6 ‘must ask’ questions when buying a mid-tier ERP solution

Published on the 25/08/2005 | Written by David McNickel, MYOB

As more ERP vendors focus their offerings at mid-tier organisations, the ERP choices available in this sector can be bewildering. David McNickel asks Greentree’s Peter Dickinson (pictured right) what questions should be top-of-mind for managers when making this critical ERP partner selection decision…

Where ERP systems were once the sole domain of giant corporates, today these company-wide financial management tools are increasingly being made available to medium-sized organisations and beyond. And while integrating the financial management of manufacturing, order entry, accounts, purchasing, warehousing, transport and human resources into a single solution is of tremendous benefit to any business, the decision about which solution to implement is one to be made with great care – particularly for the smaller enterprise, with little ‘fat’ in their systems for prolonged implementations and expensive IT consultancy.

As executive director of MYOB Greentree (who were recently recognised as one of 25 global rising stars by MIS magazine), Peter Dickinson has been involved in numerous mid-tier company ERP installations, and he offers iStart’s David McNickel some key decision making questions managers should be asking as they look for an ERP partner .

Q1: Has this ERP solution been built for companies like ours?
The needs of the mid-tier business are quite unique, and contrary to popular belief, they are often much more complex than those of larger organisations. Over the years there have been many launches of scaled back versions of Tier-1 ERP systems, targeted at Tier-2 & Tier 3 organisations.

When discussing this topic I like to use the oil tanker / pleasure boat analogy. From a product suitability point of view it’s like a company that builds super tankers deciding that they’re going to get into pleasure boats. Then, instead of actually designing a pleasure boat they’ve said ‘let’s see how we can cut down the super tanker to a point where a family can use it as a pleasure boat’. The problem is it won’t fit on a trailer and it takes 10 specialist engineers to keep the engines running. When the day comes that the family decides they want to transport 2000 tonnes of crude oil, they have the perfect vehicle, but aside from that it’s next to useless to them. And so it is for mid-market ERP systems – they need to have been built for the unique demands of those companies, not a scaled back version of a solution developed for a company 100 times larger.

Q2: Is this vendor an ERP ‘specialist’ and do they have a track record of success?
There are a number of big players in the ERP market today with fingers in many pies. But to be frank, in some cases if their whole ERP offering fell over it would hardly make a dent in their company’s overall business. So the question for the ERP buyer is do they want to be working with an ERP partner whose success depends entirely on every implementation they do delivering for their customers, or one that ERP is not absolutely fundamental to the life of their organisation? In the case of MYOB Greentree, we have been building and deploying software in exactly this mid market space since 1984. In short, MYOB Greentree has been living and breathing mid-market ERP solutions since day one – and if we weren’t delivering we wouldn’t be in business.

Q3: What about software upgrades & enhancements – do we have to implement them if we don’t want to?
The industry typically does annual releases of new product which has the disadvantage of being a major invasive change, it can be costly depending on the upgrade pricing – and it may force customers to expensively redevelop their customisations. Because of the invasiveness and cost, customers often choose to languish on old versions which has the downside that they don’t stay current with technology, miss new benefits and ultimately become unsupported as vendors drop support for old products. The major investment they made becomes obsolete and of reducing value. When we developed the new MYOB Greentree product we wanted to break this cycle and enable customers to stay current with business technology at low cost. Our technology platform allows us to;

  1. Provide constant small incremental upgrades. Every week we are releasing new capabilities which the user can choose to turn on when they want.
  2. Our automated delivery system knows the status of all MYOB Greentree sites and the users can choose when and how often they upgrade. We encourage them to do this frequently to obtain the benefits of new functions applicable to their business.
  3. The technology allows us to track all user customisations and seamlessly upgrade these as well, so gone are the days of expensive re-customisation work.

Q4: How committed is this ERP vendor to its products?
A few years ago there were 18 major ERP systems owned by 16 suppliers. Now there are 16 ERP systems owned by only six suppliers. Obviously this means some ‘umbrella’ organisations are offering several different ERP solutions. In our view this means there is a fair amount of uncertainty or lack of focus within these umbrella organisations about the future of their products – with some solutions nearing the end of their life-cycles and lots of “futures” being promised.

I think when people are considering an ERP solution they need to consider the past, present and future of the solution providers they opt for. In our case, MYOB Greentree is still supporting the CBA systems that we launched into the market in 1984. Sure those companies could probably benefit from upgrading to the ‘MYOB Greentree’ product, but if they don’t want to, we’ll continue to support their CBA installation as long as they operate it. At the end of the day, our ‘mantra’ is that it’s the customer’s choice when they want to change to new technology, and we’re never going to do anything to force that customer into a position of change.

Q5: How flexible is this provider’s ERP system, really?
As we discussed before, mid-tier companies don’t have much in the way of spare resources. Generally the people that are involved in the selection and implementation of new ERP systems are also doing line management jobs which don’t get taken away from them just because there’s a system to be implemented. And they also can’t afford layers of consultants and project managers to make sure every i is dotted and t is crossed.

The challenge this creates for mid market software suppliers, and in our opinion most of them haven’t risen to this challenge, is to build their ERP products to be adaptable from the very start. Mid-tier companies are generally fast moving and nimble and it is critical that their ERP systems support that by being flexible and adaptable – and that’s how we build them. So rather than spend a year and a half scoping out a project, a typical MYOB Greentree implementation is done in about six weeks. That’s a system up and running with data converted over from legacy systems and staff trained. Mid-market businesses need to get on with being in business, not spend years installing ERP solutions.

Q6: Ask ‘what are we actually buying here’?
Organisations need to be clear that when they buy an ERP system, that they are not just buying a ‘product’ out of a box. So the entire process, which is ongoing, must be considered. When you buy an ERP system, yes you are buying a product, but you’re also buying how that product is implemented, how it is supported and how it is upgraded during its entire life cycle, which can be decades. Everyone of those aspects is critical to the ultimate success of the ERP system and you need to be looking for organisations that have proven they can deliver a complete solution.

For More Information
E: biggerbusiness@myob.com
NZ: 0800 696 239
AU: 1300 555 110

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