FASTENER SOFTWARE

Software companies have many ways that they make money. The vast majority of software companies receive more than half of their revenue from “ancillary services”.

My definition of ancillary services is:

Ancillary services are services that you are billed for that were never directly stated in a contract. In effect, they are surprise billings. They can easily add up to 2 to 4 times the price of the original quote. They are a big deal.

There are many names for the services provided; installation charges, implementation fees, training, contouring, consulting, custom programming, etc. The one thing that all these fees have in common is that the client usually is not in a position to determine whether or not they are actually needed or whether they are actually taking as long as stated.

The Fastener Industry has many quirks and special needs that are not often addressed by general distribution software. There is often a big disconnect when it comes to the question of whether or not the system should have had these capabilities  “out of the box”.  The vendor usually insists that they had no obligation to supply these features or services  and the client can’t run their business properly without them.

In the end, it almost always works out that the client pays.

It is very important that you trust the company that you are buying software from. Not all software companies are completely honorable and no software company has 100% competent people. When you are checking references, spend time discussing this subject. Even clients who are now happy with their software can tell you horror stories about the original budgeted amount vs. the actual installed price of the system.

Some company owners put way too much pressure on people when they are doing a system conversion. They berate their employees for not doing things right in the new system. They set unrealistic deadlines and they don’t give the employees time to really learn the new system.  During consulting engagements when I was called in to examine software implementations (not ours),  I have actually seen employees reduced to tears by the pressure.

This is no way to get people to change. When you are implementing a new system, you need to be as supportive and as encouraging as you possibly can. Change isn’t easy and there is no reason to arbitrarily add to the stress. Each employee needs to be trained on their job functions using the new system. They need time to practice so that they can fully understand what they learned. They need to be complimented on their successes and helped through their failures.

Using  Sample Company for all our training and practice is a very good way to avoid the highly charged stressed out behavior that causes people all this grief. The “go live” date should be a realistic goal and if the employees aren’t ready, they should be given a little more time if needed. If you choose a good system, you will have it for 20 years or more. Waiting one more month to go live won’t hurt you in the big picture.

It is amazing how many times I run across  this situation. The  President of the  company  “delegates” the process of choosing the new computer software program. Then when the choices are laid out in front of him (or her) by his (or her) subordinate(s), he  (or she) completely ignores the findings and “goes with his  gut”.

This seems ridiculous, but it happens much more often than you could imagine. In a best case scenario the decision might actually be made on the golf course or at some cocktail party, based on a good report that was received.  In other cases, it is strictly based on the personality of the salesperson or the size of the vendor, the location of the vendor,  or some other irrelevant piece of information.

This is bad for two reasons. The valuable information that has been gathered by the team is not used to proper advantage. Worse yet, the employee(s) that did all the discovery are undermined and demoralized. This is not a good way to start the implementation of a new system.

Top management has to stay involved with the process or be willing to give complete authority along with the responsibility to the people doing the research. This is a very important decision and my vote would be for top management to stay completely involved throughout the process.

Most of our clients are distributors. As  distributors. Over the years, they have learned that they can make as much by “buying right” as they can by selling at the optimum price.

Often clients try to apply this principle to the purchase of software. They will beat on the system salesperson and obtain price concessions.  Often in the process of getting those price concessions, the clients will give up things like training, implementation services, consulting, etc.

This can be a recipe for disaster. Without proper training, many companies often end up using only 20% of the capabilities of the software. They never realize the benefits that they were expecting.

When they finally realize that they really do need training, they end up having to buy the training by the hour. This approach at least helps them use the system more fully, but the client loses complete control over the cost of implementation.  Once they have they system, they are sort of stuck.

When buying software, price is nowhere near as important as the prospective long term relationship. Don’t buy on price alone.

When you are going through the process of selecting and implementing a new system, your attention to the details and your follow up are important.

During the selection process, be sure that you get references. Be certain that those references are very similar to your company and interrogate them thoroughly. Make site visits if possible. When you talk to the references, be polite, but don’t be so polite that you don’t get the information that you need.

When you have a demonstration, be sure that you have your list of features – List them as must have, like to have and would be nice features. Don’t let the salesperson off the hook when he or she gives you “marketing answers”. Make the salesperson demonstrate the specific way your important capabilities are handled. Many system will do the things that you want, but sometimes the process is so cumbersome that it isn’t worth it.  Often the system will simply not meet a particular need. If it doesn’t, that could be a disaster when you try to install the system.

After you choose the new system, it is important to follow through as well:

Once people are trained, follow up with them to see what they learned. Clear up misunderstandings while you are in the “sample company”  phase and you won’t have to deal with problems created by lack of knowledge after you go live.

We once had a client who started implementing our system and their people misunderstood our “sample company” method. With our sample company method, no real data should ever be entered into sample company. The sample company is strictly for experimentation.

Well, this client didn’t check on their employees and a few of them were entering real data into sample company. The manager never checked their work and we didn’t discover for 2 weeks that this was going on. Fortunately, we did discover what they were doing before we copied the live data over the sample company (something that we routinely do). If we had copied the data, the client would have lost all the information that they entered.

Quite simply, don’t expect what you don’t inspect.

Implementing a new system takes time. It is important to establish a plan and allocate the time necessary to do it properly.

It doesn’t have to be all consuming though. Plan a couple of  hours a day for a 3 to 4 month period and you would be amazed at how much you can accomplish. Doing things on an orderly basis and keeping up with your regular work is definitely a challenge, but it is truly worth it.

If you have done your homework and found a system that will make your company run more efficiently, it is surely to your benefit to learn the new system and take full advantage of it.

Putting in a new system is a little like going to the Dentist with a toothache. It isn’t  much fun to go, but it is so much better after you’ve been. An old system is like a toothache. It nags at you. You might be able to bear with it a little longer, but it can drain your energy and it is often not good for the health of your company.

During each phase of the installation, it is helpful to have checklists and review points. The checklist should cover each of the tasks that need to be completed in order to successfully move on to the next phase.

Here are some examples of the transition times (when the checklists should be complete before moving on):

1. Hardware installation and Integration.

• Are all the PC’s powerful enough to run the software and do they have the client software installed?
• Are all the printers installed and integrated with the software?
• Is the VPN (if applicable) working properly?
• Is the server being backed up routinely?

2. Initial data conversion and training.

• Has the master file data been converted?
• Have the necessary people been notified about the training schedule?
• Have you set up a “Sample Company” to use for training purposes?

3. Go live date.

• Is there a plan for the final transaction data conversion?
• Have all involved employees learned and practiced how to do their jobs in the new system?
• Have they reviewed the output so that they know where to find information in the new system?

The above are just simple examples of obvious checkpoints and things to check. You should create your own checklists and determine your own checkpoints. If something that is on your critical checklist isn’t done, you should not move on to the next phase. It is much better to do the conversion right than it is to do it over. If it has to wait for another month, that would be much better than doing a slipshod job and regretting it for years (which you will).

I recently had a conversation with a company that purchased software that wasn’t specific to their industry (the Fastener Industry).  They are two years into the implementation of the new software and they have paid 4 times the quoted price for the software. Worse than that, they are spending much more in support fees and labor to use the software than it cost to run their old software.

I wish that this was an isolated instance. It isn’t. Many of the additional fees that they paid were for “enhancements, modifications, consulting services and custom programming” all of which they assumed would be in a “big system” like the one that they bought.

They are still dealing with issues that are costing them money every day. They frequently have orders that are 100 lines long or longer, something that is very common in the Fastener Industry. Their old software allowed for the insertion of a line in the order. This is very important because the orders are often in size sequence or they need to be in the proper sequence so that the Packing Slip matches the Purchase Order.

The new software has no provision for this, so when they make a mistake, which is often, they have to delete the order and re-enter the whole thing.

Another issue is that the new software only allows 40 characters for the primary product description (the one that shows on the screen). That simply isn’t long enough to properly describe many Fasteners.  There are no easy solutions to these problems because they are part of the basic design of the new software.

The client has no recourse. The 21 page contract that they signed removes the software company from responsibility for this type of issue completely. Be sure that you do your homework Details are huge.

It is very important that you inspect the output that results from your training or practice sessions. During this “Sample Company” phase of the implementation, you have the opportunity to make all types of adjustments and corrections without causing any harm. After your “go live” date, the same corrections could be very disruptive. The old sage, “Inspect what you expect” really fits in this situation.

The information that appears on business forms, the reports that the system produces, the difficulty, or the ease of entering data, are all factors that can have big impacts on your operations. Fix them before they become problems.

Most business software programs come with Maintenance Agreements. It is important that you completely  understand what is and what is not included in your Maintenance Agreement.

Some vendors have different levels of support, e.g. Platinum, Gold, Silver, etc. If your preferred vendor offers maintenance this way, you need to consider your requirements and the level of technical expertise that you have in-house and determine which plan fits you best.

The best Maintenance Agreements include complete unlimited online support, bug fixes and program updates. This type of support will ensure that your software is up to date and fully supported. Having a Maintenance Agreement like this is like having an IT Specialist on your payroll for a fraction of the cost of one.

Sometimes software salespeople will tell clients that they can go without the Maintenance Agreement in order to get a sale. This is not a wise choice for most clients. The software that you are purchasing is very complex and comprehensive and it is going to need some professional attention at some time during your use of it.

What if you are not on a Maintenance Agreement, and say two years later, you need some support?  It is entirely possible that your vendor will require that you purchase the Maintenance (along with all the Maintenance that you didn’t pay for) or refuse to support you. That sounds unreasonable, but the software is likely to have changed quite a bit over a period of 2 years and the vendor may have to upgrade you to the current level in order to fix whatever problem you have.

If you pay by the hour for the service, it may well be $225.00 per hour or more. Even at those prices, it may be refused because you are not on a current version.

Your entire company is going to run on the software package. Don’t shortchange yourself.