The Missing Ingredient

Jun 23, 2010

It has been a guilty pleasure of mine to watch some of the Food Network shows on cooking with my wife.  It is always interesting to see how chefs can make such an amazing dish out of things I could find in our kitchen. The most fun shows for me are the reality shows like Chopped or Next Food Network Star.  These chefs are put in contests with either strange foods or missing ingredients, which causes either masterpieces or disasters in cuisine

Seattle sports teams seem to continue year to year with missing the ingredient to take them to the championship games, much less the playoffs. The running back, offensive line and a healthy quarterback have all been missing for the last few years for the Seahawks.  A group of strong pitchers and consistent bats to win those games and the division has eluded the Mariners since the 116 game winning season,

In the last year I have worked with two companies that are 12-24 months into a major accounting and ERP software conversion that are logistical and financial nightmares. The software programs were nationally recognized solutions in their respective industries.  The management of each company vetted the program, reviewed the agreements provided by the Value Added Reseller and set out to convert from their existing software to the new better, faster, cost savings solution.

In the first company the total investment has been over $250,000 for software and consulting time.  The project was not ill conceived but not well planned or converted.  The conversion was put into the hands of a hardware / network consultant who had never converted any accounting software systems. This person charged the company over $50,000 directly and resulted in the VAR consultants to charge an extra $100,000 in fees.  The company had three different controllers during the conversion period and the turnover made everything cost more. The company pulled the plug on the conversion and reverted to the prior system.  They own the software and pay $5,000 per month to the finance company as a painful reminder of a poorly managed conversion.

The second company is 18 months into the conversion, $100,000 over the original conversion budget and struggling to get their accounting system to report the basic financial information, much less enjoying the much touted enhancements.  The accounting staff has not turned over, the support was directly from the software company with no VAR layer of consultants and yet the result is painfully similar.  The project cost has exceeded $250,000 and the total cost will continue to rise.  The support from the software company has been fragmented and continually put the blame on the buyer of their product.  Their consultants have complained about the “new version” that was released just after the purchase was made.  This has put the company on the “bleeding edge” of technology not the leading edge. A lawsuit may result from this company as the management is extremely frustrated.

In both of these companies either there was no quarterback to lead the team through the conversion or the person in the seat was not qualified for the job. The missing ingredient made for a bad recipe and costly result.

Next week I start working with another company that is preparing for the major conversion of software systems. This company’s operations are located in two states and the scope of the conversion will start with a comprehensive study of the steps to convert this $25M manufacturing and distribution company onto a new platform that is being vetted.

The team will be assembled between the company software representatives for the ERP system, a local VAR for the accounting software, key management and departmental staff and in the quarterback role; me. I don’t work directly for the software vendor or VAR and I also bring independence to the employees and management.

After doing dozens of conversions over the past 20 years from small companies to a large west coast franchise company I know the true value of having all the right ingredients so that the result is within budget, the timeline and the scope of the implementation. 

Make sure that if you are planning any system conversion that you include on your team a quarterback who can make sure you end up where you want to be.  Hire someone with experience and enough authority to keep the team on task with one eye on the conversion budget and the other on the finish line

More from David L. Odom…

About the Author

Dave is an experienced CFO / Exit Planning Consultant with over 30 years of expertise serving small to mid-ranged companies in finance and accounting. His background includes working in public accounting, for a Fortune 100 construction company, founding and managing a CPA firm for 15 years, prior to purchasing an international brokerage company and acting as its President and CEO. Recently he served as the Executive VP and CFO for a $35 Billion real estate brokerage franchising company on the West Coast, which accounted for approximately $900 Million in commissions and $40 Million in franchise fees.

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