[#ERP] How much to invest is appropriate? How to select system vendors properly?
201500003
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article is placed at e-Process Implementation category.
Hi. This is Emily,
the author of Whatsyouridea1996 blog.
How much do we need to plan in
investing in system implementation works? How to choose system suppliers
properly?
This topic involves in 2 kinds of【Choices】；it reminds me of a beautiful song, 【My Choice】, the singers is a couple, George Lam and Sally Yeh, please click the link inside the page and enjoy.
started at 0:33
If you don’t know Chinese but hope could know what the lyrics
mean, please seek for friends help from people who are familiar with Chinese,
there is English version but its meaning is quite …👉😒 from the original.
Love stories of this couple reminds me of a song, #MayILove You, the signer is Z-Chen Chang, producer and publisher is my former employer, HIM Music Group. I hope you like this melody. 🎹😊：
This link is from Official YouTube Channel of HIM MusicInc.
Back
to this topic, please see the diagram first and clarify the work priority：
This picture is generated by whatsyouridea1996.blogspot.com,
If you would like to use it for
commercial purpose, please indicate the source. Thank you!(2022/6/9)
1st.Please clearly define all
the needs of your system implementation and build up the request for
proposal(RFP). A brief reminder, please see：[ Other
Preparation Works ] in「[#ERP]What to Prepare In Advance?201500005」.
[System implementation demand], [ Selecting system suppliers properly] and
[ Appropriating proper amount of money] are correlational 3 elements in this topic, every element of them needs to
adjust or compromise per other 2 issues change before confirmation：
In system
implementation, it needs system vendors with aspects of specific [specialties ]
to meet your [various system needs], thus, [ professional charges of system
software, hardware and implementing service fees] are different per suppliers
specialties；the Company may also need to [ adjust the needs] due to [system
demand urgency], [ related budget limit]
and [vendors’ specialties and expertises].
2nd.How
to select system vendors properly：please also focus
on below (5)-
(1)
A qualified
supplier needs no customization system to meet your need：Please
refer to [Additional Charge ] Pay forcustomizing for me or pay for your learning 201500006
(2)
The more famous
brand the better quality method：some companies
would like to consider system vendors who have stronger brand reputation and
they feel these vendors are higher reliable. Usually, internal PM will assign
IT persons to hold a write-in selecting procedures for
several system vendors with notable brand name, though, these vendors also need to have sufficient system specs per
companies internal needs.
Companies’ IT persons know the well –known system
vendors and their expertise, this situation is like the companies’ Accounting persons
know the well-known accountant firms and the professional service work scopes
they focus on. If the IT persons don’t know related information, they will utilize
“Google Searching method” or “Phone Call methos” to know from other resources. 😆
It is
advised the companies also need to prioritize internal needs of system work
results and define the urgency to invite related system vendors for presenting
their service for internal vendors comparison. For example：some
companies’ 1st priority is the need of system generated specific report
presentation, but some need the convenience of data tracking most(note1)…etc.
(note1)Eg. Data source tracing back：in Taiwan market,
there are 2 major global system vendors be concluded in system survey, the
major difference in data source tracing is, 1 of the vendors is doing cross
reference, users will get data source by double clicking the record, and the
other is doing data processing by batch posting, users need to do additional
data capturing or sorting to get the sources. The companies make decision by
their work preference accordingly.
(3)
Consulting to
work partners in the same industries/internal colleague method.
(4)
Consulting to
external auditors method.
Per system implementation work scope, it involves
3 work departments at least: users departments, IT and Accounting. Please click to view [ #ERP
- PM Who ] IT keeps nodding when hearing this201500002. Regarding above (3) and (4), I’ve experienced a firm
which has 500 employees and its Sales
department asked help from customers and invited related system vendors
to do the briefing and attend the selection. It can be said that all staffs
have participated the system implementation project.
(5)
If the system
investment amount will reach the 「CAPEX 」number
defined in accounting, and it is taken as a 「significant」 number in
the company, in this situation, it is also advised the company to establish a transparent and neutral selecting/voting
procedure for recruiting the right vendors. And, it is better to have 3
vendors at least in this selection and vote or do assessment by the work
representatives for 「major users departments」, 「IT
department」, 「Accounting department」 and 「Internal Control
department」. Please ask me a
question if you’re not clear of above description.
While the invited
system vendors doing service/product presentations, the companies will request
for knowing their professional charge accordingly, thus, you are able to do
below 3rd. of budgeting related works based on the amount obtained.
3rd.How much to invest is appropriate?
This work
direction is similar those mentioned in this article：「Role and responsibilities 」section in How to 【write/build】 ? 2008000201, Work
process
is like the blood and blood vessels of human bodies( companies), which flow
among all the organs (work departments); and as for e-process, just like the metaphor
of using the system workflow to make the blood flow in the blood vessels more
smoothly; hence, before we decide the amount of money we need to invest in the new
system, we need to consider the maturity( business maturity and growth) of human
bodies( companies) which carry the blood and blood vessels, it is like a
baby/child( a startup), the youth( growing), or the old(mature), to define the
appropriate blood flow( system workflow) speed, the useful life of the system
it needs and the workload the bodies can endure .
Below (1), (2) and (3) affect mutually；(2) and (3) are
for general cash forecasting work purpose, these methods are testing the amount
of cash available for system investment, and mapping with the impact of
software/hardware spending amortization on profit and loss statement in order
to define the range of acceptable amount to acquire the system. Then, just like
above 2nd., there may be amount limit less than system price, the
system demand may need to do some required permanent or temporary adjustment
accordingly.
Budget template please see : [#ERP] BudgetTemplateInBrief 預算格式概況 20220618 for reference.
(1)
Vendors provided
system price comparison method：
As the term suggests, the company needs to gather all the possible system
service charge from invited system vendors for internal comparison and do below
(2) afterward.
(2) 5-year cash balance
method：
To review past 5p
year actual cash balance to predict the amount of available for system
investment for the upcoming 5f years then define the required system
implementation cost, the minimum number X and maximum Y. And, it is advised to
define/adjust the number of 5p and/or 5f per company actual record of business
growth and prediction of the future. ( p=previous，f=future)
X ~ Y is cash available for system
investment, it already excludes
estimation of other cash need in the future.
(2)
Accounting
amortization method：
To estimate kinds of required invested amount based on the charge obtained
in above methods (1) or (2), and calculate its amortization expense impact
doing profit and loss forecasting for making choice of the acceptable number.
(3)
Divination method：
To pray for knowing the suitable number?!
Surely not! 😆😆😆 !! Just kidding!
That’s all I would like to share with you. What’s your idea?
This is Emily, if this article is helpful to you,
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Wishing you good health, peace and happiness and abundance.
Send you blessing：
May you complete work systemizing project smoothly and successfully!
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