What's the best approach to implementing an ERP system? Bill Johnson, support services director for Rural Cellular Corporation (RCC), says to look at the outsourcer in relation to the applications that will be hosted. "You want to find the best fit," he adds. That's why, when RCC considered potential outsourcers for an ERP system, it ended up looking at an integrated approach to applications and hosting.
Headquartered in Alexandria, Minnesota, RCC is a full-service wireless technology solutions company providing cellular, paging, long distance, Internet and PCS services to rural markets in 14 states in the U.S. Having doubled its size the year prior to outsourcing, RCC found it had outgrown its human resources (HR) and financial services applications.
With a system unable to scale and adapt to rapid changes, some companies outsource a complete process. RCC, however, wanted to retain its internal staff and just implement new technology. But it didn't have the in-house IT expertise to implement and maintain a new ERP system, and Johnson says it would have added half a year to the project just recruiting the needed IT skills. Instead, the company decided to go with a hosted solution.
Side by Side
RCC began evaluating suppliers by sending its request for proposal to ERP vendors, such as PeopleSoft, Oracle, Lawson and SAP. "We asked each of them to provide us with proposals, pricing, and other recommendations but also to recommend a preferred vendor to provide the implementation and hosting services," explains Johnson. "Each ERP software partner and each hosting partner had to provide a unified solution, allowing us to perform comparable side-by-side evaluations."
Johnson says each software provider's applications had individual strong points, but when they were weighted with the recommended hosting provider, this added a new element to the evaluation of the entire solution package.
Ensuring the installation would happen on time and within budget were critical considerations for RCC, as was the assurance that the provider would be able to support and maintain the applications over the long term. With the side-by-side evaluations, RCC was able to take a holistic approach to the best solution. "We went into this with our eyes open on what we were trying to accomplish," says Johnson.
RCC selected Lawson Software, and a major contributor to that decision was the side-by-side services of a company called Cyber. Shortly after the five-year contract was signed in February 2000, Cyber spun out its business units into two separate companies: Digitera and Agilera.
Digitera's role was to provide project management and application technical expertise during the implementation. Agilera, an Application Service Provider (ASP), became responsible for RCC's application and hardware hosting, first-level help desk support for RCC end users, security, and the communication lines between RCC and the ASP's data center. During the implementation phase, Lawson consultants were brought in for specialized expertise to review application configuration and set-up and to provide training. Digitera was subcontracted to Agilera, who acted as the primary point of contact during implementation.
During implementation, Agilera had project management teams for each application module (HR/payroll, finance, and procurement). There also was high-level steering involving RCC Management, Agilera, Digitera and Lawson to ensure coordination between the project entities; to verify that project objectives and deliverables were being met; and to confirm adherence to budget. Agilera was responsible for setting up security, testing environments and implementing patches. "It was a big group effort by all," Johnson says.
Some Tweaking Necessary
RCC went live with the full suite of Lawson applications on January 1, 2001, nine months after project start - also on time and on budget. Considering the complexity and scope of the project, the implementation and cutover went very smoothly. There were, however, a few teething problems - many relating to training and setup. Johnson admits that some of the problems were due to RCC not having worked out all of its support processes with Agilera. Who at RCC, for instance, would be authorized to make a problem call?
And it's not unusual to run into technical glitches in rolling out complex ERP systems. "Some of these issues were fairly complex and took some time to get fixed," says Johnson. "But these issues were not due to the hosting services provided by Agilera. They were instances of things not working as well in a particular application as we thought they would or that we were using some element of the software in a non-standard way. We were rolling out state-of-the-art, sophisticated applications, and we rolled them out all at once. "All-in-all, we have been quite pleased with the results and the support we have received from our partners."
Since implementation, Agilera also has rolled out browser-based tools that enable RCC employees to view their payroll information and benefits online. Included with this is the ability to distribute and view financial reports online, and an automated process that routes purchasing requisitions to the appropriate levels of approving authority within the company.
Management tools were rolled out, too. Through Agilera's intranet, RCC is able to view a graphical network analysis to monitor network traffic and performance, and Agilera's use of the Magic Help Desk software allows RCC to go online and view the status of its open tickets.
Agility and Stability
The most valuable aspect of the ASP's services, Johnson says, is its full-service approach. "They are a one-stop shop for everything relating to Lawson issues. Agilera even has a team of Lawson experts that can provide training suggestions or procedural recommendations. And they install patches and upgrades and test them for us first. They are not just babysitting our hardware for us. They solve any problems that come into play regarding Lawson applications or the devices that host it."
They jointly developed a fairly comprehensive contract and service agreement that handles a broad range of issues; and RCC has been very pleased with the outsourcer's flexibility. Still, RCC knew it was important to work out the details upfront.
Johnson's advice to companies considering outsourcing is: "Make sure you work out the contractual details and spend time with the hosting company to make sure the services are very clear and defined. Make sure you understand what they are going to do and what you are going to do and that there are no stones unturned. The more time you spend on those details, the smoother your relationship will be afterwards. And make sure that the details are measurable."
Lessons from the Outsourcing Journal:
- Implementation of an ERP system is a complex process that will encounter a variety of technical issues and challenges . If more than one entity is involved in the implementation, be sure one has responsibility as the primary point of contact.
- For a software hosting solution, evaluating the hosting provider side-by-side with the software provider is an effective differentiator in proposed solutions.
- In evaluating application hosting providers, look for one that offers a full-service approach that includes training suggestions and the ability to solve any problems that come into play.