Solving ERP Selection and Implementation Challenges
Solving ERP Selection and Implementation Challenges
The question that we thoroughly discussed this week is, How to solve ERP selection and implementation challenges? To give the answer and discuss it in detail, we had our chat today.
In this week’s The Faces of Business Episode, our guest speaker was Sam Gupta. Sam is the Founder, Community Builder, and Host at WBSRocks. Apart from this, Sam is also the Principal Consultant at ElevatIQ wher he helps manufacturers with ERP selection, implementation, automation, and process development.
The conversation started with Sam giving an introduction about himself. He said that he belongs to a manufacturing family and his family is very business-centric as well. This is why since as a child he learned a lot about business and was aware of a lot of terms by the time he went to college.
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After this, Sam said that he tried to work on some entrepreneurial ventures when he was in college, but those weren’t enough to feed his family. This is when he changed his direction of work.
Moving on, Sam shared how he got into ERP. He said that he initially worked in VRP and then DRP, however, after some fails he realized that it was not for him. This is when his whole entrepreneurial journey gave him a perspective and later he started his own company ElevatIQ.
Continuing the conversation Sam shared more about his company and all the ERP implementation and selection challenges he faces. Talking more about this, Sam said that they do a lot of different things from MRP. He also said that there are multiple other variables when you get into ERP for SMBs.
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Further, into the conversation, Sam talked a bit about the ERP selection and implementation challenges as well. Sam said that whenever you are looking into installing a new CRM or MRP system, it’s like getting into a new system and designing your own architecture and making your own blueprints.
In addition to this, Sam said that when it comes to ERP selection and implementation challenges, the major focus is on the P or more of the IP system that matters.
By the end of the conversation, Sam talked about enterprise architecture and how it works. He said that this is slightly more technical than what people worry about.
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The conversation ended with Damon thanking Sam for his presence.
business, system, people, rp, architecture, typically, engagement, problem, talking, run, integrate, customer, upgrade, software, define, implementation, customization, integration, buying, understand
Damon Pistulka, Sam Gupta
Damon Pistulka 00:02
All right, everyone, Welcome once again to the faces of business. I’m your host, Damon Pistulka. And with me today, I’ve got Sam Gupta from ElevatIQ. Sam, awesome to see you today. So happy we can have you,
Sam Gupta 00:18
Damon, thanks for having me. So happy to be here.
Damon Pistulka 00:21
Yes. Well, it’s gonna be interesting day we’re going to have some fun we got, we’re going to talk a bit about some eirp solving challenges with VRP implementations, and in manufacturing, and I’m butchering the title I know I am solving manufacturing MRP system and inflamation implementation challenges. There we go. I got it out. Finally, it was too long for me.
You’ve gotten three words, in the afternoon. So but as long as the problem is being solved by thing we are going to be okay. Yeah, we will be we will be. And so the main thing is we want to try to give people some a bit about your, your background and history. So, you know, like our show starts out Sam, tell us a bit about yourself and kind of your journey and how you how you roll into what you’ve been doing and kind of how it led to today.
Sam Gupta 01:11
Yeah. So when I started, I mean, I grew up in a very manufacturing and distribution centric family. So we did not really differentiate between business and family trying to be honest. Okay, in our family, everybody works as soon as they are on their feet. And I think you have similar background, Damon, right. If I remember correctly, yeah. So so that’s how my, my really DD childhood. That’s how I grew up. So yeah, so spent a lot of time learning about business manufacturing, distribution, you know, did a lot of accounting as part of my family business. So by the time I went to university, I just knew too much too much information in my head, which is good and bad, I guess.
So yeah. So when I went to college, as you know, I did engineering, which could be dry for a person who did business, you know, for living before your university. So yeah, but I mean, I was really curious about the engineering aspect of of the problem, just because I wanted to understand how world work and I didn’t want to be limited, with just my background that okay, I knew about manufacturing, I knew about distribution, but I didn’t know how the other world works. So that’s why I actually went for engineering, I really wanted to master that. But then I never wanted to sort of go for engineering.
So I was always into business. I mean, I would probably not fit in, in the engineering environment. Okay, so I decided to work on some of the entrepreneurial ventures, as part of my university tried to sell to restaurants like very a very small, tiny, mini RP system, back in the days, you know, like, 2025 years back, yeah, trust me, I could not feed my family doing that. So then we decided, you know what, this is not worth it. Because, again, for me, it was not just the passion, because I knew how to do the cash flow analysis for a business. Yeah, and what works in a business.
So yeah, so I wanted some sort of predictable cash flow, so that I can, you know, raise my children, I can have family, I can have employees, but I just could not see myself doing that. I thought, you know, what, I have a lot of business background. But I have a lot of learning to do. So that’s why I decided to go for Fortune 500 Consulting, they liked me because I had a very different background, compared to other folks who were, you know, very bookish. And in my case, I had a very practical knowledge of the field, then I had the engineering perspective.
So when I went for the consulting, they would put me in every single engagement that was broken. Okay, yeah. And when I say broken, broken would mean a lot of different things. Here, in this particular case, when you talk about technology, obviously, technology can do a lot of things, it can do miracle for you, but it can also fire back to him.
And as you know, yeah, dealing with a lot of different technology engagement. So my role was really to number one, the basic problem in all of these engagement was, you know, everybody’s very siloed everybody’s thinking, Okay, I’m marketing, I’m engineering, I’m accounting, you know, everybody’s sort of trying to pull everything in their direction. And because of that, the overall picture of the organization wasn’t as clear. Okay, and because of that, you will have a lot of investment, let’s say in the marketing department, a lot of duplicated effort. It was a it was a nightmare. And yeah, go ahead.
Damon Pistulka 04:29
So when when you were doing that, was that part of business overall, or was it part of MRP and MRP systems focused?
So the consulting company that I used to work for we were sort of the SI is the system integrator, okay. Okay. So typically, their engagements are going to be very technically driven, but typically they are going to be bridging the gap with the business as well. So they will since business does not business I cannot learn the technology. Overnight, so it is the people who have to learn the business and figure this out. So for us, it was always Okay, if you don’t tend to change the business, then probably you are not right for, for the job.
And that is probably the reason why they liked my background when I got into this field is because, you know, I have that business attitude. So initially when they hired me, I did a little bit of programming as well. So yeah, so, you know, I did that for some time. But then I was put into really, you know, large engagements and in broken Beals doing a little bit of pre sales, and then professional services. That is how typically the consulting organization works.
so we’re gonna load different environment, you name it, logistics, transportation, you know, distribution, manufacturing, airline banking, oh, my goodness, all over the place. Okay. So did that for roughly 1012 years, you know, I got really good at business, you know, the move from engagement to engagement, just, you know, fixing these engagements, right?
Yeah. And then, after roughly 12 ish years, when I was done, you know, I was always exploring some of the entrepreneurial ventures in parallel, I just could not see myself doing this sort of VRP company starting up company, because you know, how competitive they could be, especially when you are targeting the larger companies, it just harder to build a company around that. So then I was I wanted to explore some of the tiny mini startup ideas, the way majority of these startups were, it could be the met at the martide directive.
So I went after pretty much every single ideas you can possibly imagine in the in the startup space, failed miserably, okay, in every single of them. Just because I just didn’t understand the market, I just didn’t understand the industry. I was like, This is so cool. I want to go after this, you know, I can do it. Like any other entrepreneur, right? But then slowly, and gradually, once I failed enough, I guess, then I realized, you know, what my core is really that manufacturing, distribution.
DRP. And, you know, in this journey, I figured out, you know how to do sales and marketing. Because before that I was involved in larger deals, but I just didn’t know how to approach the sales and marketing from the from the scratch. So this whole startup journey actually gave me the perspective, okay, how to penetrate the SMB market. So that’s how I, you know, started the elevate IQ umbrella, the core focus of elevate IQ, as you know, is slightly bigger than the RP obviously be our very eirp focus just because of the industry, you know, we are targeting here.
So we do a lot of different things from the MRP selection, to, you know, the the contract help if the companies need, we do a lot of integration, let’s say, if your CRM is not connected to your RP, RP is not connected to e commerce, you know, all of those crazy scenarios, whatever business apps, you might have, in your environment, whether you are a manufacturer, distributor, retailer, or anybody else, right, we also get involved in a lot of upgrade or optimization, majority of the time, when we get into any engagement, typically, we are noticing that the adoption rate is going up to 20 to 25% of the system, there is going to be a massive duplication between the systems.
And because of that there is going to be a significant effort overall, from the admin perspective, if you look at PnL, that actually increases your sdma. Okay, and if you keep growing your scna, and if your revenue is not growing at the same pace, you know, Damon, what is going to happen? Yeah, especially when you are going to sell this business? I don’t think anybody’s going to buy it. And one of the comments that, I think, you know, I posted a couple of folks on my podcast as well from the buy side.
And they say that, you know, in these companies and I can completely relate, we put $0 on the technology, okay, any of the business process technology, because they know that it’s not going to be any useful when I’m going to buy it. So typically, that’s the situation of the typical SMB market.
So we work with a lot of different p companies that say, if they have a vision to improvise their, their positioning in the market, Damon obviously, you know, I would be more than happy to work with you as well, because you do similar things in the market, too, right? So our goal is to how can we provide for better value from the technology? And how can we streamline the business process so you grow the way you should be growing and your admin effort? And these duplicate processes don’t become your bottleneck for growth?
Damon Pistulka 09:18
Yeah, yeah. And that’s that good stuff. So I’m gonna stop just for a second. We got Paul Van Meter is here today, saying, looking forward to discussion. Thanks, Paul. I always forget to if you’re listening, just go ahead and tell us where you’re listening from. It’s always cool to see that. We’ll make sure that everyone knows and we’ve got we got some of our some of our listeners, we hit awful. There often listen, hopefully we see some of you back too. But let us know if you got questions as well in the comments. We’re watching those both. I’m hitting it on LinkedIn over here.
We’re hitting it through the other the other channels we’re going through as well. Now, you have hit a lot of different things here, Sam, that’s the one thing that I think that Don’t know if people know quite how much stuff you just hit because I was writing as you were talking, and there are a lot of things. Now, one of the things that I see I personally in the last one was a long time ago, I’ll just say it’s been a long time. But I’ve, I’ve been through eight, or nine, something like that major upgrades or implementations, right.
So these things are never pretty, it seems like unless you really plan them out, and you really get it done, right. I mean, I, I’ve come into where people have been trying to do it for two plus years, and still doing training because they haven’t got past the training phase, because they, they can’t get the training ton done in time, before employees leave, and K you know, so an E RP can be a massive sink and suck of resources and money. And on the other hand, that so your selection, your your implementation is so key, and then you bring up something that I know is got to be killing e RP systems and duplicate systems now.
And that is the integration because every company now needs to have a CRM that every company has, on not every company but many companies are doing business, in our er p type are not a year p but an e commerce type system where, you know, they want their customers to either be Oh, by retail online, or they want to be able to customers, if they’re b2b, they might have logging in online and doing their own.
They want their suppliers to be connected to their suppliers now, or even into their customers to monitor inventory from their customer systems to automatically place purchase orders. I had one one of the people I worked with a few years ago, as mentioned that they get like a million orders a year from one of their customers, because they’re high volume orders on a daily basis.
And, and you know, so these integration, I have to, I have to imagine have exploded. And then when you talk about one of the last things you talked about, and we’re going to cover each one of these, we’re going to go back and cover each one is the upgrade the upgrade process is no simple task. So when you’re talking setting out and you’re helping people in the selection process, what are some of the key things that you think people overlook, that if they just paid more attention to that it would help them a lot.
So one of the problems that we typically notice, especially if somebody is buying the technology for the first time, for them, technology is just a product as they’re walking into a Home Depot, and they’re simply grabbing. Okay, it might be slightly more complicated than that. But typically, they are not thinking that they are buying an ITX system. And if Damon and you have been around the block for a very long time, if you had to buy this IT system back in, let’s say 1990 or 2000, oh, my goodness, your IT guy is going to give this, you know, large forum, and there are going to be at least 1000 different checkpoints that you have to make.
And each decision is going to have some sort of implications on on your IT system. Sure, in 2020, I get it that things are slightly easier, you can get the subscription, you can you can you can do a lot of things easier, an average SMB, you know, company can utilize this information to be able to purchase but the the implications the system, the it hasn’t changed, it’s still the same, it’s still very complex, it’s not supposed to be easy, okay. So one of the things that you can do to go easy on yourself is just to embrace that it is probably going to be difficult.
So number one, I mean, spend some time in researching yourself and figure out you know how to work with the consultant, because if you don’t know how to work with a consultant, then the sort of become this compliance culture is what my friends like to, you know, define that term. You know, so they become very compliant to you.
Because at the end of the day demon, you let’s say, if I’m working as a consultant, if I’m working with the manufacturer, and if manufacturer does not really have enough understanding of the IT system, and if I’m going to challenge on on a couple of things, and after that, you know what they are going to say, I’m not really getting a good bite, then I’m going to back off, and I’m going to simply listen to whatever they are saying. So sometimes what these vendors do is they become very compliant.
And when you can become compliant, that’s a challenge. That’s a problem, especially in case of IT system, because there are actually real implications overall, that a lot of small to medium sized businesses don’t realize. So number one thing, just embrace the selection process there is there are a lot of things that you need to think through before before you select an earpiece system. Even if you have let’s say building a website, right as you correctly pointed out, there are going to be at least 10 to 15 different channels that you need to consider and the more customer you sign the more channels you are going to get.
If you’re signing larger customers, they are probably going to be on one of the vendors system or the punch out system. If you are dealing with Amazon as you know Amazon has two or three different, completely different company websites. I mean, from the business perspective, they are completely different. That has huge implications on the MRP system, the fulfillment system.
So if you are, let’s say, if you are not thinking about integrating all of these pieces, if you’re not thinking about the holistic picture when you are purchasing a purchasing system, and if you’re thinking that you know what, it could be a very small piece of software, then you know, that is definitely going to fire back. And that’s what you see, in most cases, just because, you know, especially when people are buying the earpiece system for the first time, we have seen the failure rate to be roughly 70 to 80%.
So there is a saying that, yeah, in case of VRP, I think the failure rate is going to be roughly 50%. In general, okay? If somebody is buying for the first time, and that’s given just because they don’t understand what they are getting into it just hard. So the failure rate is going to be much higher for people who are buying for the next time they implement, they are going to be way nicer, because now they know that I am probably building a house.
So I need to be nice to my contractor. I’m building my airport, I need to be nice to my contractor there. Yeah. So overall understanding of the processes, one thing that we typically notice in in the selection process that people don’t understand, but there are so many different variables so we can get deeper into
Damon Pistulka 16:18
those. But you know, talking about selection, I think, and I would show Paul’s, Paul’s coming to us from Bellingham, I know that that’s a beautiful place up there. So wanted to get that in quick. But on the selection process, I think one thing that that honestly people don’t understand when they’re going to look at any kind of system like this, I don’t care if it’s a CRM, or an E RP system is that they don’t know their own business processes. Exactly. They don’t have them written down, you know, that guy, Damon’s been doing the order entry, or whatever the heck he’s been doing. And it’s, you know, that’s just what it is, and we don’t have it written down to train somebody else.
And when you don’t have that, it really, how do you actually select a system that’s going to help you do that, if you don’t know how you do it that much. And then it becomes a lot of personal opinion. But and, and that’s great that you say that, because it’s what I’ve found, and it drives a lot of extra cost. And we’ll get to that later. So great, great stuff on the selection. And Paul said to that, you know, failure rate as high as 60%. And it’s not good man. It is, it is brutal. It is brutal to implement a new e RP system, that’s for sure.
And that’s why I think people live with really crappy ones for a lot longer than they should as well. Yeah. Just because they’re scared of it. And and I know people like you can help them do that. And, and technology is probably included a lot. So when you when you talk about implementation, what are some of the things that you see on the implementation phase that really run, run people ragged or run into problems with?
So yeah, so it’s a it’s a team, right? So when you talk about the selection, if you don’t actually do the job, during the selection process, you actually hit on the right point. So before you install any sort of e commerce system, or any sort of MRP system or CRM, it doesn’t matter which system you are installing, there is a process in which you have to go through your business application to simplification phase, okay.
And it’s almost like, you know, defining your blueprint, defining your architecture, when you are building a house, irrespective of whether you are building a house or airport or, or you know, a city, okay? You would not do that in the plane engineering term, before you have the architecture refined on a piece of paper, unless you have roles and responsibilities defined of different systems in case of IP systems, typically, majority of these small to medium sized businesses, they just bypass that process.
And the point that you were trying to bring agreement is, Hey, I have been doing my business this way, can you simply enable this in the next system, if you do that, obviously, that’s not going to work. Number one, that increases the cost of the implementation. Number two, if you don’t know what you are asking your technical guy to do, they are very good at engineering, they are very good at creating. Right? They just like to solve the problems, they are going to solve the problem. But that is going to cost you a lot of money. These guys don’t understand dollars. The as soon as you talk about dollars, they are going to run away I’m telling you.
Damon Pistulka 19:11
Yes, that’s a good point. Because it it is really not what you can do. But what you should do, and you should know what you should do before that and you talked about the business blueprint. I think that’s that’s really key not to try to a before you do the selection, really you should have your business blueprint, but then it will save you a lot of money and other resources on the implementation phase for sure.
That’s great. So now when we’re when we’re looking at the business blueprint, when you’re talking about the implement the integration, now that’s the thing that that you’ve got to run into a lot where they’ve got a separate CRM system or they’ve got, you know, like I said, a website where people are placed in orders, so they’ve got an ETA to different customers or suppliers. So what do you see the channels issues that people run into when they’re doing having problems with the integration.
So typically, when they evaluate any system, they are going to ask a very simple question. And that’s, that’s almost like a checklist. Okay. So we are going to say, Okay, I’m buying my CRM system, he, as part of my evaluation list, what I have compiled is, can it integrate with the earpiece system? And my vendor is going to say yes, absolutely. Okay, and when you say integrate, it could mean a lot of different things. It’s not supposed to be this binary answer. Okay. Integration is almost like your development project.
To be honest, you need to understand both sides of the interfaces, you need to be able to translate them, you need to be able to map you need to be able to able to test. So it’s almost like you are actually writing an E RP system. So integration is not supposed to be easy. That is not supposed to be taken lightly, by any means. So this is something when people are buying, let’s say, they are thinking about integration. Oh, yeah, they can include it. Don’t worry about it. I’ve already asked that question. We are covered. Let’s move on.
Yeah. And my CRM is installed. Now, once you install the CRM, my salespeople are not going to be able to see my inventory, okay, hey, my order is here, and I have no idea what I’m selling, I have no idea whether it is, you know, in my warehouse or not, then you are going to, you know, your pricing is not going to be integrated, your customer data is not going to be integrated. And by the way, I mean, even if you let’s say you find a tool, and they might claim that they are integrated, they might, let’s say do one data field or a couple of data points.
And they might say that you know, what, I’m fully integrated, you know, you can do whatever you want here. But you need to be able to sort of see the demo, okay? how deeply integrated it is, with any system doesn’t matter whether you are talking about integration of, you know, e commerce to here, P.
And typically, if you are creating your own integration, that’s where we see majority of the problems, the reason why we see majority of the problems in case of integration, typically, when anybody is doing the integration, they are going to have this one expertise, let’s say if you are asking your ecommerce guy to do the integration, what they are going to do their perspective is going to be very ecommerce, they don’t understand what is happening in the world of accounting, they don’t understand what is happening in the world of procurement, they don’t understand what is happening in the world of engineering, and how their decisions are going to impact the other department.
So they don’t necessarily have the business architecture is what I like to call you know, a customer is a customer for the entire organization. In your case, you might have the e commerce customer, CRM, customer here P customer, and these customers are completely independent, they have no idea what
Damon Pistulka 22:40
so Yes, for sure. That’s for sure. And and you make a good point is, you said one thing here, I think that that is a key question is how deeply Can you integrate? And how, and then back again, to the blueprint is how much do you need to integrate? You should understand that in your blueprint. And, and yeah, until you go through. And this is kind of a side note until you go through. Even when someone says yeah, we can do VDI, or we can do API interface. And we do it all the time.
That doesn’t mean it’s something like you just plug a plug a light, you know, a power cord into the wall. It’s like there’s a lot of work to get them to talk you said you said the mapping, the translating the testing, there’s a ton of work that that it takes to just see, even if they say they’ll go a PDA API API, will they? Will they transmit the right data? Will they transmitted on a frequency you need to? Or do you have enough custom fields to make sure you can get all the data transferred from one side to the other?
Because one might have not the fields you can so then you got to look at custom fields? Why can’t if I don’t have enough of them? Can I even you know, there’s there’s just just that one little thing. So you your your question here is so relevant for people, how deeply Can you integrate with your critical systems, or customers or suppliers? And just make sure that that’s, that’s answered better? And again, back to the business blueprint, I think if they know how deeply they need to integrate at those interfaces, it will it’s something you could help them with or something they need to detail out themselves, really, to a really finite level to be able to do it. So awesome stuff, man.
Awesome stuff on that. So now, what should seem simple, is what are some of the things when you upgrade a system that that people run into? Because I mean, you think like, we think of upgrading software, you just think plug it in and go. But, but in the systems? I mean, what are some of the challenges that that people are unexpected? Because I gotta I gotta almost envision myself in a business here, and I’ve got an IT person we’ve our VRP system needs to be upgraded. So they’re going to do it over a weekend.
And, and we’re just like everybody, yep, they’ve talked to the customer, the software supplier, the RP supplier. And they say, Yep, this is the way you knew there, they’ve worked it all out, they’re gonna do it on Saturday or Sunday. And, and we’re gonna come back in on Monday. And, and we come back in on Monday. And we have that, you know, little notes on the computers or emails out to the whole company that says, Sorry, but you can’t log in today. So or until we fix it. So what are the kinds of things that you run into that that people need to consider? That will help them to prevent that?
Well, so number one, figure out how not to upgrade because upgrade is hard. In some numbers here, let me give you numbers here, many talks about upgrade number one, you have to talk about what you are upgrade. So each module, each component that you have in the software could be completely different. They could have different updates idle and those upgrade cycle need to align. It’s almost like it’s almost like let me give you some more numbers here, right? Then you will probably understand.
So a typical sales order screen, okay, on the ecommerce system, or let’s talk about ELD system, because they are slightly more complex, they have a lot more business rules, and then then a comparable e commerce system, right? So a sales order, typically, on the E RP system, if you’re talking about these employees, P or P system, they typically touched 200 different tables, up to 100 different tables, okay, and it’s more of the IP system, we are probably going to have 200 tables in here, we are talking about one screen, okay.
And each of those tables could have roughly, let’s say, 200 different fields and each of those tables, so now we are talking about how many like 40,000, some attributes, right? And let’s say if they have 40,000 lines of code, Okay, and let’s say if you make one change in line, okay, and if you have to merge, the way upgrade works is you have to look at both of the lines, okay, what was changed, and then you have to go through the upgrade cycle. That’s why it is so difficult to anytime you make any changes in the code in any software that has to go through that merge process.
So if you are building something number one question that you have to ask, okay, why are you upgrading? Why Can Can you not auto upgrade this And typically, when you are going to rely on the out of the box box functionality from your OEM, then what is going to happen is they are going to take care of all of this pain for you.
Okay, in the background, but if you are, you know, adventurous and then what you are going to do is you are going to over customize your email system or CRM system, then the fun, you are going to have that fun as opposed to your your software provider having that fun, because now you have your customization, you have written your code, you are thinking that it just easy, but then you have to consume that code that is actually coming from the other side, right?
So the upgrade process is extremely complex, the more see if you are a manufacturer or distributor retailer, guys, you are business people, okay? Your company is not defined by the it or business systems, don’t worry about that, give it to somebody else who is really good at that, right, they have the processor set up, they have the capacity set up. So the more you transfer this responsibility to them, the less you customize, the more you simplify your business, the easier life you are going to have to be able to do the business, figure out how you can be creative inside the system, you can
all those crazy business rules inside the system itself. If you figured, okay, my system is the benchmark, and I’m actually starting from my business. What can I do in the system from the business perspective, ask your consultant, they will be super creative. That’s the real use of their creativity, then customizing is something that is going to cause a lot of pain and expenses, admin effort, and that’s going to be super bottleneck to your growth.
Damon Pistulka 28:56
Yeah, yeah, you are right. And I’ve seen those applications where people have taken the systems and customized them to the point that where you can upgrade, you just can’t because they’ve made like you said a tremendous amount of change, to get something that they thought was critical at the point. And now they don’t realize that that lives with them forever.
Paul made a comment here real real quick. He said cloud era p will solve that it will definitely solve some of it, that’s for sure. Yep. But if it’s if it’s cloud based, and you can’t modify Yeah, that’s, that’s what you’re talking about is if you keep it the, if you keep it the original and the original works for you’re much better off which I agree wholeheartedly, because there are some of these systems have. Obviously as you know, there’s companies that are set up just to customize the systems.
And they they do a really good job of customizing the systems which is nice in some in some cases if that’s what you need, but in other cases where you don’t need It’s just added expense. And, you know, I’ve seen, not that big of companies spend multi million dollar budgets on on their eirp system implementation. When you go, you know, that’s, that’s just, it’s just overkill because they can do something and they do do something. And that and it, the customization, then what you live with after is really a killer for him. So that’s great that I like that that statement, figure out how not to upgrade.
Yeah, why, you know, we’re talking about upgrades, yep, figure out how not to upgrade, that’s good. Or like you said, Let the system is the system and it’s not being customized well, then you don’t have nearly as much risk or if you’re running a cloud DRP like Paul says, I think you’re a lot better off. Now. There is something else that we had talked about. And I want to get into this briefly too, because I think it’s really important. When we talk about business architecture, and enterprise architecture, yep. So can you explain them first of all, a little bit, and then we’ll talk about it Just a minute.
So enterprise architecture is slightly more technical term that I do know a business people should be worried about. Okay, let’s talk about the business architecture first. So it doesn’t matter, I like to take out the tool from the argument or the ER B, or C or an e commerce, it doesn’t matter what you’re doing, okay. From the business perspective, you have your, your business objects, okay? Those business objects, sort of stay in your business architecture, your customer is a customer, your vendor is a vendor, your price is a price.
Now, if you have price, living in three different key places, inside your, your business architecture, your architecture is not going to be very aligned. Let’s take an example of your organization. For example, in your organization, you have your marketing guy, you have your sales guy, you have your HR guy, you have your accounting guy. And typically when you set up a company, you are going to define the roles and responsibility of each of those so that they don’t end up stepping on each other.
This is how your business architecture works. In case of business architecture, you are going to have key components of your business architecture, which is going to be your your stakeholders, the main stakeholders or let’s say your customers, vendors, your items, your price list, you know how your bonds are going to be those are your key components. Now how that is going to go through your business process. That’s a process. So once you actually align and refine your business architecture, figure out how you can streamline that, for example, let’s take an example of you know how you are going to define your payment terms.
Now, payment term irrespective of whether you accept the payment in your ecommerce system, or earpiece system or you know, CRM system, it is one payment term. So from the business architecture perspective, you sort of outline there’s Okay, irrespective of the system, I’m going to have, these are the components that I’m going to have as part of my business architecture. Now, if my tool needs, okay, you need to go to the business architecture guy, okay? He business architecture guy, okay, if I have a specific functionality, should this reside inside my e commerce? Should this reside inside my CRM?
Should this reside inside eirp. And each of these tools are amazing, they are designed for a purpose. Now, if you don’t understand what each of these tools are supposed to do, then it’s a problem then you sort of overstepped, right. But if you define the clear boundary the way you will, your blueprint is designed on a piece of paper. Ecommerce is supposed to be doing e commerce, it’s not supposed to be doing the job of the E RP guy, e RP is supposed to be doing the E Rp.
It’s not supposed to be doing the The other thing so so the board business architected does is it’s almost like a blueprint of these different systems and components. And then it actually defines the interaction, the relationship between those systems at a very high level, okay, these are the data elements that base should be attending, should it be, you know, back and forth, how that is going to be defined, right.
And then enterprise architecture is going to be slightly more technical concept that you have, which is going to be okay, how these components are going to be laid out, in overall technical architecture, how these components are going to be designed. That is enterprise architecture, but business architecture is without any technology without any tools. It’s really business, you know, logic that you have in your business that needs to be streamlined before you introduce a tool in your architecture.
Damon Pistulka 34:13
Yeah, yeah, I see. So the the business architecture is really kind of a simple overview of the systems that you’re going to use that you need to integrate, obviously, with your with amongst themselves and that but and you’re defining the data that needs to flow between them at the appropriate level. And really the Enterprise Architecture are the different things that you’re going to use, whether it’s software, whether it’s hardware to move the data back and forth and make them talk and like kind of
cool. Let me give you an example. To make it easier, right. So let’s say if I’m building the house and if I hire the architect, architects job is really to grow the house on a piece of paper, they are not going to worried about Okay, how your door is going to appear or how your door is going to be interacting With the bedroom, they are not worried about the details they are simply worried about, okay, if you are constructing the the this house in this property, okay?
Are you compliant with the city guidelines, they want to make sure that you are not breaking any any rules, right? So they designed this on the piece of paper, that probably would be your business architecture, when you get into more of the let’s say you design a model house to deal with in case of house, probably you don’t need to design the model house.
But let’s say if you are constructing an airport or a bridge or a bigger, you know, construction property, then you need to design a model, some sort of model again, that’s not the real technology that you are probably building, it’s probably going to be some sort of model that you’re designing. So that is probably going to give you a little bit of Enterprise Architecture perspective. I don’t know if this is a close example. But that is the closest that I can probably get.
Damon Pistulka 35:47
No, no, that’s, that’s good, because it’s more of the technical details behind the business that support the business architecture. So yeah, good. So when you when you look at this and you go, Okay, what are what are some of the things that that really mess with your business and your enterprise architecture as you as it relates to the the RPS.
So the biggest problem with any software is the issue of invisibility, you don’t really see anything, okay. In case of business, in case of when you are building the house, if you are not building a wall appropriately, you are going to see that you okay, if you have plumbing problem, your plumber, plumber is going to complain, because plumber is probably going to be certified by the city that you are not supposed to be doing something that is not going to be compliant with the city guidelines, otherwise, you are going to kill people. In case of electrician, they are probably going to be certified, they are going to go through the courses before they can touch your your your electricity.
In case of software, you don’t number one, you don’t see it. Number two, you don’t know how bad your plumbing is to be honest. And sometimes you are simply creating this dispatch because the there is going to be a disconnect between your technical team and the business team. And because of that, you know, it’s going to be all over the place that architecture is going to be all over the place. For example, let’s say if you are talking you talk about eirp sometimes he on on top of VRP, you are writing 800 different reports.
Now do you need those 800 reports, you have four different it guys in your organization, the only thing they are doing is writing these reports, maybe you can replace that Alp and you know, those, the earpiece system is probably going to come with those 800 reports. So this is the this is so when you take a very tool focused approach, very technology focused approach, hey, I’m looking for this one, can you solve this problem, they are going to solve this problem without actually thinking about your business architecture, without actually thinking about, okay, how your house is going to sort of interact with all of this data.
So let’s say in this particular case, your sales is asking for a report, they are typically the consumer of the information, right? And And typically, if sales is going to ask that report is going to be, you know, produced right away.
So if they are asking for this report, you know, it’s going to reside, let’s say in the system, and you know, sometimes it might take days or, or months worth of effort in designing that report, and you are going to be spending so much time, but what you could do as you can think about, okay, which are my components, what are the data set that I’m actually expecting from different systems, and which are is the system that is going to be responsible for this perspective forward?
As opposed to putting everything in MBRP or ecommerce or wherever, whichever system? It doesn’t matter which system you are, you’re building, but you need to clarify the roles and responsibilities the way you would in your organization.
Damon Pistulka 38:31
Yeah, yeah, I think you’re right, it’s unclear roles is is in clarifying those roles, and what the systems are going to do is a big part of that. So when, when you’re called upon what, what are some of the interesting things that you had to solve with the RFP system? Just What’s one that just goes Oh, man, I never thought I would be able to have to do this.
It’s always fun, okay, and the kinds of things that we see and I was I’m going back to my broken plumbing example or broken for example, it’s so much fun okay. Let me give you the example of the recent engagement. So, in this particular engagement that we have, they have you know, three or four different entities they are 80% distribution 20% manufacturing number one the E or V system that they have is not necessarily designed for distribution, they don’t even understand how the the supply chain planning works for distribution to be honest.
So they installed a manufacturing you know system now they cannot replace because this is p owned MP has the liquidity event. So now they somehow have to live with that. Now they keep acquiring the companies all the time. Now when they are acquiring so they are sort of going in the reverse direction. Okay. So right now their financing does not use e Rp. Okay, why we are paying a lot of money for the AARP, okay? their financing does not use zerp. So they are always relying on their it to provide the information.
Again, going back to my report example, this hell of report in a country Money is always the biggest time soccer biggest. Yeah. You know, money soccer. So my finances not using who’s supposed to be driving the app initiative, by the way. Okay. My sales is not using the system. Can you believe this? Yeah. Okay. So sales is not using the procurement does not know how to use the system, the only consumer we have for the MRP system, is it? Okay, is that really a year p system, then the adoption rate in this engagement is less than 20%.
They are paying 100% for the license, they have seven people in the IT department right now, the only thing they do is EDI mapping back and forth. And they do report be in pay. That’s their job. Now they have 15 different software. Anytime procurement has a problem, they are being prospected by, you know, startup and they are trying to sell the procurement tool, a tool may be able to do very small things. Now this tool is not going to integrate with your DLP. Yeah, so they have like 15 to 16 different tools.
And right now, Damon from the business perspective, it’s crazy, because they don’t have centralized visibility of the inventory. Okay. And there are some funny instances where let’s see if a sales guy is holding the inventory for a customer. And the other sales person is actually trying to sell the same inventory, which is already sold. There is no centralized allocation, because once you actually grew, let’s say, you know, 10 million $20,000,000.30 40.
Yeah, if you have, you know, one gayden company, you know, for people maybe, then you don’t have as much problem, but let’s say we go after 10 million, 20 million 30 million, you definitely have to have that centralized control of the inventory, because there are going to be real issues.
Damon Pistulka 41:37
Yeah. Oh, yeah. I mean, when we used to run multiple facilities in the companies I managed, I mean, that inventory autorama materials are a finished product, it’s critical, because you don’t you know, if you can’t ship out of one location, you’ve ship out of another, if you need raw materials, there’s going to be times when you need to share them. Yeah. Not having access to that is, is like running with, you know, it’s like, I don’t know, trying to play handball without a hand, Hamas is just that it’s gonna be very difficult. Wow.
That’s, that’s an interesting situation, for sure. And no, but it’s, it’s also, I mean, I think when people look at eirp systems in general, they don’t understand the cost, that if it’s done wrong, or if you don’t take the time to plan and implement, like, you should, because it’s one of those things, it’s like death by 1000 cuts, because it just, it just is here, there and everywhere. And like you said, sometimes do you know when I look at reports, I’ve always been, you know, minimalist when it comes to running business.
And I always look at why do we run 800 reports? Because how many of them get run an email to somebody or, God forbid, printed out and delivered to someone? Yeah, that never that never really do anything other than Oh, that’s nice. And that’s it? I mean, how many? Okay, really, really? How many reports? Do you think in a business do that? Oh, that’s nice. And, and even if it wasn’t nice, it because this is even worse? Oh, that’s not so good, that you have to report down same thing, and it didn’t cause any action one way or the other? It, it’s just wasted effort. Yeah, it’s a wasted effort. And it goes, it goes unchecked.
Because, you know, it’s automatic, it goes by email it, you know, blah, blah, blah, blah, blah. But every bit of that has a cost as a cost and the time for the person to read it. It’s got a cost and time for to maintain it. And all these things just add up so much.
And when I look at these MRP systems, especially in big organizations, yeah. There have to be from a from an operational standpoint, there have to be tremendous amounts of money available. If you do this, right, even in an existing situation where you’re going to go in and optimize. Now, do you get called into those situations where you optimize a lot? Or just because it’s not working well? Or is that just like? No, because people don’t think about that?
No, those are the most common situations, they are going to have a business problem. And that’s why they are inviting us to be honest. And that might result into the net new opportunity as well. But those are the most common situations where either they have a lot of expenses or they are not able to really do their inventory, or they are running into the inventory of allocations typically, always the the biggest issue, then we run into a lot of waste, then their bombs are not really optimized it they sort of know that, you know, the way their bombs are structured, it just, it’s really not working.
They kind of know in their hearts, that the way they have built the manufacturing process. system is doing something else, you know, they don’t even understand Yeah, you know how The physical process and the system processes are. So we get called into those. Sometimes we get called when these companies decided to do the EAP implementation by themselves. And then, you know, they spent roughly six months, they spent a million dollar.
And then you know, they are asking us, okay, can you align the business architecture because I sort of know what these guys are working on. But if I’m going to get anything out of it, and when we look at the development plan, the customization plan, they end up talking about the recent engagement, they have 230 line items there for the customization. Name, and I’m going to give you an example. And I’m not here to frighten anybody to be honest.
There was a distributor that we were working with, it was roughly what 40 $50 million, you know, company, and they had roughly 80 customizations, okay, just 80 stories. And And what they did is they actually tried to just UI changes, okay, what they wanted to do is, they felt that the newer UEFI system that they bought, it was not friendly enough for them to be able to use. So they wanted to add customizations. Now, when they actually decided these, to implement these stories, they just didn’t know what they were getting into.
Okay, they tried to do this for roughly two years, three years, the project never went live, they keep kept funding money. And finally, the business ran out of business, because they were spending a lot of time in doing the work when they should be selling. Yeah. So in this particular case, they are talking about 80 different stories. Now, I’m actually more than a new engagement as of today, okay, they have to 30 different line items they bought. And again, this is not a job on any vendor, they bought Microsoft nav, and Microsoft nav has its own positioning in the market, what it is supposed to be doing.
Now, when you look at, you know, business like winery, or brewery, they have a very different way of the BBB, these businesses, they have different way of doing the contracts, they have different regulations, the status, the state regulations are going to be different, the way they carry their inventory is different, the way they do their accounting.
Now, if a year picker is going to say, you know what, I’m a software guy, I can design any software out in the world, I can solve any business problem, surely you can. But what is going to be the cost of that? Yeah, yeah. Here, they have been in this implementation for what, more than six to eight months, and now they are asking us and I’m like, Guys, I would rather not get normal in this engagement. But then, you know, they want to help. So obviously, we need to help.
Damon Pistulka 47:28
Yeah, but it’s a great example of Have you really, I think it comes back into the selection process, right? Because, and that’s, that’s why I kind of wanted to go through the the steps that we did talking about selection, implementation, integration and upgrading, because most people have no idea how much a customization will cost you over the life of any RP system, or selecting a system that just doesn’t have some of the fundamental things that you need.
It’s just one of these things that just will, will plague you and plague you and plague you, that if you So the one thing that I that I will say that you helped to explain very well is take your time to set up a business blueprint and correct me if I’m wrong, and make sure your blueprint is good. And then take your time really understanding what that system as you’re evaluating systems, making sure it’s going to do as much as it can without any customization.
Damon Pistulka 48:30
I mean, those two things alone seemed like that was the big because a lot of this stuff we’re talking about is after the fact that they didn’t get to deal with because the system wasn’t selected or you know wasn’t defined what they really needed was an implemented you know, they didn’t select the right one. So great stuff man. Great stuff we could go on for a long time and and this is a this is about the the time when we wrap this thing up, but Sam elevate IQ, love the discussion about manufacturing, MRP systems implementations, challenges solving, implementation and system challenges.
I made the title too long, but the information was incredible, dude, I just your experience, the way that you explain this stuff is so great, because I hope that we’ve been able to give people some information that they go, okay, maybe I should rethink this a little bit before I go in and go ahead and do something. So if somebody wants to reach out to you, Sam, what’s the best way of getting a hold of you?
Yeah, it’s gonna be really easy. My name is super easy. Sam Gupta, it’s semg up ta you know, super active on LinkedIn. You know, elevate IQ is the name of the business. It’s e l e VA t iq.com. And my email address is b2b sam dot Gupta at elevate iq.com You can find me on LinkedIn. You know Sam Gupta elevate IQ or Sam Gupta. Wb s rocks.
Damon Pistulka 49:58
Very good. Very good. No one is wants to see the entire if you’ve got in late on the live, you want to see the whole thing. Go ahead. It’s on my profile. Matt goosies here saying Nice job. Thanks a lot, Matt coming to us from Wisconsin big Packers fan. love to see good stuff while Sam, thanks so much for being here on the faces of business day. Thanks, Paul. Thanks, Matt. Everyone else’s listening out there didn’t didn’t comment in but we love love you listening. Have a great day, everyone. Thanks a lot, Sam.
Thank you so much Damon really enjoyed talking to you.
Damon Pistulka 50:29
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