Over the past eight months, our intrepid search team has typed and scribbled reams of notes about our ERP options....
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Two companies from the original 22 survive. Now, in the inimitable words of John Sebastian and The Lovin' Spoonful in the song "Did You Ever Have to Make Up Your Mind," we must "Say yes to one, and let the other one ride."
Recently I shared our research with a friend whose company is also looking for a new business system. He turned to me and said, "Your company must have a spreadsheet for everything." Then he laughed. "I'm glad my wife didn't have a spreadsheet around when she was considering me."
The week before we made our decision, our team was sitting around the conference table debating a tricky order-entry feature. The pingpong discussion became louder and repetitive. Then, like a voice in the wilderness, one of our quieter members said, "Does it really matter?" The other four faces around the table stared at him like he was the village idiot. "Of course it matters! We must be sure." Slowly, we smiled and, one by one, realized it didn't matter. This feature wasn't going to change anyone's mind.
If this had been a musical, a swell of violins, a roll of tympani drums and a final blaring chord of brass would have played. We were ready to decide.
The tone of our project changed with that realization. An almost palpable shift could be felt in the room as the process went from fact-finding to active decision making. Although we all agreed on the basic strengths and weaknesses of the products, I suspect that each of us wanted to champion a favorite. As we moved ahead, that inclination grew.
We built our decision matrix around a dozen categories such as business intelligence, messaging and industry commitment. We assigned weights to each, from a low of one to a high of five, based on each category's importance to the company.
Our CFO led the way. He proffered two's for the purchase price and accounting categories. He said it was our job to negotiate the purchase price so it didn't make a difference. He reasoned that a 100% improvement in accounting software couldn't affect the company's bottom line as much as a 5% improvement in counter sales.
After a half day of this, we organized our data and booked our conference room for the following Monday and Tuesday. Then we told the prospective vendors that we'd announce our decision on Wednesday. This triggered a flurry of last-minute calls from the sales reps of both companies as they offered assistance, followed by uncomfortable silences as they avoided saying, "Pick me."
ERP sales reps typically make a handful of new sales each year. One sale could tip their year. The sales cycle with our company had already lasted longer than most, and this must have heightened the tense silence on the phone.
The CEO of one of the companies called and told me he had already had more dinners with me than any other prospective customer, but he was willing to have at least one more meal with me.
The ranking begins
After a quiet weekend, we started the final decision process by projecting our company and divisional mission statements on a white screen and translating these into an ERP strategy. We included for consideration the impact on customers, vendors and employees.
Then we began the process of ranking the vendors in the categories we had laid out before.
We decided to score the performance of each product in each category using a 10-point scale. We then multiplied those scores by the importance weighting we'd previously given them. Adding these scores would give us the overall rating. These totals were continuously visible at the top of our decision matrix, like a scoreboard in a ballgame, as we went through the categories.
After working together closely together for nearly two-thirds of a year, our group had developed a strong sense of respect and collegiality. We leaned on those feelings as, day by day and category by category, we arrived at consensus on company rankings. Each decision was punctuated with a change on the scoreboard. By the end of the first day, the difference between the two scores was less than 10%. By the end of the process, it had shrunk to 5%.
Given the closeness of the assessment and a healthy distrust of statistics, I expected that we'd have to cast votes to score the products again. The silence of my comrades seemed to confirm this. But when our VP of operations asked for opinions, you would have thought he said, "Please justify this result." Everyone unanimously backed the top scorer.
In some respects, the 5% gap was wider than it appeared. Last year's gubernatorial race in the state of Washington was decided by 129 out of 2,810,058 votes cast -- just 4/1000 of a percent. (Some people say the decision on that one is still out.) In comparison, our difference was monstrous, and our candidates were much stronger.
You could also say that 5% was our tipping point. About 40 years ago, epidemiologists started talking about tipping points to describe the phenomenon of small changes that have no impact until they reach a critical mass. This concept has been used to explain everything from the spread of viruses to the popularity of pet rocks.
At some point during the previous two days, the process of comparing the products category by category had accumulated small victories for the winner until we reached critical mass. The scoreboard merely reflected that we had passed the tipping point. Reaching consensus after months of gathering and evaluating was like catching your breath after a grueling run. You're glad you did, but you're delighted and thankful it's over.
Given the closeness of our evaluation, the angst we felt when we called the losing company was understandable. Choosing either of the two highly capable ERP products would have been a good decision. Delivering the news to the losing company, telling them how close it was, wasn't gratifying to either side. Fortunately, their representative was a gentleman and a professional.
We probably spent more time on the phone with the winning sales rep than was necessary. He was gracious regarding the other company and exuberantly thankful that we had chosen him and his company. I don't know who he called in his company after he got off the phone with us, but it spawned another flurry of calls from many of their executives and engineers that we had worked with. The last call came from their CEO. After telling me how grateful he was for our business and pledging to be a good partner, he said, "And I guess I'll be seeing you for dinner."
We will spend more money on this project than the company has ever spent on any one thing. In case I had forgotten, our owner reminded us of this fact during a recent manager's meeting. After he slowly quoted our budgeted cost, the room got real quiet, and stayed that way as he milked the moment. He eventually broke the silence, saying, "But you and your team have done a great job. My hat's off to you."
Next: We negotiate the contract to see if we can minimize our record expenditure. In that process we'll see what our partner's made of, and, of course, they'll see what we're made of, too.
Les Johnson is CIO at North Coast Electric Co., a wholesale electrical distributor in Bellevue, Wash. Write to him at ERPJourney@ciodecisions.com. This story originally appeared in the June 2005 issue of CIO Decisions magazine.