IDII Software Newsletter
December 2nd 2002 - Volume 3 Number 22
For professionals dealing with software in Warehousing, Distribution, Logistics, and Supply Chain.
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Techniques, Vision, & Educational Thoughts

Software Implementation FAILURE AVOIDANCE Guidelines - Part Three

5. Know the ROI. Know the ROI. There is always a Return On Investment (ROI). You should have a general ROI expectation in place before you begin your project. Let your hired gun help determine this very important calculation. Do not bother to let your potential vendors perform the ROI analysis. They usually arrive at a calculation that easily and generously endorses their product and all of its associated costs.

Keep in mind your firm’s Economic Valued Added (EVA) in mind to make up an
ROI’s incomparability among divisions. EVA is net operating profit minus an appropriate charge for the opportunity cost of all capital invested in an enterprise. As such, EVA is an estimate of true economic profit, or the amount by which earnings exceed or fall short of a required minimum rate of return. It is difficult to capture all costs and payoffs of any large project, especially one as unpredictable and often terrifying as a major software implementation. Albert Einstein once said that many times things that can be counted do not always count, things that cannot be counted often count. Go back and read that last sentence again. Keep this in mind while evaluating your ROI. You will have to make some assumptions. Use the ROI as a budgetary variance tool. During your reviews you need to keep track of budgeted and actual costs. This is critical in keeping a project within budget, monitoring for adjustments, and knowing how well your team and / or the vendor is performing.

6. Budget for all foreseen costs. This is easier said than done. You will need to look at additional seat costs associated with your operating system, database management system, reporting and label producing applications, and technology such as wireless applications. Cost-Creep will produce Budget Creep, which often spells D-I-S-A-S-T-E-R. The aforementioned 3rd party can come in handy here.

7. Document your processes. If you have not done this, do it now. Let the Third Party help you. If your processes are being documented at different sites, sit back and get ready to discover the multitude of process variations for the same, well, process. You may get a lot of bang for your buck here. Let the Third Party help you distill the best processes and merge them all together in a “Best Practices” process manual. Now you have a documented methodology to present to the software vendors.

8. Document their processes (and functionality). Their functionality needs to match your process as closely as possible. Avoid customization as much as you can. The very best vendors know the very best way to do things because they have the very best customers. They have taken the collective wisdom of their customer base and programmed it into the software. Consider changing your process to fit the software if it makes sense. Remember how much you can learn from the vendor’s customer site visits.

9. Make your Selection based on:
a. The Software and the people who make it work. You are buying the people too. They are part of the solution. If they do not work or play well with others, neither will their software. If the vendor’s sales representative does not have a contagious passion for their software, then meet the Product Manager. If you do not get the comfort from this person, send them away.

b. The Voice of the Customer: Unless you agree to be a Beta Tester, you need to see at least two very happy users of the software under evaluation. Happy customers will tell you all you need to know. If they are truly happy, they will let you in and praise the application. Most of the time they do this out of gratitude for the vendor. If this cannot be done, send the vendor away. Make no compromises on this one.

c. Industry Knowledge. There are a lot of software venders, and at present the vendors are loaded with technical talent and industry experts. This is primarily because the recent soft economy yielded a glut of such talent and expertise. As you identify vendors, send out your RFIs and RFPs, and ultimately produce your short list, it pays to know that it is a buyer’s market. Consider Warehouse Management Systems (WMS) for an example: There exist more than 200 purveyors of WMS software. Many have been around long enough to be far to the right of the learning curve on general WMS functionality—and just as importantly, vertical expertise.

Select vendors that target your industry vertical. Major verticals include: Apparel, Retail, Automotive, Food / Beverage, High Tech (electronics), Commercially Packaged Goods (CPG), Pharmaceuticals, Third Party (Contract Warehouses, Private) or Third Party (Largely Public). Any vendor that professes to “do it all” most often cannot. Most vendors target a specific set of verticals (two or three) and excel in those areas. Stick to the vendors that specialize in your industry. An added bonus emerges when you make your site visits at the vendor’s customer facilities. It usually brings you up-to-speed with new initiatives and strategies in your industry.

d. Seymour. Listen to Seymour. Vendors want to sell to a dumb VITO—the one who will say yes when everyone else says no. Let Seymour get into the details not matter how long it takes (but keep Seymour on schedule) or how much it will exasperate the vendors. If the software vendor cannot handle the relentless barrage of questions from Seymour, send them away. Seymour will make your project a success every time. Keep VITO away from the project, except to keep people in line who do not cooperate with the Project Champion, and perhaps to sign agreements.

10. Hold a Conference Room Pilot (CRP) or Functional Demo. Believe it or not, this is easy to skip and it is often the case. If you skip this very important step then get ready for trouble. Even the most well meaning and best intended vendors will not be able to nail down 100% or your requirements during a demo. Nor will you and your team be able to adequately judge the software being scrutinized. Only a long and tedious CRP will guarantee your project’s success. Any software shortcomings will reveal themselves and this is an important first step of the “Discovery” process—where they truly begin to understand you and vice-versa. This is also where you and your vendor make the determination where their shortcomings and resultant modifications are either Product or Custom. If product, you do not have to pay for the modification since it is a general industry requirement. If custom, the modification is unique to your business and will drive up costs and raise myriad support issues. Your hired gun will come on very handy in this process.

11. Invest in a lot of training. Too many of us skimp on this item. There is almost never too much training. A new software implementation is often a cultural shift in your firm. The best way to evolve your people into the new processes, rules, and often accountability is to empower them with knowledge. It will also save you money. If you want to save money by cutting training, you will have to pay double later for every dollar “saved” today. Do not forget to budget time for testing and a rollout plan. Nothing will hurt more than turning the application on at multiple sites and discovering a potential show-stopper.

12. Keep looking back. Hold your scheduled reviews and never keep a bad project moving. Put it on hold when you have to or know when a sunk cost is sunk. Killing a project may be the hardest thing you will ever do as a professional. However, it is better than pushing a project doomed to failure--failure being measured by poor software or lack of project management, either or both leading to missed deliverables and insurmountable and often unforeseen obstacles.

13. Never let VITO veto Seymour and Mr. or Ms. Third Party. Almost every time this happens, VITO costs you time and money. VITO can render all of your due diligence useless. Do not let this happen.

Final Words
This essay is not intended to be technical. Items such as fault-tolerance, redundancy, backups, etc. are the topics for another discussion. While many of the above points tend to insult the intelligence of the typical professional, try to bear in mind our collective propensity to take short cuts, play the blame-game, regress to the way things used to be, and build empires. Now many of the “obvious” points become vulnerable. Pundits are predicting that our soft economy will gain momentum some time during 2003. Stingy CFOs are going to allow projects to commence that have been in abeyance for months or years. Therefore, it is with sincere hope that this essay will help to assuage disasters waiting to happen.

By Raymond Scipioni of Weblinkone.com. WebLinkOne represents a collection of
Logistics Internet links. The full article is now available as a white paper on IDII's website at Software Implementation Failure Avoidance


Speak Up -- Suggest an Article -- Submit an Article

RedPrairie's On-Line Educational Webcast - WMS Task Management & Task Interleaving: The Real Story About What Works, and How to Achieve Measurable Results. Tuesday, December 10, 2002 at Time: 8:30 AM PST / 10:30 AM CST / 11:30 AM EST - Educational and highly informative --http://www.redprairie.com/knowledge/forms/form.cfm?Form=webinar&WebinarID=54 - Register Now


IDII News - New Website Features

  • New WMS Research Report Study. IDII is now researching WMS solutions that are capable of 25 RF Users & Above. To be included in this study, please contact Phil Obal of IDII at philobal@idii.com. This study will be completed in February 2003. IDII will announce an exiting new research report with our detailed findings at that time!
  • Did you know that IDII regularly is involved with WMS & TMS software selection engagements? Every year we assist companies select solid solutions for their company. In addition, IDII also empowers other companies by helping them do their own software search - IDII provides the WHAT to evaluate - HOW to evaluate - and WHO is out there. If you have the time & expertise to do a proper search, then we can empower you!
  • NEW ADVANCED WMS RFI - Edition 7 Released November 1 - WMS RFP - Includes new sections and contains 1000 detailed questions - resulting in RFP's with greater detail in a WMS software selection project. If your company want to do a software search for a new WMS then this will greatly benefit! It will save you a solid week of time or more!
  • New Book Sections in our book catalog! - RFP Development - Proposal Writing - Software Project Management - IT Management - Software Testing
Keep Learning - Free Books - White Papers - Books - Suggest A White Paper

Software Company News

  • ANISA ACQUIRES AZURRI’S WAREHOUSE MANAGEMENT BUSINESS. Anisa Group, owners of Open Business Solutions (OBS), a supply chain management, ERP and financial solutions provider, has acquired the RIVAStore warehouse management system (WMS) business from azurri, a leading provider of IT support solutions.

    The deal is for the total WMS business including software, staff and customer base and further strengthens Open Business Solutions’ position as one of the key players in the supply chain marketplace. azurri are the developers of RIVAStore and a long-standing technology business, providing products and services around the Unix, MPEi/X and Windows platforms.

  • Lilly releases VISUAL Jobshop 3.5. Initial release of the product was early 2001, and Jobshop sales have steadily increased worldwide, over 300% since October of last year. With customers currently in twelve countries, including the United States, Canada, South Africa, Australia, Taiwan, and Mexico, Lilly expects sales to remain strong as it announces its latest release, VISUAL Jobshop version 3.5.

    The newest Jobshop release offers tighter integration with QuickBooks(r)Pro, Premier and Enterprise small business financial software and coincides with the release of QuickBooks Pro 2003. In addition to integrating Accounts Receivable, Accounts Payable, and General Ledger information with VISUAL Jobshop version 3.5, QuickBooks users can now automatically populate Jobshop's database with existing customers, vendors, and inventory items from their QuickBooks company file. This enables users to get up to speed quickly when implementing their Lilly Software solution. VISUAL Jobshop(r) is an affordable software solution for small manufacturers for the short term, while migrating toward a more comprehensive ERP and supply chain product, VISUAL Enterprise(tm), in the future.

  • LXE Introduces the Intrinsically Safe MX1-IS Rugged Mobile Handheld Computer. Due to its broad Intrinsically Safe (I-Safe) approval rating, the MX1-IS can be used in almost any I-Safe environment, including environments where explosive material is always present (Division I Rating). The MX1-IS features an industry standard, highly reliable, 486 processor and a ROM-DOS operating system. The unit supports 900MHz or 2.4GHz (802.11b) radio options and numerous terminal emulation standards for easy integration with most Warehouse Management System applications.

    • MX1-IS Intrinsically Safe Approval Ratings:
    • FM Approved (US) NEMKO Approved (EU) / Test Safe (AU)
    • Class I, II, III Class 1, Zone 0
    • Division 1 & 2 EEx ia IIB T4
    • Groups C, D, E, F, G
    • T4 Temperature Rating
    • Class I, Zone 0 AEx ia IIB T4


  • Mapics to acquire Frontstep.

  • Prophet 21 (ERP, Wholesale, Nasdaq: PXXI) Use of Interwise Increases Participation in Customer Education Program by over 400 Percent in One Year Web-Based Training Helps Customers Extract the Most from their Enterprise Software Investments. Interwise(R), the foremost provider of enterprise communications solutions, announced that Prophet 21, a leader in providing durable goods distributors with enterprise software solutions, has quadrupled customer participation in their Prophet 21 University technology training courses since adding Interwise's live, online training sessions in 2001. With Interwise, Prophet 21 can now offer global customers the ability to participate in Web-based training courses from the convenience of their own offices.

  • QSSI (WMS, SCM, 3PL) announced the release of PowerHouse version 7.0. Version 7 adds considerable depth to existing features while still continuing to provide everything that previous versions had; rules-based, as opposed to programmatical configurations, adaptability to any warehousing environment, and above all solid usability." PowerHouse WMS version 7 introduces production line control, new options for picking and shipping, and special features for sites that ship to consolidators.

    The Production Module handles everything from the initial Bill of Materials through reconciling the raw materials used during the production run. The system calculates the quantities of raw materials needed to produce the finished product on the production order or request and directs workers to move the products to the production areas. As finished products are received off of the end of the production line, the raw material inventory is decreased according to the quantity received and the amounts needed to make each piece. Raw materials can also be shared among different production lines. After the run is complete, the quantities being returned to stock checked against the calculated values and adjustments can be made for waste during line switchovers and other situations.

    Sites that ship to consolidators instead of directly to the customer will find new features that will create the appropriate shipping loads, customizable to the format that their consolidators want to accept the shipments, and all of the necessary shipping documents for both the consolidator and the final ship-to.

    Version 7 also expands upon many existing features of the system, including kitting, 3PL billing, item control, RF functionality, reporting, receiving and picking/shipping. Communications with the warehouse or shop floor are also improved with the ability to hold 2-way text discussions between administrators and RF users.

  • RedPrairie Corporation (WMS, TMS) announced that it has used a portion of its more than $15 million in cash flow generated from operations so far this year to retire its remaining long-term debt.

    RedPrairie Company Results Leader John Jazwiec commented, "As a debt-free company with tremendous market awareness and momentum, we have greatly expanded our options for growth. While many of our competitors are faltering in the down economy, we have numerous opportunities to gain market share and accelerate our growth financed by our strong cash flow and other means. We will continue to evaluate all options to chart a market leadership course for RedPrairie."

    Editor's note: Congratulations to Red Prairie for the very smart move on being debt-free. In IDII's opinion, a debt-free company can endure & prosper much better than other companies (with debt), especially during the slower periods. It's a smart move to become debt-free, as it will assist the company tremendously in many areas.


Quotes to Ponder - List of Quotes to Ponder from prior issues.

  • "I have always been delighted at the prospect of a new day, a fresh try, one more start, with perhaps a bit of magic waiting somewhere behind the morning."
    - J.B. Priestly
Scripture to Ponder - List of Quotes to Ponder from prior issues.
  • "Like a bad tooth and an unsteady foot is confidence in a faithless man in time of trouble."
    - Proverbs 25:19
Websites to Check Out

Online Book Catalog - Intuitive Categories

Books on Shipping, Warehousing, Distribution, Operations, WMS, ERP, MRP, CRM, Supply Chain, Customer Service, Logistics, Facility Layout & Design, Metrics & Measurements, and books on software solution providers SAP, Peoplesoft. Need help in RFP Development or Proposal Writing. IT Management Issues: Software Project Management - IT Management - Software Testing

New CRM Book - September 2002

"The Ultimate CRM Handbook : Strategies and Concepts for Building Enduring Customer Loyalty and Profitability"


Order From
Amazon

Manufacturing
"Value Stream Management"


Order From
Amazon


Manufacturing - Supply Chain - ERP
"Lean Performance ERP Project Management" - Implementing the Virtual Supply Chain"


Order From
Amazon


SAP & Supply Chain
"Supply Chain Management
Based on SAP Systems"


Order From
Amazon

SEARCHING FOR A NEW WMS - SAVE TIME !!!

"ADVANCED WMS RFI / RFP Bundle"
Available from IDII only

Software Directory

Research Report

1000 Questions
Obal, Philip
 Advanced Version is available only from IDII

Valuable Future Events - List Your Event or Convention

RedPrairie's On-Line Educational Webcasts - WMS Task Management & Task Interleaving: The Real Story About What Works, and How to Achieve Measurable Results. Tuesday, December 10, 2002 at Time: 8:30 AM PST / 10:30 AM CST / 11:30 AM EST - Educational and highly informative --http://www.redprairie.com/knowledge/forms/form.cfm?Form=webinar&WebinarID=54

ProMat 2003 - February 10 - 13, 2003. ProMat 2003 will provide business, IT and operations professionals with a comprehensive solutions showcase of 700 exhibitors and nearly 80 educational sessions. Focus is Material Handling and Software. See http://www.promat2003.com

National Conference on Operations & Fulfillment (NCOF) - April 13 - 16, 2003 - Orlando, FL. The Walt Disney World Dolphin Hotel, Exhibits: April 14 and 15 The Conference Exclusively for Direct-to-Customer Operations and Fulfillment Management.

Distribution/Computer EXPO 2003 - May 20 - 22, 2003 - Navy Pier - Chicago, IL. The largest Exposition for logistics and supply chain technology including; distribution, transportation, and warehousing. Held in conjunction is the D/C EXPO seminars focusing on the latest trends and advances in logistics and supply chain technologies. Visit our website at www.logistar.com or call our toll free number - 800-338-4112.


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We educate and share news on software for warehousing, transportation, shipping, packing, slotting, loading, optimization, and enterprise wide software solutions. This free newsletter is published twice a month. One may quickly subscribe, view past issues, view FAQ, & our rate card by accessing www.idii.com/esn/index.htm.


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