Tech Central

Thinking Software
A smart purchase relies on distributors’ commitment to doing their homework

When it comes to purchasing software, what you don’t know can definitely hurt you.

Distributors may think one software package is as good as another, but like other investments, it must fit the needs of the company and be a long-term asset that increases profitability. Too many times, business owners assume that researching software systems will end up being too technical, so they choose the first package that looks good rather than spending time comparing options, says Steven Epner, president of BSW Consulting in St. Louis.

“What usually happens is that a lot of distributors start talking to software salespeople before they’ve really assessed the needs of their company,” he says. There are four steps that distributors should follow in order to find a software package that fits:

• Identify basic requirements
  
  
• Survey software users
  
  
• Find out what options are available through existing vendors
  
  
• Compare software vendors based on company needs
  

What’s Necessary?
Fully integrated software packages are programs that enable efficiencies in all necessary business operations throughout a company. Software can vary greatly depending on the number of specialized features and the complexity of the overall system. However, basic features for distributors include the ability to track inventory, do accounting and manage sales accounts. “Every software package should be able to do receivables and payables,” says Epner. “It’s just a given that business software should have those components.”

Software must reflect the goals and personality of the distributor. Distributors with aggressive growth plans will need software that is able to change. For example, as American Hotel Register, a jan/san distributor in Chicago, began doing more business overseas, a different software package was needed to handle various languages and currencies. International shipping regulations have different inventory tracking requirements than domestic shipping that uses trucks. “As we’ve decided to grow globally, we’ve needed both software and hardware systems that can handle the international marketplace,” says Marianne Moss, director of information systems development for the company.

Distributors may be concerned that specialized software packages may are expensive, but several functional systems can be purchased at a low cost. Brain Rencher, president of TechniChem Corp., Boise, Idaho, has been pleased with an off-the-shelf software package that his company has used for years. “We’re a smaller distributor, so when we found a good program that interfaced all our departments, we knew that it would be fine for our needs. We’ve had it since 1993, and it does inventory control, accounting, receivables, payables and also our payrolls.”

Talk to Your People
Epner advocates getting input from all employees who will be using the software program. After all, a software package should be designed to make things easier for its user. If the users aren’t comfortable with a new (or old) software system, chances are they’ll be less productive using it.

“That’s the most important thing,” says Epner. “Distributors have to talk to their own people. Executives may assume that they know how all the business operations work, but often they are a few years removed from knowing the details of those operations.

Moss made sure that employees from all departments of her company were involved in the pre-purchasing process for American Hotel Register. She made up a committee of internal users — representatives from throughout the building — and had them rate the current system on two different occasions. “The first time, our system got a pretty good rating, but the second time around we found a lot of redundancies,” she says.

When employees have a say in the evaluation of current software as well as the implementation of new software, they are more likely to buy into the program and less likely to complain when they experience setbacks, says Epner. “What happens too many times is management says that they need a new system, but then they drop out of the implementation process,” he says.

Right at Home
A distributor who is thinking of purchasing new company software may not need to spend any money at all. According to Epner, a smart place to start in the search for adequate software packages is for distributors to fully evaluate the vendor they are already using. “Most distributors use only 20 percent of the systems that they currently have,” he says. “A lot of them don’t stay on top of everything that their current vendor has available. If they’re able to stay with the same vendor, the adjustments that need to be made to take a company to the next level can be made very easily.”

Jan/san manufacturers can also be a great resource for information about software packages. Mike Sulkin, president of LBH Chemical, a distributor in Fort Wayne, Ind, recommends that distributors talk to their suppliers about what software they use, “then they can tweak it to fit the needs of the company,” he says. Although manufacturers have different needs, they may know which software vendors are the easiest to work with. “If you have a good relationship with your manufacturer, then they may be able to give you some support from a technical standpoint.” With so many vendors available, it’s sometimes difficult to know what sets them apart.

Compare Vendors
Moss didn’t make things easy for software providers who came calling on her business. “We started out with 27 different candidates for software programs, and we were actually kind of mean to the vendors,” she says. “Rather than letting them do their own demonstrations, we had them do demonstrations that we designed, ones that were specific to the exact needs of our company.” After narrowing the vendors down to the top five candidates, the company was able to choose a program that vastly improved the daily operations of the company.

Previously, American Hotel Register had a home-grown software program that had been in use for nearly 20 years. Finally, the company’s inventory and shipping needs outgrew the abilities of the old system. After running the new software for only a few months, customers noticed the increased efficiencies.

“We now have the capability to know what products have arrived in the warehouse on back order, even if they haven’t been restocked yet,” she says. “Before, our program couldn’t tell us where inventory what unless it was at its final destination in the warehouse, but now we know where everything is all along the product pipeline.”

Rencher, who is a smaller distributor, did not organize a committee of participants as Moss did, but he was sure to enlist the help of the company accountant, who was familiar with inventory, receivables and payables. “We compared several different packages together and settled on the best one,” he says.

Whatever the software needs of a distributor may be, enlisting user input and making careful comparison of vendors can save time and money in the long run.