LOUIS CARPENTIER KNEW the stakes were high when it became clear his company's main computer system had to be replaced. Fast growth at Innotex Inc., a manufacturer of fireretardant protective apparel, meant that its old computer system was nearing its limits by 2008. There were no illusions about how challenging or important the project would be for the company, located in Richmond, Quebec, southeast of Montreal.
"We knew from the get-go that it had the potential to make us or destroy us," says Carpentier, Innotex's President and co-owner. "We didn't take it lightly."
Innotex needed a new enterprise resource planning (ERP) system. The task of selecting and implementing it would be fraught with expense, complexity and risk because it would touch every corner of the company and the work of many of its 120 employees.
From sales to purchasing, manufacturing to finance, the new system would control 800 different processes. A smooth transition was essential for a company that has averaged 25 to 30% annual revenue growth over the last decade, selling protective suits to fire departments and other users around the world.
Innotex management not only had to choose the right system, but also navigate through a long and arduous implementation phase. To be successful, it was crucial to win the support and participation of employees for the challenges and changes ahead.
"You need the employees' full buy-in and confidence because, even with that, it's not easy," Carpentier, 44, says.
Carpentier faced a challenge that's common for entrepreneurs when it comes to information and communications technology (ICT). ICT can transform a business by boosting growth, productivity and innovative capacity. At the same time, it is one of the biggest sources of change in today's workplace.
Overcoming employee resistance to new initiatives and winning their active support is a big challenge for any business. That's especially true for new technology, which has caused turbulence in the workplace since the dawn of the industrial revolution.
At Innotex, Carpentier has been careful to involve employees throughout the ERP project. That was important not only to encourage support for the project, but also to tap employees' knowledge and expertise, he says.
"I strongly feel that the people who best know exactly how something should work are those closest to the job, and not me in an office as president."
With the help of BDC ICT Solutions Consultant Lawrence Young, Innotex followed a detailed purchase plan that included the participation of employees at each step of the way, from system selection through implementation.
During the search for a supplier, key staff from various departments participated in identifying system requirements. These were compiled in a comprehensive request for proposals sent to a long list of potential suppliers. The employees then sat in on two rounds of system demonstrations, narrowing the field and eventually selecting a winner in February 2010.
During the implementation phase, "champions" from each department helped oversee the project, says René-Frédéric Roy, Innotex's Chief Financial Officer, who led the project. Employees were also involved in testing various modules. As the company marched toward the "go-live" date in the summer of 2011, users received training on the new system. Now they are providing feedback on how it's operating and what can be improved.
Throughout the process, workers who were not directly involved in using the system were kept abreast of developments during quarterly town hall meetings.
The results have made all this work worthwhile. There have been glitches, but the transition has been as smooth as could be expected and was brought in on budget, Carpentier says. Innotex is now beginning to reap the rewards of a far more robust, userfriendly and scalable ERP system.
It will be the foundation for ambitious growth plans at Innotex, a company that Carpentier and two partners acquired in 1999. They have since refashioned it from a producer of snowmobile apparel and sports equipment into a manufacturer of fire-retardant protective gear with about $15 million in sales to fire departments, industrial users and the military in 35 countries. Principal markets are North America, Latin America and the Middle East.
Young, the BDC Consultant who advised Innotex on the project, says a successful technology implementation starts with the whole-hearted commitment of the president. The top person has to be clear on why the project is necessary and beneficial for the company. Young says Carpentier, Roy and other Innotex executives have cultivated an open culture at the company and brought the same attitude to the technology project. "They set realistic targets and made sure that the people who had to be involved in the various aspects of change were given the time to devote to it and the opportunity to express themselves," says Young, who specializes in ICT system selection at BDC.
From his perspective, Carpentier says it's important to manage employee expectations from the outset. That means reminding employees how they will benefit from the new system and the larger goal of building a stronger, more competitive company, but also resisting the temptation to soft-sell potential difficulties.
"We explained: 'Hey, we're going to do our best, but there's no perfect system out there. There are going to be drawbacks. But the overall objective is to have something that will perform better for the entire company.'"
Diane Bazire, a BDC Consultant who specializes in human resources, agrees with this approach. Managing technological change is, first and foremost, about communicating early and often with employees, she says.
"You can't show up one day and say to people: 'Up until now you've been doing A-B-C, and now you will be doing X-Y-Z,'" Bazire says. "Managers have a tendency to underestimate how upsetting this type of change can be."
Newsletters, town hall meetings and e‑mail updates are a few of the tactics entrepreneurs can use to make sure employees are well informed and the rumour mill doesn't take over, she says. And don't forget to seek employee feedback. "You have to try to understand what's worrying them about the change and then respond to those concerns," Bazire says.
Back at Innotex, Carpentier says the company purposely "didn't set the bar too high" for the new system's initial roll-out. The objective was for it to do what the old system was doing. Now, the company is looking ahead to using more sophisticated applications, including customer relationship management and financial reporting analytics.
"We told our people it won't be perfect, but it's going to take us to a much better place over the next 10 years," Carpentier says. "I think the people ended up believing and expecting that. And it's happening right now."
Jack McDonald's business was growing fast, and its accounting software simply couldn't keep up. In 5 years, the company, Leeza Distribution, had grown to 12 employees from 2 but was still using an off-the-shelf accounting package.
McDonald and his business partner Mark Hanna knew they needed a more big-league enterprise resource planning (ERP) system to replace the outdated accounting software and meet other business needs. What they didn't know was that the task would turn into a major headache.
The Montreal company, which distributes branded surfacing material such as floor tile and quartz-based countertops, ended up spending 5 times more than budgeted on the ERP software. What's worse, the system turned out to be poorly suited to the company's needs and was still causing frustration 5 years later.
McDonald's experience is common when small and medium-sized businesses go shopping for new information and communications technologies (ICT). These disappointing experiences could explain, at least in part, why most Canadian companies don't invest enough in ICT, according to studies.
Once burned, many entrepreneurs hold off on needed investments on hardware or software and end up depriving themselves of the systems they need to compete, says BDC consultant Lawrence Young, a Montreal-based technology expert.
With a little planning, however, Young says an ICT purchase can do much more than just satisfy basic business needs; it can become a vital tool for enhancing competitiveness, reducing employee stress and boosting profits.
The secret, Young says, is to follow a detailed ICT purchase plan that is aligned with your company's strategy. Failing to go through a rigorous planning process is one of the main reasons many ICT purchases go off the rails, he says.
"The buyers and sellers often don't start off on the same page," says Young, who specializes in implementing ERP software. "The choice of vendor and system is often a decision based on the buyer's instinct or which vendor is perceived to have the lowest price."
To avoid those kinds of pitfalls, here are the steps for making the right ICT purchase for your business.
When McDonald decided to update his ERP system earlier this year, he opted to take a more systematic approach than he had the first time around. He quickly realized he needed outside help for the job.
He called BDC Consulting and retained Young. McDonald says Young did an in-depth needs assessment for the business built around the company's strategic plan, which envisages the number of employees growing to 120 over the next 5 years.
The result was a highly detailed request for proposals that listed nearly 1,000 requirements. The top 4 vendors were each invited to do a half-day presentation focused specifically on Leeza's needs, making them easy to compare. "We were comparing apples with apples, not apples with pomegranates," McDonald says.
The top 2 picks were then each brought back for a full-day presentation, followed by an additional half-day each to answer BDC.cafollow-up questions.
The final choice was about as well researched as it could be, McDonald says, and the new system will be a cornerstone of the company's ambitious growth plans.
The result can be thousands of wasted hours and dollars.
To operate efficiently, just about any company needs a good information system and the right kind of software to run it.
Management information systems, when they work to their full potential, can give companies an edge by identifying ways to increase sales and reduce costs.
But investing in information technology turns out to be one of the biggest pitfalls facing mid-size companies, says Montreal software consultant Lawrence Young, president of Lawrence Young & Associates.
Many firms don't choose the right software to fit their needs, he says.
Even when they do make a good choice, they often don't understand how to use what they've bought.
The result can be hundreds of hours of wasted time and thousands of dollars in additional costs.
Young cites the example of a $10-million distribution company that purchased a software package and implemented it with the help of a local vendor.
The company signed up for $20,000 in software and another $20,000 in services to install and customize the program and train staff.
But "things weren't working the way they thought they would." Problems came to a head when the company and its accountant went to a bank to get new financing.
The banker took one look at the financial statement and said: "Something doesn't add up here." It turns out the inventory on the statement was wrong by $500,000.
"All kinds of other things were wrong, and the company didn't know it," Young recalls.
The firm spent more money trying to set things right and the bill climbed to $65,000. Even then, they weren't able to generate any management reports.
Young, who was called in to clean up the mess, said the system was installed improperly from the start.
At that point, his client wanted to throw the whole package out the window and start over.
"No," he told them. "It's good software; you just don't know how to use it." It's a problem he encounters frequently.
Companies often rely solely on sales presentations by vendors and don't seek independent advice on how to select software they need, Young says.
In a typical mid-size company with a sales range of $10 million to $50 million a year, the comptroller or chief financial officer might have some systems background, but probably not enough to ask the right questions and make an informed decision.
When choosing among different options, buyers often wind up making a selection based on price, Young notes.
But they end up comparing apples with oranges because the systems they're looking at have different strengths and weaknesses that may not have been considered.
"Most companies know what they don't like about their existing software, but they don't know where to put the bar in terms of what's out there."
What companies also fail to realize is that business processes often have to be re-engineered in order for a new information system to work effectively. "You don't use a new tool the same way you used the old tool."
A former chief financial officer at one Montreal company confirmed in an interview that investing in a new system can be tricky.
His company spent $200,000 to buy a software system to generate management information, most of which, the company later realized, could have been obtained using what was already installed.
Companies need to spend a lot of time figuring out what they need and trying to decide "if they can live with 80 per cent of it rather than 100 per cent," the executive said.
One important issue, he added, is the reliability of data. Information used for accounting purposes may not be useful for other purposes, such as performance evaluation of the sales staff.
"It sounds so simple - just generate a report on this. But then you realize it's hard to get the data you need," the executive said.
Young acknowledges there's no easy route to success. Setting up an information system properly can be "painful, disruptive and costly."
Expectations aren't always met, but it is possible to get a system to work at 90 per cent efficiency rather than 50 per cent, he said.
"This is a substantially avoidable problem."