Panel builder business software: buy an existing erp package or develop your own solution?

Mr Gilles FRADIN, manager of ITEC, panel builder in France, explains how they came to the decision of developing their own business software (erp) rather than choosing an existing business software package on the market. And also shares the status of their project and the expected benefits …

We are more than interested in hearing your own experiences in this domain (for example, do you know a business software package available on the market which is really adapted to panel builder needs?), so don’t hesitate to comment or share your own experience by proposing your own testimony.

My original idea was to choose a business software package available on the market

I found it more reassuring in terms of reliability and stability along the time. So I met 3 companies offering business software, selected by my IT manager (SAP …)

But these software packages are not fully adapted to my panel builder needs …

The cost they were asking for their packages was high (170k€ to 220k€) but I expected that. In fact, the main difficulty I had with them is about their philosophy: they believe that the standard solution they have developed corresponds to every business, works well and is optimized for all.

All the three solutions I saw have an architecture which is somewhat “rigid”. They have many parametering options which makes it possible to do many things, but they are still rigid in their architecture : we found out that some sequences needed for panel building professionals in general (and for our organisation in particular), like preliminary steps before ordering, cannot be addressed “naturally” with these software.

… and they expect my company to adapt to their software !

Their answer was “you will have to adapt to it”. But my belief is clearly that software is just a tool, to be at the service and adapted to the company structure & organization, and not the other way round.

I saw too many small to medium size companies who bought such software packages, and paid a high price for it, because the people in these organisations were lost, thus a significant loss of productivity which is catastrophic for companies of that size.

These software companies were able to propose a personalized version of their software to answer our “specific” needs, but then the prices became sky high. The required investment was becoming really  “significant”, and we felt they would still push us towards their standard solution.

We finally decided to consider developing our own solution

First we decided to write down a specification draft according to our requirements.

We contacted the same business software companies with these specifications, but the feedback confirmed it was “complicated” to match our needs with their software.

Then we consulted some software development companies, and the first feedback on cost seemed to be cheaper (120 to 150k€), the time scale obviously longer but still acceptable, so finally we decided to go in this direction, and started the project in September 2008.

It appeared necessary to hire a new employee to manage this project,
but it was also the opprotunity to re-enforce my IT organization

At first we tried to prepare detailed specifications and follow the project with our existing resources, but it was not feasible, so we hired one new IT person to be in charge of:

• writing the detailed specifications
• following the development by the software company
• deploying of the software inside our organization (training and support of users …)

He will also be in charge of the maintenance & evolutions of this software, as I absolutely want this to be done with internal resources and not depend on external competences.

It might seem heavy to hire 1 extra IT person for this project, but in fact it was also the opportunity for us to re-enforce our IT, and to ensure its continuity of service along the year. Till now, we were at risk every time our IT manager was away, even though we had a contract with an external supplier for these periods. We don’t need this contract anymore, and with these 2 people we are sure we have at least one knowledgeable person all along the year.

And again, the cost of that person is to be compared to yearly maintenance fees for existing packages (~15% of purchasing cost every year, eg from 25 to 30k€ …)

The project took more time than what we expected, and will be more expensive than originally agreed, but the software is almost there and will be deployed from end of August

The software development company agreed, at our request, to commit to delivering the software within 4 months, by the end of 2008. But when January arrived, they came back saying their original proposition for end of April was the reality of what they could do … and finally all modules should be delivered only by end of June: I was really surprised that they didn’t really seem engaged by their own commitment …

So the final schedule and cost are a bit different from originally planned, which is a negative point, though I’m quite sure I would have faced similar difficulties had I chosen to acquire an existing package (at least that’s what I heard from big companies experiences with such packages …)

Finally, tests are undergoing, and we are preparing the deployment and training sessions to our employees to start in the coming weeks, so the first results will be measured before the end of this year.

We expect a number of benefits compared to our existing software solution

Obviously, all the software functions we already had with our existing solution have been incorporated in this new software. The main evolutions and enhancements will contribute to increase our efficiency, reduce our costs & shorten our delays, through:

• Integration and consolidation of the software and database for our whole group (ITEC is a group of several panel builder sub-companies)
  • easily extract global statistics, from the common and consolidated group database
  • simplify, reduce time and cost of intra-group operations : for example, transferring one project from one subsidiary to another will now be instantly done …

• Sales and project management functions, which were limited, will be strongly enhanced : functions like automatic reminder sending for expected tasks, project management follow-up …
• Continuous updating and access on outstanding invoicing amounts, for each customer, to control their situation compared to the credit limit defined in our group
• Enhanced link with the accounting software, to avoid re-typing customer invoices, to manage supplier controls and invoices automatically … in short to reduce purely “administrative” work and win time

Gilles FRADIN
Managing Director
ITEC group, France