It really happened….Profit From ERP
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Welcome to the Case Studies Series Level 3 Audio Visual Part Two – actual clients using real ERP and getting real results – Today we’re back with Level 3 Audio Visual’s CEO Jeremy Elsesser as well as Doug Spencer, CFO – for the second of a two part episode on how Vaco Consulting’s Selection Process and Eide Bailly’s NetSuite Implementation project impacted the phenomenal growth and played a huge role in the development of a multinational business.
I’m the Practice Director for Profit From ERP and Vaco Resources Software Selection & Implementation, Gene Hammons
It’s well and good to speak of how ERP mighthelp your company – but it’s also instructive to see how it reallyworks in the real world – and occasionally, here on the ERPodcast we take a look at a past client to see how everything worked out.
Last week we detailed the complexity of an Engineer to Order environment where L3AV creates and deploys some of the world’s best AV systems in boardrooms, conference rooms, auditoriums, healthcare, government and education, including some of the most high tech learning centers in existence.
For all the details, check out last week’s episode One for the full background. It’s kind of like Spiderman 5, you can still jump right in but it’s better if you’ve seen Spiderman 4. Or so they tell me – I’m way too involved with exciting ERP projects to keep up at the cinema.
In any case, this week we’re going back to the original $5m Cost Revenue Model – we projected it – did L3AV achieve it? L3AV also had some pretty impressive whiteboards and dynamic spreadsheets driving process – was NetSuite able to move them past that? The Quoting spreadsheet was a many-tab work of art – and what about managing resources when you have a crew in Chicago and another in Rhode Island? Project Management, CRM and Exactly what do ERP Selection Consultants do…let’s find out in Part Two of the Case Study Series Level Three AV – – – it’s the real world, where those ERP Selection Consultants help clients actually Profit, From ERP
Today’s Podcast is being brought to you by Eide Bailly Technology.
In a recent podcast, I mentioned that there were 1,000 NetSuite Partners around the country – actually the correct number is over 500 NetSuite Partners in 80 countries worldwide.
It’s my email inbox with over a 1,000 messages from NetSuite Partners – – well, that’s an exaggeration too – but with all the different software providers and projects, it’s not too far off.
But I tell you what, whether there’s 1,000 or 500, the one NetSuite Partner you wanthas been named Worldwide Partner of the Year multiple times and now picked up The Americas Partner of the Year last week in Las Vegas – that makes 4 years in a row. That’s Eide Bailly Technology
Worldwide Partner, partner of the Americas – Just think of it like a big Final Four bracket starting with 500 teams and Eide Bailly moving thorough and ending up on top. And the team can only score when they make you’re project successful –
They’re my pick when it comes to NetSuite – even back in 2014 I’d been working with them for some time and that’s why we called them in to the Level 3 AV project.
As you’ll hear in today’s Part Two, they were instrumental from the beginning and are still helping develop the ERP environment at L3AV – that’s the kind of ongoing support you want from your ERP software partner.
And believe me, I know. my email inbox is full of messages from software partners of all stripes and sizes – we see the difference every day, different software for different companies – because NetSuite doesn’t absolutely fit every company everywhere – but when NetSuite is the right ERP, Eide Bailly is the right partner. Contact them today at Eide Bailly.com – that’s E I D E B A I LL Y.com
Welcome Back to the ERPodcast – the Case Studies Series – Level 3 Audio Visual Part Two
Now as we said before, all the background detail and opening discussions about how L3AV doubled in size, and is in the process of doubling again, plus expansions overseas – all of that is in Part One, which posted last week – I encourage you to start there because this is a great story of a successful company – smart guys that work hard, do a great job and are a leader in the field.
As a consultant, you soon realize you end up looking better when you’re working with smart clients than the other way around – so as much as I’d like to claim major credit for consulting genius that led to L3AV’s growth – let’s just go back and let them tell the story.
You’ll remember, our conversation was with CFO Doug Spenser and CEO Jeremy Elsessor.
And with all business process, one process leads to another… in this case into purchasing
(SFX Phone Jeremy Purchasing and Systems Development Ongoing)
So are you beginning to get a real view of how NetSuite isn’t just a fixed solution that you turn on day one and go? I mean, since go-live, the company has doubled in size – there are issues today that weren’t visible from the perspective of a $14m company, yet we’re not replacing the ERP, we’re refining the ERP we have.
Plus additional modules are available – for example, not all companies will go with Project Management out of the gates, but then find those features very valuable.
(SFX Phone Jeremy PA Resources Needed Labor Forecast)
At L3AV, we looked at several ERP packages – besides NetSuite, we reviewed Acumatica, another cloud offering, MS Dynamics SL, although a little dated had a strong history of project management, Priority ERP an Israeli development that was strong in the EU but just making waves stateside – all had advantages – but out of the box, none did everything that was needed.
Because of the Quoting complexity – both audio and video engineering, meeting the wildly different requirements whether a boardroom or auditorium, as well as the interplay between thousands of signal component systems – there was not a standard Quoting system on the market to handle L3AV’s specific requirements. Here’s where the development tools, using the NetSuite platform for deployment, and extending custom functionality around the core system is an approach to customization, without actually customizing the core system – the user can’t tell they’re outside NetSuite, and data passes back and forth – I asked Jeremy to walk us through the process
(SFX Phone Jeremy Quoting Tool Development)
Again the NetSuite functionality growing with a growing company
And then – Implementation – switching to a new system is never easy – the very first ERP system I sold, when I was in sales, way back in 1999 – I was meeting with the team and mentioned the need for a Change Management approach, to which they replied, ‘oh no, not us, we embracechange’. Week two into the implementation, 1/3 of the staff had actually quit, the project was on indefinite hold and the software consultants dismissed. I met with them and said, ‘Guys, what happened, you told me you embracedchange.” And they said, ‘Yeah, but you didn’t tell us it was going to be like this.” Well, let me tell you, change is what happens when you didn’t expect it to ‘be like this’. And that was the very worst example, but in over 400 implementations it always seems common that the impact is underestimated. But once it’s up and running, change becomes something very positive – Let’s let CFO Doug Spenser tell it
(SFX Phone Doug: Accounting Implementation)
And ERP doesn’t just cut costs. NetSuite CRM allowed L3AV to increase revenues by putting together programs to combine customer contact programs with contract expiration dates driving additional revenues and customer satisfaction
(SFX Phone Jeremy CRM Maintenance Customer Experience)
Which Brings us to the Cost Revenue Model – As we were in the selection process, one of the steps is to rank Requirements by Economic Impact – so if your company holds $500m in inventory, and has three sales orders a year, inventory is important and sales order functions are needed, but not critical. Different than if you have zero inventory and 500m drop ship sales orders.
But by compiling L3AV’s 76 key Requirements, we were able to calculate costs in the as-is state and project costs in the ERP state. Going through 18 high transaction volume workflows, we projected that L3AV could avoid costs, save labor and potentially increase revenue by $5.3m over a three-year period.
Now, for ROI’s sake, we discount that number significantly. We’ll say things like consolidated purchasing saves the average company 5% – so if we only do half as good as the average, well, that’s 2.5% potential savings.
We also look for department managers to buy into that number – because let’s face it, software doesn’t really do anything, people using software achieve goals.
So using easily achievable goals – usually much less than other companies have done in the real world using the same software – if we can see a complete payback – that is, if the new software pays for itself – including all project costs – then we kick off the evaluation project
And here’s the deal. Any Cost Revenue Model is going to be a Gene Hammons projection – that’s what I would have done had I been managing the company based on what I’d seen other clients do previously. However, L3AV has a management team that far more experienced than Gene Hammons when it comes to the AV business – but what it enabled the L3AV managers to see, was ONE WAY to drive cost savings – let’s let them talk – as I asked Doug did they meet all of the goals on the $5.3m cost benefit
(SFX Phone Doug PA Revenue Model Forecast)
So in the three year period where we expected the Cost Revenue Model to return $5.3m, the company actually grew revenues by nearly $14m – of course that’s not solely attributable to ERP – but instead of looking at ERP as purely an increased cost – well, you begin to get the point.
And here’s what we actually see in client after client – Doing the Cost Revenue Model is a step that sets goals, creates achievable targets and focuses the project. While we might project a 4% increase in maintenance renewals and a 7% cut in purchasing costs – I don’t normally see a client come back and say ‘Hey we were within half a point’ or anything like that – but when you have definable acheveable goals, you will vastly exceed the performance of those companies who purchase ERP and the only goal is to get the system up and running.
Besides, the exercise of economic exploration of the Requirements takes process mapping a layer deeper
(SFX Phone Doug/Jeremy Software Consultant Value.1&.2)
And then last words – client companies take a long time to make decisions of the magnitude of an ERP program – as they should, it’s a big decision. But then the expectation is, let’s go live at the end of the month -and with cloud software, we’re no longer looking at 12 month ERP projects but 120 days is not uncommon and you do need to ‘hurry up and wait’ because there’s significant process that has to occur
(SFX Phone Doug Patience in implementation /Jeremy Moving Company to new ERP)
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So there you have it. Profit From ERP. A great story of a dynamic company. A NetSuite Success – an ERP Consulting success. An Eide Bailly Success – Most importantly a Level Three AV success.
And is this one of a hundred, one in ten? In no way. Like I said, smart clients make smart consultants – or I should say smart clients make consultants look smart.
Here’s the thing – when you do go through the process of creating goals, your probability of achieving those goals increases exponentially. Client companies tend to prioritize a $5.3m project rather than ‘oh, it’s just some new software system they want us to use.’
And again and again we see our clients showing great returns – in an upcoming Case Study we’ll spotlight a company that saved $180k in the first 90 days after going live with new software .
Look, we’re really pleased that we’ve been able to save clients real dollars in excess of our billable hours – that is, we more than pay for ourselves upfront – in 96% of the jobs we’ve done over the last 5 years. But what’s really exciting is seeing companies reach these stretch goals of efficiencies and productivities – that’s the real focus.
But it’s not magic, it’s the same defined and refined process we take with all our ERP Selections – a process learned from years and years of watching other smart clients, how they did things and replicating that process for new clients.
And we can do it for you too – If you’re thinking about how ERP might help your company – give us a call. As we like to say, call us early and often. We can help with the initial planning process – help you set a realistic budget and determine a realistic payback – show you where other companies have driven efficiencies and productivity using ERP – we can help you shortlist likely ERP vendors to invite to your evaluation – and we can replicate the methodology used by the most successful companies when implementing ERP
That’s what we do
Thanks for listening I’m your host, Gene Hammons, for ERPodcast saying join us next week for the next adventure in Profit, From ERP.