Whatsyouridea1996 您說呢?!: [#BusinessManagement #ERP] How much to invest is appropriate? How to select system vendors properly? 201500003

Monday, January 23, 2023

[#BusinessManagement #ERP] How much to invest is appropriate? How to select system vendors properly? 201500003

[#ERP] How much to invest is appropriate? How to select system vendors properly? 201500003

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This 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

https://www.youtube.com/watch?v=9bQT7t58WtU

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)

1^st.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].

2^nd.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’ 1^st 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 3^rd. of budgeting related works based on the amount obtained.

3^rd.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 2^nd., 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 5_p year actual cash balance to predict the amount of available for system investment for the upcoming 5_f 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 5_pand/or 5_fper 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?

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