Want to talk to us about technology? Click here and we will get right back to you (during normal business hours or when we are not helping another distributor with their critical technology).
The Top FIVE Technology Mistakes
Isn’t it amazing how technology seems to have taken over almost every aspect of our lives? Can you live without your smartphone? What if you couldn’t see who was calling you before you picked up the phone? Do we ask humans for directions anymore when we have GPS-enabled devices? We hate toll road a bit less now that we don’t have to stop and pay the toll due to I-Pass, EZ-Pass and other Transponders. But when it comes to advanced technology in our distribution-based businesses, and actually many other B2B focused businesses in other sectors, we are lagging behind.
MISTAKE ONE: Bar-coding is for retail and too expensive for us
We see bar code technology everywhere we look, so why is it missing in so many small to mid-sized distributors’ warehouses? It takes a mindset that is ready to move forward and is not satisfied with the ways things have always been done. Adding bar-code technology to most ERP applications is pretty simple, but it is the planning for a fully functioning bar-coded warehouse that is often the obstacle. It takes some thought about changes to processes, even though at the very core of bar-coding is the concept of replacing keystrokes with a scan. The beauty of most technology is that you can take baby steps before you begin to sprint. The same is true with bar-coding. Make the decision to move forward and then take that first baby step, you’ll be running in no time.
MISTAKE TWO: Technology will solve all of our problems
Another mistake we see distributors make is thinking that bringing in new and improved technology will solve their problems. It has been said many times before that technology can speed up processes, so bad processes just happen that much faster. When you are considering new technology, it is important to recognize that it is also the best time to change your processes. One of our clients had posters place in strategic locations throughout their building that simply stated “We’ve always done it that way” with a red circle and a diagonal line striking through the words. Technology can be a catalyst for change, but in and of itself cannot make the change. Make sure that you have people within your organization that are “change agents” involved with any evaluation and subsequent implementation of new technology. If you have the right people with the right attitude implementing the right software, you have a winning combination that CAN solve problems.
MISTAKE THREE: My staff is smart, we don’t need much training
We see this time and time again. A great technology solution is selected, but management has decided to skinny down the dollars related to the training and education aspect of the implementation. There is some software out there that is relatively easy to use,, but in the world of ERP, CRM and WMS technology, that is often quite a ways from reality. These systems today can do so much, but also take a great deal of thought and understanding to fully leverage the deep functionality. When evaluating ERP systems, you should make sure that you budget an appropriate amount of your implementation dollars to training and education. It is our recommendation that 50-60% of your implementation budget be for this sole purpose. You should also be very much aware of the time that your people will need to spend on learning a new system. A rule of thumb that we often use is to budget a 4:1 ratio between your people’s time and the outside implementation consultant’s time. So if your implementer has budgeted 700 hours, you should expect your team will need to invest 2,800 hours overall on the project. If you calculate the hours that your people need to commit to a project of this magnitude, you will get something along the lines of the following:
2,800 hours x $35 per man hour = $98,000 Not a number to be sneezed at.
MISTAKE FOUR: When it comes to technology, my IT staff makes the decisions
Before all you IT professionals start to e-mail us, what we are trying to point out is that it is critically important to involve the business leads from all functional areas on the evaluation, selection and implementation of a new business system. It is not that the IT folks don’t know technology, quite the contrary, they do know technology. But what you really need when you are selecting new technology are the people with the best knowledge of your business processes and more importantly, what you would like your business processes to be. As we said earlier, this is the perfect time to be making process improvements. Who better to suggest, implement and own the process improvement plans than the people using the technology on a daily basis.
We know of a distributor that needed to do a better job of tracking the success and failure of their sales efforts. They had almost 50 salespeople handling the United States and Canada. The VP of Sales asked their Director of IT to research and recommend a solution to this issue. What happened was disastrous. The recommendation was to create their own CRM system rather than trying to fit their processes into a “boxed” solution. Twelve months later, the custom CRM solution was finally deployed. After another six months of begging, pleading and threatening the sales team to use the system, they shelved the CRM tool. It didn’t come close to meeting the needs of the sales team or the VP of Sales. It was then that the VP of Sales took ownership of the project, hired a consulting firm to help them evaluate and select an out-of-the-box solution that was then tailored to fit the sales team and management. Three months after they went live on this new CRM system, they had a 95% user adoption rate. It was because the sales team owned the decision and clearly understood the benefits that they would derive from properly using the system.
MISTAKE FIVE: Next year the technology will finally be perfect
If I just wait until next year; the technology will be better, the price will be lower and we’ll be more ready to implement the changes along with the technology that we need to run our distributorship. Well, it is likely that all of that will be true, but and it is a big but, you will be one year further behind your competition. If you have some technology deficiencies, the sooner you can do something to eliminate the weakness and turn it into a strength the better. You can’t afford be on the “bleeding edge” of technology, but you can certainly move your company forward with very little risk by moving a little bit closer to the early majority. If you wait for every “bug” to be worked out of whatever technology you are looking at, you will be waiting forever. Understand that it might not be perfect, because it won’t be. Do your due diligence, gather enough facts and then make a decision.
MISTAKE SIX (BONUS): Fear
There are many reasons why distributors make mistakes in technology, but the one that seems to rise up above the rest is fear. Fear of the unknown, fear of change, and fear of losing control of the business. We have also seen technology adopted because of fear. Some of you will remember when you processed your first customer order through Electronic Data Interchange (EDI)? Wasn’t that done because of fear or just clearly the threat that a major customer would stop doing business with you unless you adopted EDI capabilities? What about that first request by a customer to send you a request for quotation via e-mail. There is technology out there that is just begging to be implemented. Don’t be the last kid on the block with whatever it is. Get past your fear. Shoot past your competition. Make a decision to explore some technology that can positively impact your sales efforts, increase efficiencies, or improve your decision making, you’ll be glad that you did.
Have you seen MISTAKES SEVEN, EIGHT AND NINE? We would like to hear about what you have seen. Email them to us at David@TheDistributorBoard.com