F. Curtis Barry & Company Blog

Management often bemoans the fact that IT projects fail to be delivered on time and within budget. And the truth is, the IT spending waste that occurs in our industry is at times mind-boggling. We have seen clients —ranging in size from $7 million to $650 million in sales —all struggling with the same schedule and budget problems as they attempt to implement a new order management system and/or warehouse management systems.

In doing some research for a client looking to get started on an order management system project, we came across a study that was conducted of 800 senior IT managers from the United States, England, France, Germany, India, Japan and Singapore. The study revealed: 

It is amazing how many companies don’t look at vendor's order management system license agreements very closely. These are binding legal documents and without close review of payment terms, deliverables, schedules, termination options, etc. you could be putting your company at risk for losing thousands (or hundreds of thousands) of dollars.

There are two major aspects to these license agreements:

Recently we had a chance to follow up with a client and vendor on the outcome of their seven-month implementation negotiated last year. There are some unique lessons learned about making modifications to  an order management system; or an ERP or warehouse management system for all of us.

One of the most important aspects of selecting any order management system is actually getting a demo of the vendor’s application. There are a couple of different approaches to demos; depending on where you are in the system selection process. One is used to get the general feel for a system early in the search process and lasts one to two hours. What you get is a high-level overview of a few of the system’s functions.

The second type of demo, which is what the focus of this post is about, is much longer taking a day or possibly a day and a half; depending on the complexity of your business. This longer demo is used to select the finalists after vendors have responded to your Request For Proposal (RFP).

In our experience as consultants selecting and implementing systems we see 12 mistakes multichannel businesses make in selecting an order management system. These apply whether its order management, enterprise resource planning, warehouse management or website development platforms that you are selecting. How do these mistakes manifest themselves and lead to failure of a project?

• 50% of the projects have budget over runs on the initial implementation
• 50% have higher total cost of ownership than planned
• 40% fail to deliver the expected business value and Return On Investment

Much of this heartache can be reduced or avoided if you adopt the principles outlined below:

Having spent a considerable investment in new software whether it is an order management system or any system for that matter, the last thing you want to have is a failed implementation.

Unfortunately, flawed system "go live" executions happen all too often. You might wonder how this is possible, after dozens of people have worked for months on an implementation. I think it’s because many companies have not built a readiness assessment for "go live" into their project plans.

It’s one thing to be running behind on programming modifications, testing and implementing your systems project. It’s another to unknowingly commit the company to "go live" without management review, risk assessment and agreement and signoff that everything is ready. This isn’t a daylong meeting before "go live", but a built-in process that everyone works towards and knows in advance in terms of plans and criteria for readiness.

In many cases, businesses are holding on to their installed order management system or ERP for more than 10 years – sometimes 15+ years – if they believe they’re the right fit. On the face of it, this is sound thinking; considering the time and expense involved in implementing a new system.

Your order management system or ERP may be right for your call center, the merchandisers’ management of inventory, accounting systems and integration with your web platform. But are your fulfillment system requirements the same as they were 10-15 years ago? For many businesses, the answer is a resounding no.

Maybe you’re being too conservative by expecting incrementally greater productivity from your distribution center’s warehouse management system each year without additional functionality. In most companies, direct and indirect labor accounts for more than 50% of the total cost of fulfillment, excluding cost of shipping. People productivity in a DC is largely based on the feature/function set designed into the systems.

I was recently shopping online from a large Outdoor Specialty retailer, and at check out the shipping time was estimated to be 10-14 business days. To see the least I was shocked. All of the products were listed as being in stock and none of them were too large or heavy. I thought to myself that this was way too long in this day and age where a customer is looking for instant gratification and expecting merchandise to arrive in 3 or 4 days or at most a week if coming from one coast to the other. Having previously shopped with this retailer, I remembered that the shipping timeframe use to be about half of what they just quoted me.

I decided to give the company a call to see why the shipping time has about double of what I expected. When I finally reached customer service they told us that the warehouse is having some huge issues in getting any product out quicker than 14 days due to a new warehouse system that they have installed. I asked about expedited shipping to get the products sooner, and I was told they cannot overnight or 2nd day air out anything either because of the new system issues. WOW!

How could a large company implement a new warehouse management system and have these types of issues? I can think of at least one answer and that is more or better testing to be sure you are ready to launch a major new system.

With the implementation of a new order management system, companies need to assess user department and IT skill sets as they plan their system conversions. The skill sets are often dramatically different from what is required to support the current legacy systems. Additionally, the user department manager will have the challenge of learning the new applications and potentially upgrading their knowledge about using the new platforms, data repositories and reporting applications.

It behooves you to assess how much change there will be for the IT staff and user management. This learning curve impacts not only the cost of the project but the timeline to install the order management system. Here are 5 points to assess: