Preliminary Vendor Selection FinaliStS From the demos arrive at the two best potential vendors as finalists. Take these two through the final steps in the negotiation. This will end up with the best decision for your company. Draw up a list of questions and interview as many references as you can. Then schedule at least one site visit for a couple members of the team to businesses which are comparable to yours. We also recommend visiting the vendor finalists’ headquarters to meet the management team, interview the potential project manager that you will be working with, understand their philosophy on R&D and if there is a user group that recommends enhancements, etc. Remember generally these systems have a longer life and take eight to 12 months to install. You have expended a lot of effort; don’t shortcut these final steps.
SPeciFicationS oF cuStomizationS (aSSumed minimal) We believe that companies should do everything they can to initially not modify the systems. Modifications add risk and cost and lengthen the schedule with specifications, programming and testing. If modifications are necessary, detail the screens, reports, calculations, etc. of the necessary changes. Put these in writing, ask the vendor to prepare an estimate of the hours, dollars and time frame required. Few vendors are going to do modifications fixed price. Work with the vendor to give you a fair bid that has a certain level of accuracy unless you change the scope. Don’t sign a license agreement without understanding as best you can the costs of modification. These costs can be major. Your company and the vendor should sign off on the specifications and estimates.
imPlementation Planning As part of the RFP, ask the vendor and the team to do the best possible planning for the implementation. Most vendors will want to do the detail implementation planning in the implementation phase. We advocate doing as much as you can before the decision is made and contracts are signed. This will give you important observations and task lists of how much your process and business environment will change. This should become part of the business decision process. The objective is to identify the assumptions about what your company will be responsible for; all the processes and procedures that will change, what resources are necessary; a detail view of training process; conversion of specific files; and a realistic time frame for the project. As we said earlier, over 50% of major projects are over budget and off schedule from the original assumptions.
Final Vendor Selection
licenses, professional services, and support agreements is critical. Include all key decisions you have made including timeline, modification specifications, assumptions about services, etc.; these should all be part of the agreements.
a Word about Sign-oFFS Throughout this article we have mentioned places where vendors and the user community should sign off on deliverables, requirements, plans, etc. Since the 1970s, as general IT industry standards have evolved, sign-off on key deliverables has become a standard. It’s also the best way for you to get buy in from the management and department users.
beneFitS Most teams can come up with a soft list of benefits for moving to an OMS. In today’s business climate and with the competition for capital, CFOs we work with want to see a Return on Investment (ROI) within 18-24 months. Frankly, this is one of the hardest steps in the process. However, here are some areas to consider: } How will customer service be enhanced? Is the online, closely coupled website to OMS business system essential to growing your business? } How will the new OMS improve inventory management resulting in higher initial order fill rates, improved turnover, and reduction in aged inventory? Inventory is the largest balance sheet asset. } How will the new OMS and resulting process reduce labor costs in the call center and fulfillment centers? Eliminating process steps and touching product less times decreases costs. } How can barcodes throughout all the steps (inbound product and outbound customer fulfillment) reduce costs? } How are errors reduced? Studies on errors show they cost $35 to $50 and often lose customers in the process so you lose the Life Time Value forward. } What are the merits of the technology being proposed? Does it allow you to adopt other alliance partner applications and websites that are not possible? Is the change out necessary because expense and difficulty of supporting aging technology, databases and languages? p
Curt Barry is president of F. Curtis Barry & Company, a consultancy specializing in multichannel operations & fulfillment. Services include systems selection and implementation, improving fulfillment operations through cost reduction, benchmarking, process improvement and layout and design. He can be reached at 804.740.8743, www.fcbco.com, cbarry@fcbco.com.
Evaluate the total picture — the total cost of ownership, the fit of the system, what the vendors’ customers say about their support, and observations from site visits, etc.
Vendor negotiation and contracting We believe that an attorney that specializes in intellectual property law should review the agreements. Review of software november-december 2012 | www.PARCELindustry.com
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