We recently published a new white paper in the TGI Resources Library. TGI’s Extending CRM Concepts in ERP Systems white paper discusses the necessary software features an ERP system must deliver to go beyond basic contact management and extend CRM concepts throughout the enterprise. By selecting an ERP software solution that is capable of meeting such criteria, manufacturers and distributors alike will be able to arm themselves with a set of software functionality to improve customer service and satisfaction and meet individual customer’s requirements on an on-going basis.
Virtually every small business with whom I speak has questions about how to calculate concurrent ERP system users as they evaluate various small business ERP software solutions. Many small businesses have difficulty in making this assessment due to the fact they currently use a number of different software systems across each of their organizations’ departments.
Before I go any further, let’s take a look at the difference between “named users” and “concurrent users.”
Named Users: Named users would be all users who would ever require access to the ERP system. Whether the user accesses the system once a day, twice a day, or uses the system all day long is irrelevant.
Concurrent Users: Concurrent users would be the total number of named users accessing the system simultaneously (concurrently).
On one hand, small businesses will overestimate the number of concurrent user licenses they should be purchasing because they do not know or understand the distinction between “concurrent users” and “named users.” They are under the impression that any person who ever uses the system at any point in time would have to count as a concurrent user rather than a named user, leading to inflated cost estimates and proposals from ERP software vendors.
Conversely, small businesses will underestimate the number of concurrent ERP system users at their organization because they are not used to having all business departments (accounting, sales, customer service, manufacturing, warehousing, shipping, receiving, quality control, etc.) operating on the same software platform.
Generally, when I speak to a small business owner who has questions about how he or she should go about calculating the number of concurrent ERP system users his or her business would require, I try to get the owner to think about the simple task of processing an order from start to finish. First, a sales representative contacts a prospect or customer about a product the business is offering. Then, the customer places an order either with the sales representative, an account manager, or a customer service representative. Procurement personnel purchase raw materials, ingredients, and/or components to make the product. The raw materials, ingredients, or components are then received into inventory. These items are then consumed in manufacturing to produce the finished good, and this finished good is then put away into inventory or immediately allocated to a sales order. The customer order is then picked, packed, and shipped to the customer. Accounting personnel then invoice the customer for the order. Some (hopefully short) time later, the customer pays the invoice, and accounting personnel process the payment.
Once I’ve gone through this somewhat simplified process, I tell the small business owner to think about each point in the process that would involve his or her employees entering information into the ERP system (either manually or with RF and barcode scanning devices). Finally, I tell the owner to think about the number of people who would need to be entering such information into the system simultaneously, on average. This number, in turn, is most likely the number of concurrent ERP system users the small business would have.
Obviously, the simple process of processing an order from start to finish as described above may be an oversimplification, as some businesses may require additional information to be entered into the system, such as quality control data, serial numbers, lot numbers, etc.
Fortunately, to assist businesses in calculating their number of concurrent ERP system users, TGI offers a free ERP software concurrent user estimator template. This template is part of TGI’s Software Selection Tool Kit. To download the complete version of TGI’s Software Selection Tool Kit, please click here.
For those of you who are NFL sports fans, you’ve likely noticed there are some NFL teams whose offenses produce better when they play in hurry-up mode – the way in which all teams play toward the end of the game when they’re behind and need to score rapidly. The current day Indianapolis Colts strike me as this kind of team. With Peyton Manning calling the plays from the line of scrimmage, the Colts’ players stay focused and execute in a highly-efficient manner.
Let’s contrast this to the slow, methodical, grind-it-out NFL offenses that take long periods of time and numbers of downs to get to the end zone. Sure, there are successful scoring drives that can take twelve to fifteen plays to completion; however, the more times a team has to snap the ball and run a play the more opportunities there are for issues to sneak in that stall or end the drive – a penalty, a turnover, or even one dropped pass or missed block can result in an unsuccessful drive.
From my perspective, ERP implementation and NFL offenses have a lot in common. They both require a variety of players with varying skill sets and experience levels to play their respective positions for a successful outcome. In the NFL, all of the players know their roles, and there is a sense of urgency to accomplish tasks in an expedient, highly-efficient manner, and measurable progress occurs. The same should be the case to ensure successful ERP implementations.
Players should be educated on what their roles are and how what they do fits into the overall plans for the ERP implementation. And, while I completely understand that personnel’s day-to-day responsibilities can get in the way of having sufficient time to devote to the implementation project, my recommendation is that by running the ERP implementation like a two-minute offense, key personnel will feel the sense of urgency to execute in a highly-efficient manner thus producing a successful outcome. To contrast this, if there is an expectation that a project can take as long as people want or has sufficient slack time in the project plan, there is a lack of urgency that keeps most personnel from prioritizing the time to accomplish what is necessary to produce a successful result with the implementation.
Demand Forecasting within Enterprise 21 ERP: A Key Input for Successful Wholesale Distribution Inventory ManagementTuesday, June 1st, 2010 by admin
When small and mid-market distribution companies start considering that it might be time to evaluate and replace their existing wholesale distribution software systems, they’ll typically calculate a potential return on investment they strive to achieve. From my experience, the one area of tangible benefits that will dwarf all others comes from an overall reduction in inventory investment and associated carrying costs. Generally distributors can pay for the entire new distribution software system and associated ERP implementation costs based solely on the reduction in inventory. Strong ERP systems like TGI’s Enterprise 21 provide the information and processes to enable wholesale distributors to improve overall inventory management.
There are numerous information requirements when it comes to performing time-phased inventory requirements planning (distribution requirements planning, or DRP), including customer demand, inventory statuses, inventory management business rules, and procurement and supply chain management business rules (and production-related data and business rules for manufacturers). The area of focus for this article is on forecasting – specification of one’s best volume estimates as to the total requirements for finished goods to satisfy customer demand.
Within Enterprise 21, forecasts can be created externally and then imported into the system or can be generated within the system based on historical sales data. A forecast can be defined as granularly as for a specific product, customer, servicing facility (i.e., warehouse or cost center), ship-to geography, and sales person; or it can be at some higher level of aggregation (i.e., all customers receiving a given product from a specified facility, etc.).
When using the system to generate a forecast, one can specify the number of periods to forecast, whether or not to apply seasonality to the forecast, one or more facilities, products, vendors, and buyers, and a range of dates to use for historical sales demand purposes. When the forecast generation process is run, Enterprise 21 analyzes the historical sales demand data and a series of algorithms to determine the best fit formula on a product-by-product basis. Forecast generation can be done separately for subsets of the product mix and then an overall forecast can be created by overlaying these separate sub-forecasts.
Once the system completes the forecast generation process, one can view a graph of historical and forecasted data and the associated best-fit algorithm (i.e., line, curve). Also, the forecast can be reviewed and adjusted manually as desired.
It is common for distributors to work with a series of forecasts such as ones that depict worst-case, best-case, and most likely-case scenarios respectively. A forecast can be used as one of the key inputs to a time-phased inventory requirements planning process for the generation of a series of purchase requisitions for the procurement of finished goods in the case of wholesale distributors (and components and/or ingredients to support production plus a tentative production schedule which ultimately becomes the master production schedule for manufacturers).
By using Enterprise 21’s fully-integrated planning process, wholesale distributors can generate forecasts which are an essential input to the time-phased planning process which becomes a key enabler to reducing and optimizing the distributor’s overall inventory position. Please click here to see a high-level overview demo of Enterprise 21’s forecasting and planning processes from within TGI’s Resources Library.