I was cleaning out my files yesterday and I came across a presentation that I gave a couple of years ago at The Logistics & Supply Chain Forum. The workshop was titled “Making an Informed Investment in Supply Chain Software” and the goal was to provide the attendees with an overview of the supply chain software market (types of solutions, vendor landscape, trends, etc.), along with some recommendations (“food for thought”) on how to go about selecting a solution. I won’t go through the whole presentation here, but I’ll highlight a few points.
The need to invest in software is often triggered by the need to enable a new business process (or to streamline and automate an existing one). Business process transformations are typically initiated by internal functional groups or business units, customers, suppliers, and/or government and regulatory agencies. The question then becomes: How do you acquire the required functionality? The graphic below, from my presentation, outlines a relatively simple decision process flow.
Decision Process Flow for Investing in Software (Source: ARC Advisory Group; click to enlarge image)
Can our existing solutions address our requirements? This seems like an obvious question to ask, but I find that many companies skip over it. Said differently: most companies only use a fraction of their existing software capabilities, and since many of the people involved in the initial software selection process and implementation are probably gone, current users have limited or no knowledge (or training) about the wealth of capabilities at their fingertips beyond the ones they use today.
An easy recommendation that can save you a lot of time, money, and effort: read the user’s manuals, talk to your existing software providers, and keep your employees well-trained on your systems.
If you make it down to the bottom of the decision tree and need to decide between an ERP solution and a best-of-breed one, my recommendation is that the logistics operations team and corporate IT (including the CIO) work together from the very beginning, even before the vendor evaluation and selection process begins. I can’t tell you how many times I’ve come across the following situation: the logistics operations team spends several months evaluating vendors, including the incumbent ERP vendor, and they ultimately select a best-of-breed solution, but when they present their decision to the CIO (who was disconnected from the process), he responds by asking why the ERP vendor wasn’t selected. This then triggers another round of evaluations, this time with corporate IT involved.
In short, it’s important for the logistics operations team, before the evaluation process begins, to educate corporate IT on the business processes they need to enable and why; what critical software functionality is required to enable these processes; and (most importantly) why these features and functions are critical. Likewise, it’s important for the logistics operations team to understand corporate IT’s overall strategy and decision levers. Investing in this mutual education process upfront will save everyone a lot of heartache and rework down the road.
Another point I make in the presentation is that companies should look beyond features and functions when selecting a solution/vendor. Here is a short list of other factors and questions that companies should consider:
- Alignment with IT Strategy and Architecture. Is the application based on open standards? Does it use web services for integration and process automation? Is it aligned with your IT simplification and standardization strategy?
- Expertise with Vertical Industry Processes. Does the vendor have business process experts from your industry on staff? Client references from your industry? Does the vendor support industry standards? Participate in industry organizations?
- Innovation Roadmap and Cycle Time. R&D budget and resources? Turnover in R&D staff? R&D priorities and timeline aligned with your priorities/timing? Frequency of new product/functionality releases? How are customer requests for new functionality managed?
- Global Resources and Support. Support staff in all the countries where you have operations?
- Financial Stability. This is a topic my colleague Steve Banker wrote about recently in “What If Your Supply Chain Software Vendors Goes Out of Business?“
So, there you have it, a one hour workshop boiled down to 90 seconds. Now I can get back to cleaning out my files. As always, if you have your own ideas and recommendations related to this topic, post a comment and let me know.
