Making the Upgrade

Science-fiction stories predicted it long ago, but they couldn't have conveyed the subtlety with which our lives and businesses have become intertwined with computers. As the information-handling capabilities of business software have grown, our dependence on them has deepened. They've gone from being a mere tool to being a key strategic advantage to an inseparable part of the personality of the company itself. No wonder so many people liken software upgrades and conversions to major surgery on a company's nervous system.

“Installing a new software system takes as much attention as anything a business ever does, other than when it's first starting out,” says Mike Wentz, vice president of marketing for TradePower, Blue Bell, Pa.

There are many reasons distributors start down this path. Maybe an old system is no longer supported by the vendor or has hit the limits of its capabilities. Maybe a major customer asks for reports an existing system can't produce. Maybe you're tired of trying to track things on bits of paper. Maybe all the talk about the wonders of new distribution software tools piqued your interest.


Whatever the reason, you've got to start at the top. The system you select will have a huge impact on the bottom-line financial success of the company going forward, so top management must be directly involved with the selection and implementation to keep the system in line with the company's overall strategic direction.

To get things started in the right direction, look inside before you look outside. Spend some time thinking about your long-term competitive picture, and how you expect the industry, the local market environment and your company's position in it to change over the next five to seven years. Assemble a team of your top managers, present them with the big picture, and ask yourselves what kinds of system capabilities you will need to meet those challenges and opportunities.

As part of this process, identify what you like most about your existing system. You want to make sure you don't lose anything in the conversion. “It's common for distributors to assume that any new system will do everything their old system does at least as well, but it's not always the case,” says Doug Levin, executive vice president, Prophet 21 Inc., Yardley, Pa.

The leading distribution software systems offer similar packages of core functions, and they're all a huge improvement over the systems distributors were installing 10 years ago. The older systems tended to use character-based interfaces sending commands to large UNIX mainframes from dumb terminals. Functions like accounting, order-entry and inventory ran on separate systems. The new systems all have windows-type graphical user interface (GUI) working environments that allow users to do more than one thing at a time (multi-tasking). All the major distribution software offer enterprise-wide systems that integrate information from all areas of the company.

The integrated information-handling capability of these enterprise-resource planning (ERP) systems can drive efficiencies straight to your bottom line by making many of your internal processes automatic. Each activity generates a process of reactions. The systems also are much better at capturing data for management analysis.

Where they vary most is in their use of more recently developed features such as electronic commerce, customer relationship management (CRM), database marketing, sales force automation (SFA) and warehouse management and automation systems.

Which system will work best for your company depends on your primary focus. A company driven by sales and marketing will get more out of a system that offers more SFA and CRM features, while a company whose first priority is operational excellence will get more out of warehouse automation. Spend some time reflecting on your overall direction before you begin evaluating the different systems on the market. Build on your core excellence first, and then make sure it has the features you'll need to improve in other areas.

You must develop a technology plan that can help you match the system with your overall business plan. “Before starting the migration to a modern system, distribution and IT executives must understand what their legacy system does and whether the way the system works actually matches the business strategy,” says Matt Turner, director of marketing for NxTrend Technology Inc., Colorado Springs, Colo. “It's a huge mistake to jump into a migration just to see where it might lead. Work with your CIO and your new technology vendor to develop a vision of where you want your technology resources to be in two, four, six and eight years. Ask where your database support will be in each of those periods. Assess what skills are available and know what your investments are right now in developing for and maintaining your legacy applications. Does your current system map the key business processes that are critical to your success, or are you changing your processes to fit outdated technology?”

When Desert Electric Supply in Palm Desert, Calif., began looking for a new software system, the first priority was to make internal operations more efficient by eliminating as much paperwork as possible, says Randy Keil, president. “We had some logistics issues with hand-generated paper flow. When you're trying to find something and it's, ‘That's on so-and-so's desk and he's out to lunch,’ if you don't find it you're at a loss as to how to go forward. So in moving all that hand-generated paperwork, a lot of things get narrowed down to where only one person can help them. They're all capable, they just don't have the tools.” Installing a system that automated all that paperwork gave everybody access to the information they needed, Keil says.

The ability to correlate information from different areas within the company to support market-share analysis and targeted marketing efforts is one of the most important improvements says David Weinstein, New York district manager of Kennedy Electric Supply, Jamaica, N.Y. Kennedy was preparing for a software conversion last year, before its acquisition by Crescent Electric. The company is now preparing for a conversion to Crescent's ERP system this spring.

“There's been a change in what we were looking for from a system,” Weinstein says. “Systems today with CRM capabilities built into the sales functions can access information from parts of the system that couldn't communicate before and generate sales leads. For example, if a customer bought a motor controller and didn't buy a NEMA 1 metal enclosure, you know he bought that enclosure from somebody, so it's an opportunity to make additional sales. So now I've got a mailing list for a target promotion on NEMA 1 enclosures.”

In the search for more efficient ways to handle product data, some distributors are looking to the Industry Data Warehouse (IDW), a database of manufacturer-direct product information in a standardized format. Though early adoption rates have remained low, the potential of the system is enormous. If this is a priority for you, make sure the systems you consider offer access and are prepared to make use of the IDW's formatted data.

Some of the vendors are more advanced than others in this respect, says Mike Rioux, president of the Industry Data Exchange Association (IDEA), the organization that manages the Industry Data Warehouse and the IDXchange2 data network for the service's owners, the National Electrical Manufacturers Representatives Association (NEMRA) and the National Association of Electrical Distributors (NAED), St. Louis, Mo. All the major vendors that focus on the electrical distributor market have some IDW capabilities, but some are able to use the IDEA's 832 EDI documents directly while others must take a flat file and convert it. For the most recent list of software companies whose systems are EDI compatible, IDEA keeps a running list on its Web site,


When you have a feel for what you need in a system, arrange for some demonstrations. Talking to your peers at association and marketing-group meetings can give you an idea of the systems they use and how they feel about their vendors.

For on-site demos, bring in people from all areas of your company to evaluate the systems in light of their areas of expertise. Come to the demonstration armed with a list of questions and a detailed checklist of the criteria on which you'll base your selection. After a few demos it's easy to confuse one system with another, so take good notes on the features and functions during each demo.

Vendors will all show you how the system handles typical orders, but it's the atypical ones that will make the most difference in using the system. Have them show you how it handles the order from hell — one that includes nonstock items, back orders, a combination of items shipped from your inventory and direct from the manufacturer, some items subject to rebates and so forth.

Ask the software vendors to discuss the history and future of the technology platform they use — the basic programming language, database structure, operating system and hardware — and those used by their competitors. You're not asking them to criticize the competition, but you need this information to get a sense of the relative strengths.

If it comes down to two vendors who do what you need equally well, go with the one whose technology platform shows the most long-term potential. The folks at John A. Becker Co., Dayton, Ohio, wanted a system running a Windows NT environment using a networked “thin client” architecture, says David Adkinson, president. The goal was to “future-proof” the company's investment by installing a platform that would give them maximum flexibility and would be supported for the long term.

“Bill Gates had already won the battle for the home PC, and Microsoft was the system of choice in the business software arena,” Adkinson says. “Windows NT also gave us the ability to buy off-the-shelf software.” The thin client setup gives each user an intuitive Windows working environment without the added upkeep of hard drives on every workstation or the temptation for employees to load their own screen savers, games and other software on their desktops, Adkinson says.

The focus on a particular technology platform limited Becker's choices, and meant the company had to spend more time with the vendor up front writing software to make the system do what they wanted. But in the end Adkinson is confident his company got a system that will work well for years.

Installing new software is a long-term commitment. The vendor you select will play an important role in your company for the next five to ten years, so don't base your final selection on a four-hour demo. Demos can help you narrow the list to a top choice, but before you sign, get references of other electrical distributors who have recently implemented the system, as well as some who have had relationships with your chosen vendor for a few years. If possible, visit these distributors. The experiences of other distributors with the system — and more importantly with the vendor's support staff — will be a key consideration.


Whichever system you go with, the implementation process will determine how much value you get out of it. The skill and experience of the software vendor's project manager will be the biggest determining factor in the implementation, but few distributors ever think to ask about this person, says Wentz of TradePower. You might interview this person, or at least ask for the person's resume and a list of references to other electrical distributors he or she has worked with on a system implementation, then talk to those distributors about their experiences.

Pick the most qualified person from within your company. Typically, a good choice is someone with an understanding of technology and a talent for project management. Give him or her ownership of the project. This point person will be the key contact for the vendor, and will be responsible for making sure everything comes together on schedule.

Your point person, working with the vendor's project manager and the selection committee, should come up with a detailed project plan and time line — getting hardware delivered and installed, installing phone lines and network cabling, planning the work flows and processes of the data conversion, scheduling employee training, installing and testing the new system and taking it live.


The most critical aspect of the conversion to a new or upgraded software platform is employee training, and it's the area where most distributors cut corners, say vendors of business software.

“If there are unforeseen problems in the go-live, they'll almost always be in the areas where distributors didn't spend enough time training and practicing,” said Prophet 21's Doug Levin, who discusses this subject in more depth in his Speaking Out column on page 50.

Several vendors say distributors don't always take their training recommendations seriously. But some distributors that have been through the experience say proper training is integral to the success of the upgrade. Many different types of training exist, and each has its proponents.

Classroom training by the vendor costs more than train-the-trainer programs or computer-based training, but it's far more effective, one vendor says.

“You see some distributors get chintzy on training and opt for train-the-trainer programs, but the in-house trainer doesn't have the experience with the system to answer many of the questions that come up, and they may not have the resources to get the questions answered at all,” says Don Webb, president of Prelude Systems Inc., Addison, Texas.

The best and most cost-effective approach is for distributors to get everyone trained on the core system first, then space out implementations of more advanced, peripheral features so employees don't have to digest the whole thing at once. Some features can be turned off for the initial installation, so distributors don't have to train for it at the time of installation. Then, as they are ready to use each additional feature, they can have it switched on and train their people on it at that point.

“It's like a big dinner buffet,” says Jay Walther, senior manager of marketing, Intuit Eclipse, Shelton, Conn. “You know just looking at it that you can't eat it all, so you have to come up with some sort of plan. You could try to train people in the whole system and all its features at once, but they can't digest it. It's important the management team identify what they need to replace first, and then add the companion functions they need most over time.”

The timing of the training with respect to the go-live date is critical. If distributors train their people too early, they may not retain much of what they learned when the system goes live, says David Adkinson, of the John A. Becker Co. This is one of the problems his company ran into in its conversion to a new computer system last January.

“Our original go-live date was Dec. 1, 2001, and we began training people in early September. Then our go-live date got pushed back to Jan. 2. By then it had been four months, so people didn't retain as much. That's one thing I'd do differently. I'd train them closer to the go-live date,” Adkinson says.

The best time for training also varies by department, say vendors. Accounting people can be trained as much as six to eight months out and still be expected to retain most of it, because the standardized accounting methods don't change that much from one system to another. Warehouse, order-entry and counter people should be trained in the last four weeks before the planned go-live date so all the changes in order-entry screens and processes stay fresh.

Vendors also warn against using a one-size-fits-all approach to computer training. Salespeople — who will be expected to use the software's customer-relationship management features to produce better information for their sales calls but have seldom used the company's computer — may struggle to learn how to capture the data that supports targeted marketing efforts.

And if truck drivers who have never been tied to the company computer are to be capturing signature images that link into invoicing and accounts payable, they will need more training just to get up to a basic comfort level.


No matter how well you prepare, expect the go-live to be disruptive. Prepare everyone: days will get long and fuses will get short, nerves will fray and naysayers will feel flush with vindication. Productivity will suffer for the first few weeks, at least. Maybe months.

It's important to appoint some “champions” to keep the atmosphere positive and remind everybody why the changes will help them and the company as a whole. This is especially true in a company with several isolated branches, says Steve Peterson, president of Minnesota Electric Supply, Willmar, Minn.

It's also important to keep employees informed on why the changes are happening so they can answer customers' questions. “When we first went live, we got a lot of questions from customers about why we made the change,” says Randy Keil of Desert Electric Supply. “There were some long delays at first, while we were learning the new system. Some of the customers got impatient, because they thought the new system was slowing us down. They also wanted to know why their billing statements looked different.”

Data conversion is one of the key areas where things can go wrong. The vast majority of the system installations today are replacements for older systems, and the vendors have become adept at writing programs to convert data from the various older systems into their new integrated databases, but the expanded capabilities of the new systems allow for much more detail in each record. This means somebody will have to go through all the records — customer records, purchasing histories and product data especially — and overwrite some of it into a format usable by the new system. Invariably, some records get fouled up in the process and will need to be cleaned up.

Make sure you balance out your finances, all your inventory data, receivables and payables before going live. Auditors will need to track the numbers back to the old system.

Be flexible about your go-live date. It's an important target for bringing everybody together, but it's worth moving the date back to make sure the transition is smooth. If you're not ready, going live early will only be rougher, cost you more money and undermine confidence between your company and the vendor.

Consider a mock go-live with live data while your old system is still running. This will allow you to find bugs and further fine-tune the data flow to support how your company does business. Fix the problems, do another mock go-live, and repeat this process until you've worked out all the bugs you can find. There will still be unexpected problems when you actually go live, but they'll be fewer, and the disruption to your actual business will be much less severe.

A full-blown enterprise system that integrates data from all parts of your business is not very forgiving. Any action produces changes throughout the whole system. You must be more disciplined than you were in your old character-based, batch-processing mainframe system. In the long run this is a good thing for your company.

During the overlap, when you have both systems operating, have employees play with the new system and get comfortable with it. If they're going to blow it up, now's the time. You'll learn valuable lessons about what the system will tolerate and where problems can crop up.

Once the conversion is done and everybody is up and running on the new system, you get your opportunity to reap the benefits of all the money, time and effort your company put into the conversion, but you won't get full payback unless you continue to invest. Budget money and time for follow-up training, not just the up-front training needed to get the system working. Follow-up training is where the real payoff comes for your company. Peterson of Minnesota Electric Supply says this is one area where his company could have done much better.

“It's like we have a 1,000-hp engine, and right now we're just using about 100 hp. That's because we haven't trained people to get more,” Peterson says. “Some people take it upon themselves to learn tricks and get more out of the system. Our purchasing people, for example, have gone from 100 hp to about 250 hp. You never use the full 1,000 hp, of course, but if we got everybody using 400 hp, we would be getting a lot more value out of the system. We felt like we did a good job training people before going live, but we haven't done as good a job after the fact.”

One way to improve performance once the system is in place is to bring in someone from your vendor for a few days on a consulting basis to spend time in each department answering employees' questions directly and helping them find ways to get more out of the system. The consultant can then report back to you on areas where additional training is needed.

After their conversion, some distributors keep a full version of their new software system running on a separate server with real data as a “play box” to experiment with work-flow changes and test new features and software updates before implementing further changes in their real system.

It's also worth your while to get involved in your software vendor's user groups, where you can pick up tips on getting more out of your system from other electrical distributors paddling the same boat.

A software conversion is an expensive and often harrowing experience, but there are some advantages to doing it now, especially if business is slow, rather than when you're flooded with work. Cash flow may be tight, which can make the transition a little more stressful, but on the upside, fewer customers will be inconvenienced by any disruptions and mistakes caused by the conversion. The new system will also position your company to be more disciplined, more efficient and more aggressive in gaining market share, which will reap huge benefits once the economy turns back around.

“It was rough doing this the same year the economy hit the skids, but I think it may have been better to do this during a down year,” says Adkinson of Becker Electric. “Everybody who goes through this has agonizing problems, but at least during a slow time you're not going to run away a lot of business. And it gets us ready to handle the future.”

For all the aggravation involved in a computer conversion, the payoff can be amazing. “Our month-end reporting used to take our controller about three weeks to compile for all our branches,” says Peterson of Minnesota Electric Supply. “Now at the end of the month we get complete financials on all eight branches — $60 million in balance — by 10 o'clock the next morning. The controller comes in here just beaming. That's the way it ought to be.”


Don't wait until there's a major problem with your existing system to consider an upgrade. Crisis mode is not the time to install a new system.

Don't fret about knowing everything about all of the newest features. The pace of software development brings new, useful capabilities onto the market in a constant rush. You don't have to be on top of every new bell and whistle, but make it a point to review what's available every couple of years so you can use that input to shape your company's direction.

Don't expect the conversion to go off without a hitch. The “go-live” experience, in particular, is an ordeal. Plan for extra overtime in the first few months after the new system comes up for employee training and correcting the inevitable glitches, and prepare your entire staff for the difficulties ahead. The magnitude of the work will mean tired, overwhelmed people and fraying nerves at a time when you need 110-percent effort from everybody.

Do budget plenty for training. The more complex the system, the more training you'll need. The new systems are an order of magnitude more complex than the systems of the past. The more features the system has, the more time it will take to learn how to put those features to work for your company.

Don't expect a smaller staff to mean smaller training expenditures. If you expect to get full value out of your new system, somebody is going to have to learn how to use all the new functions. On a smaller staff, that means your fewer people will have to be trained more extensively.

Don't start training too early. With the exception of accounting and IT people, most of the system's users should get their training in the last four weeks before go-live. If they're not using the system everyday, you can't expect people to retain what they learned much longer than a month.

Don't expect the same training to work for everyone. Especially as you add new functions to your system you'll be bringing in people who didn't work with your computer system everyday before. These people — truck drivers, warehouse pickers, salespeople — may need a much more basic approach to get them up to speed with the office people who have been on the computer for years.

Do take the time to visit distributors who have installed the system you're considering. Their real-world experience with the systems and people will be your best guide in making a good decision.

Don't delegate the whole shebang. You need to get the expertise of all your functional areas, but the person at the top must be integrally involved in the decision process and drive the implementation to make sure it is consistent with the company's direction and goals.

Do budget for training after you go live. Follow-up training will be much more meaningful. Train them in the core functions of the system first, then add capabilities and train your people for it when that time comes. This not only allows people time to absorb the most important information first, it also allows you to spread your training investment over a longer time frame.

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