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WHAT LISTS OF SOFTWARE DON'T SHOW CAN KILL A DISTRIBUTOR

A client recently mentioned that company "A", with sales of some $400 million, had been forced to sell because it had to operate its business manually for several weeks after switching over to a new ERP system. During those weeks it took so long to answer customers' questions (price and availability, order status, etc.), take orders, fill orders, handle returns, etc., that the company lost a very large customer. That loss resulted in a technical default on their largest loan agreement, and the bank refused to modify the terms. When my client mentioned the name of the ERP system, it rang a bell -- I had recently seen it on one of those lists of software packages supposedly meant for distributors.

This article describes some important system selection considerations that are not addressed in lists of software.

            Suitability for a Distributor. The conversation related above reminded me of another software package that appears on most lists, and is being aggressively marketed. It was thrown out by two distributors who couldn't get it to work right, and the vendor was sued by at least one other distributor. Three other distributors are, even after a few years of use, still unable to get it to work right in one critical functional area -- in spite of enlarging their system-related staffs, an expense not anticipated. Most systems are not difficult or costly to install and use, but some really are not meant for distributors, no matter how many lists they appear on.

            A distributor is not a distributor. Some systems are really great for one narrow segment of distribution, but not good for other segments. A look at lists of features for such niche software would not reveal this condition.

            Cost of Installation. Another system on some lists has earned the unenviable reputation of billing for far, far more hours of professional installation services than quoted. At least two distributors terminated the installation process before the bills became unbearable, and two others filed lawsuits against the system vendor. The vendor of a different system refused to provide more installation help to two distributors who didn't want to pay more than had been originally quoted/estimated; the distributors opted not to proceed with the installation, even though they paid the license fees.

            The very weakest link. Several of the packages that appear on most lists are not licensed by the well-known authors, nor do the authors provide the installation and post-installation support. These packages are re-licensed by, installed by, and supported by re-sellers. Its the capabilities of the re-sellers that usually mean the difference between success and failure (assuming that the package itself is suitable). Unless a re-seller is listed as the vendor, most lists provide no information about a package's re-seller. And, since the contract may be only with the re-seller, if something goes wrong, the author may not be able to help much (and certainly wouldn't assume financial responsibility).

            Post-installation Support. This is critical because all systems are relatively complex, and no matter how much training occurred before going live a high level of support is usually needed for 12 to 18 months after going live. Yet some vendors have a reputation for slow and/or unquality support, and many re-sellers are support-challenged.

            Functions and features. Even the most detailed lists of software packages show only a cursory description of a package's functions. But the devil is in the details, and reliance on a software list to determine which systems to examine can result in wasted time when the project team discovers that a software package is not nearly as robust as it seemed. Worse, if a package is not examined in detail before licensing it, a lack of needed specific features would not be discovered until the system is paid for and in use.

            Adaptability. Related to features is the ability to interface third party software packages to an ERP system. At least one vendor has gone out of its way to make life difficult for existing users who want to interface packages not sold by this vendor.

            Viability. Obviously there has been much consolidation in the packaged software industry, and the pattern will continue. But no list contains the information needed to judge whether an author is likely to remain independent -- or be bought out, and its package relegated to obscurity (no enhancements, and dwindling support). Software re-sellers are much less viable than authors, and seldom is one bought out -- they usually go out of business.

            List Objectivity. Some authors of lists seem to have relationships with some of the vendors of listed software. A relationship may not be financial; there can be a quid pro quo arrangement whereby each party promotes the other.

            References may not be useful. One would think that the problems described here could be avoided by calling references already using the packages in question. However, experience has shown that vendors seldom provide the names of unhappy users; certainly not the names of users who have filed lawsuits. And even if names of questionable references are provided, most unhappy references adhere to the old saying "if you have nothing good to say, say nothing."

            How to avoid the unpublished problems. Find someone who knows about many different systems and where the hidden problems are; someone with extensive hands-on experience objectively evaluating systems, and getting references to talk about their true experiences with systems; someone who can negotiate a contract with specific performance guarantees.  

    Contract Terms and Attitude. Obviously, all contracts created by system vendors protect the vendors when a conflict arises with distributor-users. But most contracts do not even address problems that can and do occur – its like the vendors are trying to hide the potential problems. And some vendors have a dangerous attitude toward contract negotiations – take it or leave it.