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ERP for the Small Business: Three Ways TGI is Making ERP Software Affordable for Small Businesses

Tuesday, March 29th, 2011 by admin

One of the biggest roadblocks for small businesses that are ready to make the jump from their existing software systems to a fully-integrated small business ERP solution is cost. When it comes to purchasing an ERP software system, all businesses, regardless of size, should examine both the upfront first-year costs associated with purchasing an ERP solution and the potential long-term costs associated with the ERP system, such as customer support and software upgrades. At TGI, there are three things we are doing to make purchasing Enterprise 21 ERP more affordable for small businesses that are ready for an ERP system.

1. Free Data Migration for Small Businesses that Purchase Enterprise 21 ERP. For 2011, TGI is offering free ERP data migration services to businesses that purchase Enterprise 21 ERP, and currently use a number of small business software packages. We’ve developed a series of mapping files that allow us to export data out of these systems and load the data into Enterprise 21 in a timely, efficient manner. Given that data migration is perhaps one of the most time-consuming, tedious tasks performed during the ERP implementation process, TGI’s free data migration services can save small businesses both time and money, resulting in faster, more cost-effective implementation projects.

2. Interest-Free Payment Plans. TGI offers every small business that purchases Enterprise 21 ERP flexible, interest-free monthly payment plans for software licenses. As opposed to giving the ERP vendor 50% of the total software license cost upfront, in the form of a down payment, and another 50% of the total software license cost thirty days later, TGI allows small businesses to purchase Enterprise 21 software licenses with twelve, equal monthly payments, minimizing the disruption to the organization’s cash flow and monthly budget constraints.

3. One Year of Free Maintenance and a NO Maintenance Fee Increase Guarantee. For every business that purchases Enterprise 21 ERP, TGI offers one year of free maintenance from the date of initial software installation. Given that an ERP implementation may take anywhere between three and nine months to complete, we believe it is inappropriate for ERP vendors to charge their customers maintenance fees during the first year of software ownership. For each subsequent year following the first year, TGI guarantees, in contract writing, that we will never increase our customers’ annual maintenance fees. This guarantee provides our customers with the peace of mind in knowing they will not be subjected to unforeseen maintenance fee increases and escalating yearly software expenditures. Click here to learn more about TGI’s No Maintenance Fee Increase Guarantee.


Small Business ERP Software: Calculating Concurrent ERP Users

Wednesday, June 9th, 2010 by Alex Smith

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.


ERP for Small Businesses: Taking Advantage of all Your ERP System Has to Offer

Tuesday, March 2nd, 2010 by Alex Smith

Many small businesses with whom I speak, generally, want the same basic functional features in an ERP system. Fully-integrated order management, inventory control, warehouse management, purchasing, manufacturing, financials, CRM, and business intelligence are critical elements to any ERP selection project. That being said, many small businesses also question how they can take advantage of all the software functionality a small business ERP software solution has to offer given their relatively limited internal resources and their desire to complete ERP implementation in a timely, cost-effective manner. How, then, can small businesses take advantage of the complete set of software functionality inherent in their ERP system while still completing ERP implementation in a relatively short time frame?

When going through ERP implementation, a small business should work closely with its project manager in determining the project scope, which consists of those core functions, rules, and processes that the system must deliver by the project go-live date. At the conclusion of the implementation process, the business must be able to perform all necessary transactions in the ERP system to conduct business on a daily basis in a manner that is faster, easier, more cost-effective, etc. than prior to implementation. The small business, should, in turn, begin to realize a return on its ERP investment.

Following software implementation, the small business should continue to work closely with its project manager in developing a post-go-live plan to roll out additional software functionality, such as leveraging wireless warehouse management with RF and barcode scanning devices, paperless AP functionality to operate the AP department in a completely paperless environment, and/or using automated supply chain processes to continue to streamline the organization’s purchasing, inventory, order entry, and manufacturing departments. Again, this will allow the small business to continue to realize a return on its ERP investment in the months following ERP implementation while taking advantage of incremental software functionality that is already built into the ERP system.

As mentioned in a previous article by Dave Litzenberg, TGI conducts six-month ROI workshops with our customers. These workshops, which consist of the customer’s core team and a combination of TGI’s executive, project management, and sales teams, are designed to initiate plans for the customer to take advantage of additional functionality in Enterprise 21 so the customer can continue to realize an increasing return on its investment in TGI and Enterprise 21.

By closely working with the ERP vendor in the months and years following ERP software implementation, small businesses can develop post-go-live plans to take advantage of additional software functionality and continue to realize ROI without having to purchase additional software, modules, features, functions, or bolt-ons at a later date.


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.


ERP System ROI – How Small Businesses Can Achieve ROI from the Purchase of an ERP Software Solution

Tuesday, November 17th, 2009 by Alex Smith

While there are some similarities between the ways in which larger corporations and small businesses achieve a return on investment from the purchase of an ERP solution, the benefits to be realized from an ERP system implementation for small businesses tend to be more intangible in nature and, at least initially, less measurable. That being said, small businesses who have grown to the point where their existing small business software’s functionality no longer meets their business needs can gain several benefits from a fully-integrated ERP system that will lay the groundwork for future business growth and more efficient, streamlined business operations. Some of the benefits a small business can realize from an ERP solution include:

  • Time savings due to the elimination of duplicate data entry. A small business ERP solution can allow the organization to operate on a single software platform. Unlike many small businesses who use one software solution for accounting and financial management, Microsoft Excel to maintain inventory levels, and a separate software package to manage customer orders and purchasing, the small business who utilizes an ERP system can manage all business transactions in a single software package that maintains accurate data for all of the company’s departments. Rather than entering an order in one software package, updating the inventory data for the ordered item in Excel, and then making the necessary accounting entries in a third software package, an ERP system can automate such processes and eliminate the need to maintain products, customers, vendors, customer orders, inventory data, and financial accounts in separate software solutions. In addition to reducing employee time spent on maintaining such data across a multitude of software applications, an ERP system can help small businesses improve data accuracy and integrity, as the likelihood of entering incorrect data is significantly reduced due to the simple fact that data does not need to be entered multiple times.
  • Faster order entry and processing. By having the company’s customer service, warehousing, and accounting departments integrated in a single ERP system, small businesses can gain significant improvements in customer service. In TGI’s Enterprise 21 ERP software, the system tracks customer order history and buying habits to show customer service personnel the items a given customer orders most frequently during the order entry process. Such a feature can allow the customer service representative to enter orders quickly and easily. In addition, the customer service representative has immediate visibility to real-time order status to communicate to the customer when their order is being picked, packed, and shipped. Furthermore, should the small business choose to integrate the ERP system’s back-end e-Commerce functionality into the company’s website, customers can place Internet orders while still having access to their customer-specific product pricing, promotions, and volume discount opportunities, allowing for more automated order processing and giving the small business the opportunity to process a larger volume of orders on a daily basis.
  • Flexibility and scalability. When a small business makes an investment in an ERP software solution, it is making a decision for the future benefit of the company that will ultimately result in significant cost savings in the years following software implementation. An ERP system that offers a flexible, configurable architecture can deliver the software functionality the small business needs today and the scalability to take advantage of additional functionality as the business continues to grow without having to invest in a new software package, higher implementation costs, and additional services fees for employee training.

Purchasing an ERP system is an investment in every sense of the word for organizations of any size; however, small businesses can take advantage of the benefits to be realized from a fully-integrated software platform today and additional functionality in the years following implementation as the business continues to grow.


The Top 15 Signs Your Small Business Software Needs a Makeover

Thursday, September 24th, 2009 by Alex Smith

In my experience working with small businesses and assessing their software needs, the problems small businesses encounter with their existing software tend to be quite similar and do not pertain to a particular industry within the manufacturing or distribution marketplace. Below are fifteen signs your small business software is in desperate need of a makeover.

1.    You use one software package for accounting, a different software package for managing inventories and manufacturing, and a third software package for web orders.

2.    You can’t track lot or serial numbers for raw ingredients and materials through production and shipment to customers in your existing software.

3.    You are frequently out of stock of the products your customers order most frequently and have excess inventory supply of the items your customers never order.

4.    Your accounting software limits you to one costing method for all products.

5.    You enter the same data multiple times due to your use of multiple software packages.

6.    Closing an accounting period is a week-long procedure.

7.    You are forced to cease warehouse, shipping, and receiving operations for several days every three to six months to conduct a complete physical inventory count to try to capture accurate inventory information.

8.    Your physical inventory count consists of somebody hand-counting items in inventory, writing recorded values on a piece of paper, and then entering the information into an Excel spreadsheet.

9.    You don’t know what a cycle count is.

10.    Your existing software limits the maximum number of products you can enter into the system.

11.    Your reporting capabilities are limited to the standard reports in the software you purchased.

12.    You do not have an automated Request for Quote process for your suppliers.

13.    You have no means to track the true profitability of your customers and products.

14.    You have no means of tracking potential new customers.

15.    Your existing software is not capable of telling you the products an individual customer orders most frequently.


Selecting a Small Business ERP Solution: Small Business Software Should Not Be “Small” In Functionality

Thursday, September 3rd, 2009 by Alex Smith

When small businesses decide to migrate from their existing software to a more sophisticated ERP solution, they are doing so for two primary reasons: 1) the business has outgrown the software it is currently using, and as a result, what were formerly simple tasks to complete take an excessive amount of time and have resulted in the development of impractical, inefficient internal business processes; and 2) the small business’ leadership team has recognized the need to purchase a new software system that will allow the business to grow in gross revenue, net profit, and customer base without a proportional increase in staff. When a small business elects to purchase a new ERP system, it should not settle for anything less than what other larger organizations would find acceptable.

When selecting a small business ERP solution, full integration is key. There is no point in moving forward with an ERP vendor who does not offer a complete solution that includes accounting, inventory management, purchasing, order entry, customer service, e-commerce, business intelligence, and warehouse management. Again, one of the primary reasons why a small business begins to engage in a software selection project in the first place is to eliminate the need for multiple software solutions from a variety of software developers.

From a purely functional standpoint, a small business should be careful not to buy into many ERP vendors’ claims that the business does not need function X, Y, or Z. When developing a list of functional requirements, the small business’ selection team must take into consideration both existing and future software requirements. For example, the selection team should ask vendors to provide a sales quote/proposal that includes a fully-integrated warehouse management system with RF and barcode technology. Similarly, the team should look for an ERP accounting solution that is SOX-compliant and provides full audit trails. While these are just a few examples, there are hundreds of functional and technical requirements that the small business selection team should demand from software vendors. For more information on developing a list of ERP requirements, click here.

In addition to scope of software functionality, the selection team should also look for a software solution that is platform independent. By selecting an ERP solution that is platform independent, the small business does not need to worry about becoming “locked in” to or outgrowing a particular operating platform. The chosen software’s architecture should provide the small business with a variety of operating and database options to choose from for both today, tomorrow, and beyond.

Lastly, and perhaps most importantly, the small business should ask software vendors to describe the scalability of their proposed software solutions. The small business must do everything it can during the selection process to ensure that whatever software it selects, the software will provide the business with an opportunity for growth. The small business’ selection team should require software vendors to disclose the lowest user count for a given business using the proposed software solution and the highest user count for a given business using the proposed software solution. The difference between these two user counts should provide a fairly good indicator of the software’s scalability. The selection team should then request a formal proposal from the software vendor that includes all previously demonstrated functionality and all functionality that was deployed in both the low and high user count business’ software solutions.

By following these simple guidelines, small businesses should be able to obtain the necessary information from software vendors to select a small business software solution that is anything but “small” in functionality and features.


The Small Business Software Rules: Add a Product, Upgrade Software

Friday, August 21st, 2009 by Alex Smith

I recently spoke with a small business owner who provided me with a piece of information I previously was unaware of. The small business owner said that his company had started running QuickBooks approximately three years ago when the business was just in its infancy. The business grew rapidly, increasing its customer base and its product offerings. One day, the business had reached a total of 3,501 products in its catalogue. When the QuickBooks user entered the 3,501st product, the software informed the user that the entry was invalid, as QuickBooks would only support a maximum of 3,500 total products. When the small business owner called customer support, he was told he needed to upgrade to QuickBooks Enterprise Edition to allow him to enter more products. I, needless to say, was shocked. Believing that his business was not ready to migrate to a more sophisticated distribution software system, the owner spent $3,000 to upgrade to the Enterprise Edition for the privilege of adding new products, which, according to the owner, was simply a waste of money.

This pricing scheme for varying degrees of standard software functionality should be a lesson to all small business owners as they consider migrating from their existing small business software to a more sophisticated ERP software solution. Owners should pay careful attention to a software solution’s pricing structure and the software’s limitations at each price level. By requiring software vendors to disclose the true cost of all demonstrated software functionality before contract signing, the small business owner will receive the most accurate cost estimate to be used for budget and ROI calculations.


Selecting a Third-Party IT Service Provider

Tuesday, August 4th, 2009 by Alex Smith

After selecting an ERP solution and vendor, the next step for the selection team, in the case of small business manufacturers and distributors, is to select a third-party IT service provider (this assumes that the small business does not choose a Software as a Service or Managed Infrastructure model, and the small business does not wish to employ a full-time IT employee). It is a good idea to discuss the ERP software’s hardware and network requirements with the chosen software vendor and then communicate these requirements to potential service providers. It is also a good idea to purchase new hardware (if new hardware is required) directly from the selected IT service provider. In choosing a third-party IT service provider, quality and scope of services and cost should be the main focus of the selection process.

From a services perspective, the organization should look for an IT provider who offers 24-hour technical support in the event of server or network issues should they arise. The organization should also look for a service provider who is capable of delivering a guaranteed, on-site response time should on-site fixes be required. Typically, a guaranteed response time of 4 hours or less is a fairly good service offering. In addition, the organization should look for an IT service provider with local representation and local technical and support staff. Choosing an IT service provider who is in relatively close proximity to the manufacturer’s or distributor’s facilities can improve response time and make on-site visits much more plausible. To gauge quality of service, the provider should have some references of other comparably-sized businesses in the area that use the provider for similar services. The selection team should talk to these existing customers to ensure the IT provider is capable of delivering the services and expertise it promises during the selection process.

In terms of cost, the selection team should be careful not to buy into providers’ claims that system failure and network disasters are always lurking around the corner. Some IT service providers have fairly sophisticated software offerings that can monitor hardware performance and check for potential issues that may arise. While these service providers can deliver value to larger organizations, they are not really a cost-effective solution for small businesses. The reality is that while hardware issues do occur, complete system failure (short of a natural disaster, fire, etc.) is highly unlikely with today’s technology, and as long as data is routinely backed up and stored, hardware issues should be minimal and in no way catastrophic.


Use Your ERP Software Implementation to Clean Up Your Garbage Data

Tuesday, July 7th, 2009 by Alex Smith

A common concern many small business owners have when selecting a small business ERP software package is how they are going to be able to extract their existing data from their legacy software systems (QuickBooks, Excel, etc.) and transfer the data into their new ERP software solution. While migrating historical data into the new software package is important, the real question small business owners should ask is what historical data should be migrated over to the new ERP solution?

Within most small businesses, manufacturing and distribution operations use multiple software packages simultaneously, which leads to numerous instances in which data is duplicated, and, in many cases, inconsistent. Products are often times entered with one product description in one software package and a different product description in a second software package; the organization may also have a customer’s shipping address entered in one software package and the same customer’s billing address entered in a different software package. The software implementation process is an excellent opportunity for the organization to clean up its duplicated and inconsistent data and develop a single, cohesive data set for products, customers, ingredients and raw materials, suppliers, financial accounts, etc.

While the process of going through potentially hundreds or thousands of data records may be painful, it will prove to be highly beneficial to the small business during the initial system go-live and beyond. A sophisticated ERP software solution is only as good as its associated data. I recently spoke with one small business owner, and I believe his take on data migration was probably one of the most simplistic, yet most accurate statements I have heard when he said, “Garbage data in is just going to mean garbage data out.” This statement is just as true today as it has always been when using automated systems.

Establishing an accurate and consistent data set during software implementation is one of the first steps for the small business in realizing significant ROI for its software purchase and developing improved, efficient business operations.