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ERP System Implementation Critical Success Factor: Proper Establishment and Execution of an Implementation Test Plan

Tuesday, January 26th, 2010 by admin

The top three critical factors for a successful ERP implementation are the proper establishment and execution of a training plan, data migration plan, and a comprehensive implementation test plan.  From my experience, the proper establishment and execution of a comprehensive implementation test plan is perhaps the most overlooked of the three plans.

The test plan needs to be representative of how the company does business as a whole and should include the following:

  • Customer-facing (i.e., quote to cash, customer service, customer self-service);
  • Operational (i.e., demand to pay on the procurement side, inventory management and warehouse operations, manufacturing planning and execution); and
  • Compliance and control (i.e., financial management and reporting, lot traceability, quality management, industry compliance).

Let’s discuss how a company goes about establishing a comprehensive implementation test plan.  The starting point for the creation of a test plan can be to select some 50-100 customer orders out of the existing customer order files at random.  Experienced personnel can review these randomly-selected orders to make sure they collectively establish how the company does business as a whole.  Should there be some nuances that need to be added, specific customer orders meeting those scenarios can be pulled from the files as well and added to the list.

Assuming you did a good job of establishing a software demonstration script during the software evaluation process, the script can be another key input into the test plan creation process.  The test plan should consist of a series of test scenarios which may also be called “use cases.”  Associated with each test scenario would be some narrative about what is being tested, specific data that is to be used in the test, and the expected results of the test.

The test plan should also include some test cases to stress test the system to verify there are no issues with data tables that need to be re-indexed or infrastructure bottlenecks that need to be addressed (network capacity, memory requirements, processor speed, etc.).

The test plan should be executed by functional end user personnel – not just a couple of IT people running through the process by themselves.  There are two key benefits to this process.  First, the functional end users will be aware of nuances that may not have been addressed in the existing test cases.  These process anomalies need to be identified and added to the test plan.  Second, this process reinforces the training functional end users have received to date to verify whether or not additional training is necessary to ensure a smooth go live experience.

The test plan document should include space on each scenario to document the actual results of the test, the names of the individuals who performed the specific test case and the date it was performed, and any pertinent observations made during the test run.  Results should be documented in writing – or electronically – so the results can be shared with the implementation core team consisting of both customer and software vendor personnel and the customer’s executive sponsor.

The test plan should be a living document, which is updated as the business changes over time.
The test plan should be re-executed when a version upgrade is being implemented to validate there are no business processes that have become broken as a result of the upgrade process.

Additionally, a good rule of thumb for ERP software system enhancements is to establish the associated functional test plan or use case for that enhancement at the same time the enhancement is being defined.  This incremental portion of the test plan can be incorporated into the overall test plan.

By effectively establishing and executing of a comprehensive implementation test plan, companies implementing Enterprise 21 can expect their go live experiences to be as smooth as possible with the successful entry, picking, packing, shipping, and invoicing of customer orders day one.


Small Business ERP Total Cost of Ownership: Looking Beyond Upfront and First Year Costs

Tuesday, January 19th, 2010 by Alex Smith

One of the most significant hurdles a small business faces in deciding whether or not to migrate to an ERP system is project cost. Generally speaking, the total cost of ERP implementation can be divided into three main categories, including software licensing fees, implementation and training fees, and annual maintenance fees. This third category, annual maintenance, is often overlooked in the software evaluation process. It is imperative that the small business’s selection team consider not only the software vendor’s maintenance fee during implementation but the software vendor’s maintenance fees for the years following implementation (and what is included with such maintenance fees) in order to calculate an estimated five-year total cost of ownership. This five-year total cost of ownership calculation will give the selection team a better view of what the business’s projected cash requirements will be for implementation as well as the years following implementation to determine the most cost-effective long term solution for the organization.

Many software vendors begin to charge their new customers annual maintenance fees the day contracts are signed. At TGI, we believe charging new customers maintenance fees during ERP implementation is inappropriate. Given that a small business ERP implementation may take anywhere between three and six months, we do not believe a business should have to pay maintenance fees on Enterprise 21 when the software is not yet being used in a live transaction environment – annual maintenance for Enterprise 21 is free for one year from the date of software installation, allowing for a more cost-effective first year of ERP ownership.

Secondly, the business’s selection team should consider each software vendor’s maintenance fees for each year following ERP implementation. Do the software vendor’s fees increase after the first year? Do the vendor’s maintenance fees increase each and every year over time? In addition, two great questions to ask ERP vendors are, “What is your annual maintenance fee today? What was your annual maintenance fee five years ago?” While these two questions may seem inconsequential at first, they are crucial to determining the most cost-effective long term ERP solution for the business. The business does not want to be faced with a situation in which its maintenance fees have doubled in the first three years following ERP implementation. When a given vendor’s new software sales start to slump in times of economic downturn, the easiest way for the vendor to make up for its loss in revenue is to increase its maintenance fees for its existing customers; therefore, it is crucial that the selection team search for an ERP vendor with a track record of consistent, non-escalating maintenance fees over time. At TGI, we are proud to say that we have never increased our annual maintenance fees since the company was founded in 1990.

By analyzing ERP vendors’ total long term solution cost, not just the cost to be incurred during the first year of ERP ownership, the small business will have a more accurate view of its budgetary requirements for the years following implementation and be in a position to determine the most cost-effective long term ERP software solution.


The ERP Selection Process: 50 Questions for Every ERP Software Supplier

Wednesday, January 13th, 2010 by Alex Smith

We recently added a new white paper to the TGI Resources Library, 50 Questions for Every ERP Software Supplier. This white paper lists 50 questions that are critical to a successful ERP selection project and must be asked of every potential ERP vendor. While there are some basic, general questions about product functionality, the white paper is not intended to be a list of questions relating exclusively to functional features; rather, the questions are designed to give the selection team a better feel for the software vendor’s general business philosophies, organizational longevity, approach to ERP implementation and customer support, annual maintenance fees, software upgrades, etc. One can think of the white paper as a “Getting to Know You” list of questions to ask ERP vendors. To download the 50 Questions for Every ERP Software Supplier white paper from the TGI Resources Library, please click here.


Process Manufacturing Software: Enabling Effective Product Shelf Life Management

Tuesday, January 12th, 2010 by admin

Strong process manufacturing software solutions like Enterprise 21 can enable companies to establish an effective product shelf life management program.  Within the system, one can establish shelf life parameters by product group or category.  For example, certain classes of products may have a predetermined shelf life of 90 days from the date of manufacture while others may have a 120 day shelf life.  Specific lots of ingredients and/or finished goods will have expiration dates associated with those items based on how these parameters are established.

The Enterprise 21 ERP system enables the allocation of products on a first expire, first out (FEFO) methodology – both for the consumption of ingredients and intermediaries in manufacturing processes and for finished goods shipment to customers.  Additionally, one can manage retesting of products through the establishment of parameters relative to how near an item’s expiration date it is desired to retest a product’s remaining shelf life.

As products reach their retest periods, the system can place those items on quality hold automatically, and quality control personnel can be alerted as to the need to perform the retesting process to determine the remaining shelf lives for those items.  Based on those test results, one can establish new expiration dates for those items and release those items from quality hold back into active inventory.  Should there be excess inventory approaching expiration dates, the company’s sales organization can be alerted that it may need to run a product promotion or special to move those items from inventory prior to it reaching those expiration dates.

There may be instances in which certain customers may require a guaranteed minimum shelf life for the products they purchase.  In these cases, there are parameters that can be defined within Enterprise 21 noting a given customer’s requirements for guaranteed shelf life on a product-by-product basis.  Then, when one of these customers has product being allocated to its sales order line items, the FEFO methodology can be overridden to make sure the customer’s guaranteed shelf life requirements are being met.

The Enterprise 21 system will help enable process manufacturing companies to minimize their exposure to products needing to be thrown away or sold at a substantially reduced cost while concurrently meeting customer guaranteed shelf life requirements through the combination of first expire, first out product allocation, product retest procedures, and guaranteed customer shelf life management capabilities.


Leveraging Manufacturing Software Functionality for Distributors

Tuesday, January 5th, 2010 by Alex Smith

Virtually every one of the distributors with whom we work has some sort of kitting, assembly, and/or light manufacturing software functionality requirements. With Enterprise 21’s integrated manufacturing capabilities, distributors are able to meet both their manufacturing and material requirements planning requirements with a single ERP solution.

For distributors who sell kitted items, Enterprise 21 allows for a multi-level bill of materials to be defined for each kitted item. The system also allows for substituted items for any component on the BOM. In addition, distributors can associate both labor and burden costs to each bill of material, allowing the organization to gain better visibility to the true cost of each kitted item.

Furthermore, material planning for each item in a given kit can be accomplished through Enterprise 21’s integrated forecasting and planning functionality. This gives distributors the ability to plan appropriately for each product it sells whether the product is sold on an individual basis, in a kit, or both while simultaneously reducing inventory carrying costs and improving order and line item fill rates.

By taking advantage of Enterprise 21’s integrated manufacturing software functionality, distributors can meet their software requirements with a single ERP software solution without having to purchase additional manufacturing and planning modules as add-ons or bolt-ons from third-party software providers.