage mission critical functions. Clean up or prepare your database before importing all your inventory, parts, vendors and customers into the new one, or you’ll have lots of out-of-date information that can clutter your new ERP. And make sure old system or back up is available for reference.”
“Make sure you test the conversion files. Don’t assume that your information came over correctly.”
“I suggest that you change your processes instead of changing the computer system. Once you change the computer system, you won’t be able to upgrade each year. You will be stuck with your current system and it will just get more out-of-date each year.”
“Time of year is crucial, you don’t want to be busy when this is going on. You need to get your existing ERP completely cleaned up six months before you begin this process, and you need ample training on real situations for every department…A/R, A/P, outside sales reps, inside sales reps, accounting, management, etc. Because an ERP change will fundamentally alter the way you do every transaction in your business.”
“Get training from the software company and make sure everyone in your company gets trained on it properly. Sometimes it is best to have classroom-type training, because some employees will ask questions while others might be afraid to ask the same question.”
“Talk to plenty of dealers before you move forward, and be sure you choose a company that has great customer relationships and support.”
“Make sure you have a motivated point-person spearheading the project, and make sure that person has the full backing and support of management and owners.”
“Training, training, training! We went from a green screen 25-year old system to a state-of-the-art windows-based platform. Our staff experienced some angst with the change. We invested in a day-long training session for everyone with our implementer. Then, we gave out assignments for completion in the training environment. We did this over the winter, which in the Midwest, is a slower time.”
“Realize the learning curve is steep and that the training is probably going to be inadequate. Additional needed training always comes at a cost, and you are at the mercy of the software company as they can turn your system off at anytime.”
“Be prepared for costly changes to their ‘out of the box’ solution, in order for it to truly meet your needs. Ask lots of questions. Don’t assume anything. Get your people involved early and often.”
“Find a ‘friendly competitor’ and go visit their business, and interview everyone who interacts with this system. Get demos of systems you’re considering, and ask lots of questions.”
“Don’t let the new system dictate your business processes. If you have a process/system that works already, then make sure the software can accommodate you, not the other way around. Also, be prepared to add staff to make the change. They will be needed before, during, and after to minimize business disruption. You would set yourself up for failure to expect that current staff can do their regular jobs and transition software at the same time.”
“Testing is the most important thing you can do. Make sure all your business processes can be handled correctly before final installation and ‘go live.’”
“Go slow. There should be built in overtime for admin, and a lot of simulated work to be done in a simulated environment before going live if you hope for any degree of smoothness. Go with a larger software provider that can have technicians onsite. Trying to phone in questions at this critical juncture is not very effective.”
“Don’t believe everything the ERP salesperson says. Instead, go visit two or three users to make sure the system you are considering can do everything you need it to do.”
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