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CTS Manufacturing Blog

Perils of the ERP Manufacturing Software Sales Cycle

Of all of the products one can buy, purchasing ERP software is possibly the most complex and problematic.

Think about it. When it comes to purchasing MRP software for your manufacturing company you have to truly understand the requirements for all phases of your business. Not only do you need to understand them, ideally you should also understand how the various applications tie together both from a business operations perspective as well as an accounting perspective. Exactly what data should be sent to what applications beginning with a sales quote then creating a bill of materials, moving that into a work order, tracking the work order through the shop along with work in process data for tracking job completion and then shipping along with requisite documents.

Some of the challenging questions that must be answered are:

  • What are my priorities in order to meet essential business goals
  • Will staff support putting in new software?
  • Will new staff need to be hired with better skills?
  • What cost accounting method should be used?
  • What will be the long term costs of maintaining the system?

All this may be roughly understood but translating the details of that into the ability to evaluate prospective manufacturing software vendors requires a lot more than perusing sales literature and listening to a slick salesman.

Here are some of the hurdles you can run into along the way.

One size fits all. Some sales people see all prospects as the same. “They are manufacturers, we sell manufacturing software so what’s the problem? We have hundreds or thousands of customers. We can make them happy.”

Does the salesperson know his or her product? How much experience do they have in the industry? Turnover of sales people is high in the software business. They come and go and many of them never really learn their product well enough to answer your questions properly. At the same time, a salesperson who is able to master a slick demo can come across as knowledgeable. It is not unusual to find companies who buy the salesperson and not the product because they are taken with the salesperson and how they present themselves. Conversely, an incompetent or inexperienced salesperson can make good software look terrible.

Ideally on a sales call, there should be both a person who is assigned to your account and the sales representative and another person who is the technical representative there to answer product specific questions. But that won’t happen if you are a small company because the vendor will not want to invest two people on call to a small prospect.

Project managers. Once you buy the software it has to be set up and installed. You could purchase a pretty good system and still have it fail if the project manager does not know his product well or understand your type of business. Setting up a repetitive, make to stock manufacturer is totally different from setting up a one–off job shop manufacturer. Be sure the project manager has experience implementing systems for your type of operation.

Pricing games. Prospective buyers often waste a lot of time looking at software that ultimately will be too expensive for them. Salespeople usually don’t want to be upfront with the total system cost because they might scare you off. So they will low ball the price and gradually move it up in hopes that you will fall in love with their system by then. In the meantime, there can be dozens of sales calls and back and forth when that the product was never a realistic candidate for you to begin with.

Are you worth their time? I sometimes hear from buying prospects that certain vendors are not responsive to them and show no interest in them a buyer. In those cases, the vendor has likely decided that they are not going to spend enough to make it worth their while servicing them. Or they may think they are not a serious prospect and lack the profile of a serious buying prospect. What are those characteristics?

  • Has set a budget
  • Have a committee working on the project
  • Management is involved
  • A software champion is present to guide the project on the buyer side
  • Is coming off software that is not too far removed from what they are looking at buying
  • Has adequate resources to train and implement the system properly.

Unfortunately, all of these straightforward and common sense issues can easily get swallowed up by sales people who only see dollar signs and push the manufacturing ERP candidate into a purchase based on sales hype, special end of quarter discounts or plain old selling pressure. Of course, the buyer may contribute in his own way by not documenting his needs carefully enough, assuming the salesman is accurately answering his questions and or is so exhausted by long, drawn out buying process that they throw their hands up and make a shoot from the hip decision just to get whole thing over with.