#20: Välj rätt leverantör: Det kan avgöra om din IBP-implementering lyckas eller misslyckas

Soren Hammer Pedersen (00:12):

Hello, everybody. Warm welcome to this S&OP Masterclass from Roima. My name is Soren Hammer Pedersen, and I’ll be your host for this session here today. The purpose of these masterclasses is that we dive into trending topics within supply chain planning. It could be on operational level, strategic, tactical level, and give you our perspective on these matters, and hopefully give you something, the input that you can use in your daily supply chain planning world.

(00:41):

Today’s topic is no different. We are continuing our budget season special here. So in our last podcast, we talked very much around how can you future proof your supply chain planning? What do you need to take into account if you want to get a request for a new budget, a new development into next year’s planning? Today we are looking at, okay, now we got the approval, how do you run a successful vendor selection process? And today, as always, I’m not alone in the studio. I brought my good friend and colleague, Benjamin Obling. Again, welcome, Benjamin.

Benjamin Obling (01:16):

Thank you.

Soren Hammer Pedersen (01:17):

And, Benjamin, let’s start with a normal introduction here. We could have a new listener, so please two words about Benjamin before we get started.

Benjamin Obling (01:24):

Yes, so Benjamin Obling, happy to be here. So I’m overall responsible at Roima for onboarding our new clients and our continuous partnership with the clients. Been working with the integrated business planning for at least 15 years.

Soren Hammer Pedersen (01:38):

Good. So 15 years. So you’ve seen a lot of vendor selections.

Benjamin Obling (01:41):

Sure.

Soren Hammer Pedersen (01:43):

Good. Good. And that is maybe my little disclaimer here before we get into today’s topic. Of course Benjamin and I, we represent Perito IBP and work with that in supply chain planning on a daily basis. So of course, you could argue who are we to advise you on vendor selection, but I actually think that makes it absolutely perfect for us to give you some advice because we have been on the other side of the table many times in these processes and have seen what works and what doesn’t work. And that actually allows us hopefully to give you some good input to your coming process on how can you structure this in a good way. I hope that’s okay with everybody out there. So, Benjamin, let’s start why we think this actually is needed. Why do we need to have this podcast in terms of running a good vendor selection? Because again, starting with the why, is there a lot of good vendor selections out there? It could be a leading question.

Benjamin Obling (02:42):

Yeah, there sure is, but there are also bad. Yes, absolutely. I think the good motivation of why it’s important is that we do see when we look at the surveys, et cetera, that there are quite a lot of failed implementations in integrated business planning, S&OP tools setting that up. And there are, of course, a number of reasons for that. But you could say in the vendor selection that is really important there, how can we qualify that process so that we avoid these failed implementations, because there are quite a lot of failed implementations actually. And you could say that would either then be a gap in terms of the tool or of the processes or the people. So how do we make sure that that doesn’t happen?

Soren Hammer Pedersen (03:27):

And I think also from my perspective, just to add to what you’re saying, many times it’s also smaller things on the surface, things could look pretty good and a real-world product and four weeks, eight weeks, six months down the road you find out that this wasn’t the right choice for you anyway. So I think there’s a lot to be had because a lot of resources can be wasted here if we make the wrong choices or don’t end up hitting what we want to achieve.

Benjamin Obling (03:57):

Yeah, yeah. And of course, we all need to be on both sides of the table, needs to be very aware about the different processes in this selection. I mean, that you have the sales process where, you could say, a lot of vendors would be very tempted to say that they can solve everything. Right? And then you have the beginning of the project, what you could call the honeymoon where everything is still nice and you’ll talk about all the great features that you’re going to build, and you’ll get all the requirements finalized and so on. And then you get into the real difficult part where you actually need to build it, to start to test it, validated, need to get the process working, need to ensure that it’s aligned with the people. You have the capabilities in the organization and you don’t overengineer it, and all of that.

(04:38):

And I think what is one key at least is to make sure that we put our feet into the water after the honeymoon in the beginning. So how do we do that? I mean, how do we make sure that we find out how is life after the honeymoon period, after the sales process, all the yes, we can. How do we do that upfront? Because that’s really where we need to know, okay, is this, we could say, from the vendor perspective, does this client, this company have some very complicated requirements that will be very, very difficult to fulfill? Are they changing a lot?

(05:11):

How do we find out? How do we make sure then to fence that so that we actually solve something? Because if it’s changing all the time, it’s not possible. On the other hand, how do we make sure on the other side of the table as companies, how do we make sure that the vendor can actually do it? So they say, yes, absolutely we can do it because it’s the sale, it’s the honeymoon and so on, everything is perfect, but can they actually do it? And we’ll get back to that, I guess, but it’s really about do it, fix it, try it, make demos, build it, be concrete.

Soren Hammer Pedersen (05:42):

Show, show, show, and not in PowerPoint. Yeah.

Benjamin Obling (05:45):

Absolutely.

Soren Hammer Pedersen (05:45):

I think that’s first advice already.

Benjamin Obling (05:47):

Absolutely.

Soren Hammer Pedersen (05:48):

But let’s play with the scenario now. We have our investment in proof. We want to develop our supply chain planning, we want to acquire, in this case, IBP solution. Before we even get into a request for information, request for proposal process, we get back to our recommendations for those. Where do you actually start before you even get to those structural process? What would you recommend there?

Benjamin Obling (06:17):

Yeah, so one thing is to ensure that you have the alignment in the management team of what is the objective, what do we want to obtain here? So do we want to have a higher service level towards our customers because we have lost sales or we have an idea that we have lost sales? We don’t know exactly because we don’t measure it yet. Or do we need to reduce our working capital? Do we have a lot of manual work in the planning process? We’re wasting our very good analytical talent, pushing data around. We want to automate that process. We want to be more agile in making scenarios. So those could be some of the motivators and reasons for doing that. But first of all, why do we do it and then agree in the management that these are the main objectives we want to fulfill.

Soren Hammer Pedersen (07:04):

Yeah. Yeah, I think that’s a very interesting point and something we see, I wouldn’t say often, but once in a while that once if we receive a request for a proposal from customers, then they might lack the actual knowledge of what is the business outcome that they actually want to achieve. They know a lot of functionality, but they don’t know what change actually that’s supposed to come out of it. And that’s a crazy red flag, I guess.

Benjamin Obling (07:35):

Yeah, yeah. Yeah, I agree. Of course, we need to know why we do things, and that will also become clear if you make a business case for it, because then you need to think, okay, how is this going to impact either the profit and loss or the balance sheet? Because that’s all there is. I mean, we need to impact one of those two, otherwise it does matter, you could say, at the end. It’s all about the money. And then in building that, then you also get more aligned on what is it actually we want to obtain here.

(08:05):

And why that is important, you could say, as a guiding style is that will also work to limit the request that we have, because if we don’t have a complete good idea or a crisp idea about why we are doing it, we might also overcomplicate the solution, because then we want to do a lot of very interesting things when we get into how do we make production proposals or purchase proposals or building the demand forecast, et cetera. So then we are into the very, very nitty-gritty requirements and so on. And that’s where it can really explode in terms of budget and cost, which we want to reduce, if we don’t always think about, okay, but does that actually play? Is that really important in obtaining our end goal?

(08:46):

Okay. If it’s less important, say okay, yeah, this is maybe 2%. I don’t know, the tender management or phase out is not really a problem. So maybe we need, someone could come up with a very complicated solution somewhere in the organization who is working with, it’s super important for them, but it’s just 1% of the business and it runs okay. Okay, let’s not complicate the whole IPP implementation with that.

Soren Hammer Pedersen (09:10):

But I guess also broaden it out what you say around knowing the business outcome, but breaking that down to different functions within the company and stakeholders in the sense that we’re not only focused, of course we want supply chain directors, okay, we want this. But we need to make sure that we also know what sales needs and what other functions needs and what the business outcome is for them so we don’t end up down the road being... So having that stakeholder management in place and the business outcome I think is crucial.

Benjamin Obling (09:40):

Yeah, absolutely. Yeah, yeah. And also making sure that there will be the support and the management support. And it’s trivial to say, but it’s just super critical to have the management support, because when you come to sale, we’ll say, okay, now we need your input on the monthly demand planning process, for example, or we need your input in setting up the balancing of the inventories and what target service levels, which customers are super important, which products are important. If they don’t understand the whole purpose of this and are not on board with it, they’re again going to either not contribute as they should or they’re going to overcomplicate it with something that doesn’t really matter in terms of what we want to obtain with it.

Soren Hammer Pedersen (10:18):

Yeah.

Benjamin Obling (10:18):

Because the big risk here, or one of the risks is really of course that you don’t have the organizational anchoring, but it’s also that it will mushroom into a lot of requirements that are super complicated and will never fly. And then you don’t get these basic outcomes that will actually solve your business case.

Soren Hammer Pedersen (10:38):

So get the business case and make sure that you don’t run this as a underground supply chain planning development, but have the organization behind you and knowing what the business outcome is for the whole organization.

Benjamin Obling (10:52):

Yeah.

Soren Hammer Pedersen (10:52):

Okay. Good introduction, but now, okay, let’s just set a check mark with that. We got that in place. We know what we want to achieve. We have the organization. Then we want to run a vendor selection. And typically, those start with a broader audience in a request for information where we go out to a number of company and dial it into a few selected that go into making actual proposal. But let’s start with the broad scenario here. We want to go out and run an RFI here. First question, what are your main recommendations or observations around these RFIs you see out there?

Benjamin Obling (11:35):

I think it’s, again, you’d say, very important that there has been some homework done before you start. So you need to make sure that, okay, now we know the overall objectives of this. We have then trickled it down to, okay, if it’s demand inventory, supply planning, for example, what are the main things we need to solve in order to realize the objective and the business case? So in terms of functionality now, drilling it down to functionality so that we know, have an idea about, okay, what is it we need? We need a demand forecast. You could say, do we need that to be AI driven? Maybe. But what we really need is we need the seasonality to be captured.

(12:13):

We need changes in the level. We need product to phase in, for example, phase out, super critical for us, et cetera. So mapping that out, what is it really that we need? And of course in mapping that out, you can use external consultants help for that. You can also use AI. So use a large language model that will probably help you quite a lot in mapping out. You can just type in whatever, what is on top of your mind of what is important. When you’ve done that and had internal meetings around that, assisted by the AI, you would actually start to have a pretty good idea and material, concise material on what is it that you need, and then you can start to approach the different vendors.

Soren Hammer Pedersen (13:00):

But of course here, in the initial phase where we expect to go out to many vendors or at least more than a handful typically, then you need to make sure that we can run this process fast enough. So we have to make the initial selection on a smaller scale somehow.

Benjamin Obling (13:18):

Yeah.

Soren Hammer Pedersen (13:19):

So it’s still on business outcome and key functionalities, I guess, we are talking about here.

Benjamin Obling (13:25):

Yeah, yeah, yeah. Yeah, sure. But again, the faster you can be concrete, the better. But I agree. Of course, it’s overall and then you can say, okay, we need demand planning and inventory planning, for example. Okay, so which tools could be fit for purpose on that? Get your list either, you can say, from AI or from consultants or your Google Search or from the vendors that you know would be good in this area and vendors that you trust.

Soren Hammer Pedersen (13:55):

Yeah. Speaking of that, how many vendors would you actually include in such a process? You can have 20? You can have two?

Benjamin Obling (14:02):

Yeah, I would say five, seven or something, not 20 because you can’t take in all of that information anyway and you can’t judge whether they’re fit for purpose. So yeah, less than 20.

Soren Hammer Pedersen (14:16):

I would say less.

Benjamin Obling (14:18):

More than one, yeah.

Soren Hammer Pedersen (14:20):

More than one, yes, I think that’s excellent advice. Then we have the initial material. I think what we have seen that works really well is, you mentioned it also with like see it with your own eyes. Can you elaborate a bit more on why this is so important and what people should do there?

Benjamin Obling (14:42):

Yeah, absolutely. And I think that is probably our main message here. And the most critical thing is, see it, have some demos because you can make checklists and ask about a ton of different functionalities. But really, if you haven’t seen it and you don’t know and what is the definition about that checkpoint, for example, then it doesn’t really help you. What really helps you is to see that yes, this works and this is what I want. And maybe to be more concrete, it could be if we have the demand planning, for example, say, okay, one of our pains is to capture the seasonality correctly. Okay, so instead of having a questionnaire for let’s say 20 different vendors or just seven maybe, because we heard the advice, but then say, okay, so do you have seasonality in your models?

(15:31):

I mean, all IBP vendors would say yes. Do all do a good job in that? Probably not. And do they do a good job in terms of what you actually need? So if your problem is in the low season, when I have changes in the demand in the low season, how should that impact the total forecast also in the high season when I have really heavy seasonality, for example? Just one example of a very detailed requirement. You don’t know that from a checklist and you can’t ask that question. So do you do seasonality? Are you good at that?

(16:00):

Everyone would say yes and everyone are okay at a certain point to a certain extent. So there, please let us see some examples with your demo environment where we have heavy seasonality. See, okay, how does the forecast look? Let’s look at the 20 different items in the demo environment or take it to the next step. That wouldn’t be in the request-for-information phase, but you could say show it with some of your data, ideally. So give the data to the vendors and have them create the forecast and see the forecast and judge it there. That’s of course quite detailed, but you could say you need to see it so that they can actually prove that they can do it.

Soren Hammer Pedersen (16:42):

Yeah, I think it’s so interesting what you’re saying now, is because we have a tendency to just make the broad picture, this is what we need, but actually the devil’s in the detail here. So find the three, four, five things that are really critical and dive into those and already in the RFI to make sure that what’s going to bring your business outcome in the end, the solution can also provide, I think that’s a really, really crucial point.

Benjamin Obling (17:12):

And you can say PowerPoint is really easy to use, right? So we can all be heroes in PowerPoint and explain, show everything and say, okay, we can do it all. Or checklists, you can all say, okay, yes, we can do seasonality, absolutely, or we can do product. And then you have 200 questions around that, but what do you actually mean when you do that, when you show it? And you can see, okay, and you can ask questions, challenging questions. Maybe it’s not possible for the vendor to show it completely in that demo because maybe it’s, let’s say, a special request, but then demand to see something that is similar, with similar complexity so that you can judge, okay, if you can do this, you can probably also do the other thing.

(17:53):

So make it like a demo challenge of saying, okay, now we have this situation. That’s really a problem. How would you go about doing that? And please show that in the tool. Not maybe exactly, but show something that is similar. So I would also say when you have meetings, I mean that should be at least, let’s say, 50% of the time in the tool itself. I would say if the vendors are less than 50%, then stop the meeting. That could be a very concrete and maybe a bit brutal suggestion.

Soren Hammer Pedersen (18:23):

That’s very concrete advice, anyway. I really like that point, but I want to tie one more point into it also on the Show It part because I think one thing is a tool, but I also think it’s important with the business understanding that the vendor, we as a vendor should understand your business, your planning, your business. So when you present a vision, a business outcome, a business case, or for that matter for us that we are to now, I would always like the vendors to present in their own way, how can we help you achieve that business outcome?

(19:04):

So we’re not just only on the functionality, but also really on which part of what we are presenting here would we actually bring that business case or how would that work. I think linking that is already in this phase. I know it sounds a bit, okay, is it going to be very broad? But it’s so crucial because you are cutting some vendors out already, so you already need to make the right choices here. So I think you should be aligned with that as well.

Benjamin Obling (19:32):

Yeah, yeah. And then take those challenges and questions and so on, make sure that you test. Has the vendor understood your business? And that’s both in terms of the supply chain footprint, what is the overall strategy. Is it a buy and build, for example? So will we have new ERP systems? Okay, then it’s super critical that we are able to onboard those easily, for example, or do we have a lot of footprint analysis. Okay, then we need to be able to do that. It’s just a super steady business with a few products. Then it’s something else, and then it’s important that it doesn’t mushroom into a lot of different requirements.

(20:08):

And then have them demonstrate how would they do that in the tool, and how would the process around it support it? And then of course, in understanding the business, they would say it’s okay to use a few PowerPoint slides because PowerPoint is pretty good at that, for example, mapping out the footprint, understanding the overall objectives, et cetera. But then again, so we wanted to balance our inventories, that’s our main objectives. So how do we do that? Let’s take an example. What are the ways that we do it, how does it look? What are the suggestions for it? Take a few item numbers and let’s see what is the visualizations you get, what is the total overview, how can you make scenarios, et cetera.

Soren Hammer Pedersen (20:51):

Yeah.

Benjamin Obling (20:51):

See it in the tool.

Soren Hammer Pedersen (20:52):

Yeah, really, really good advice. And I think maybe last point and then go into the RFP process is, I think some of them, if you’re listening, you might be thinking, okay, is this too much? Can we really go out to, let’s say, seven vendors, maybe more, and ask them really to be this detail already in this early phase? And my response and my feedback, let’s flip it around and say you’re hiring a new candidate into your organization as a key position. 95% of you would have them present a case or do something very concrete, not just looking at the CV. It’s exactly the same here. You need to see it real. We are all pretty inward and PowerPoint, yeah. So excellent point.

Benjamin Obling (21:40):

It’s a bit the same improvement. You need to do it and make something that is as real as possible. And again, let’s try to make a situation where we are beyond the honeymoon period. Okay, now we are actually going to solve this part about the seasonality in the low season. How are we going to do that? And of course there can be, I mean to make it not too cumbersome, cases where it’s not possible for the vendor to show exactly that case that you have, but then find something that is similar and then be okay with saying, okay, that is the same level of complexity. I can understand what they’re saying. The method makes sense what they’re doing and they’re showing they can do something which has the equal amount of complexity. Okay, they’ll be able to do it, instead of just the check, yes, we can do it.

Soren Hammer Pedersen (22:28):

And speaking of the check, let’s go into the next one. Now we’ve done our homework, we have shortlisted now let’s say two or three vendors. That is the typical scenario and we are going into getting actual proposals now. So how would you go about that? Because what happens in many now is that now the size of material explodes towards the vendors. That might be okay, but what would your best recommendations be going into this next phase of the selection?

Benjamin Obling (23:02):

Yeah, keep the material limited. That is because you could say that is especially, you could say, a pitfall maybe if you use external advisors or if you dedicate someone in the organization to do that exact point and actually give them too much time. Then they would build a lot of material around this process with a lot of different questions, a lot of descriptions and so on. And sometimes what we see is then the experts in the company who is actually going to work with it and who knows the company and knows what we need, they have very limited time. So we can’t ask them too much. So when you have someone external, for example, or it could be like a project organization in your company asking these experts about the time, they don’t have too much time to do that and then you risk having a lot of blah, blah, blah around the material.

(23:56):

So you can easily produce 50 pages of requirements, which will be pretty generic. And you could say if you have someone doing that, they’ll probably use AI to do that. That means the cost of making a really large material set here is really low now as compared to a few years back. So you can really produce that, then you can send it to all the vendors. They’ll have to spend a lot of time understanding, okay, what are the different requirements? They’ll probably also use AI for that. And then they need to answer it and we can let you in on a little secret, we’ll also use ai. So that means it’ll be very easy for us to create another 50 pages with answers to those requirements. But the question here is really, so did we get any wiser? Did we get wiser on the company?

(24:41):

So from the vendor side, if we have limited access to the people who really knows and we just have access to this more generic material, we don’t really understand the business, we don’t really understand the business requirements, so we can’t answer in the best way. We can answer in a general way, then we’ll all be able to do seasonality and do all of this check to check, and we can make explanations around it and so on. And on the other hand, then you’ll have the customer, the experts who are going to evaluate this.

(25:10):

Will they read the 50 pages that we sent? No, they probably don’t have the time. That didn’t have time to provide the input either. So did we really get any wiser in this process? But the amount of material still makes us feel like it’s a good process. We’re in control, we have a very nice presentation deck or a big Word file and so on, and then that feels professional. But in my view it’s not.

Soren Hammer Pedersen (25:35):

No.

Benjamin Obling (25:36):

We’ll just get lost.

Soren Hammer Pedersen (25:37):

Yeah, I like the picture of we have AI talking to AI in-

Benjamin Obling (25:42):

That’ll be the end of it, right?

Soren Hammer Pedersen (25:43):

Let’s try to avoid that. But that comes back to your former point as well. We had the critical areas. Of course we are expanding on those now, but still keep it on the critical. Okay, now the two or three that we had, they have to go that step deeper now. But in real life, not in PowerPoint.

Benjamin Obling (26:05):

Yeah.

Soren Hammer Pedersen (26:05):

Yeah.

Benjamin Obling (26:06):

Exactly. And then you can record the session. I think the best processes in my views are the ones where you have, let’s say, teams meetings or you meet the physical. That’s not so important in my view. And then you go through the different requirements. Let’s say you have 10 different requirements in demand planning, which are super critical or 15, go through a demo, talk your way through it, and then you should have the experts on the client side, preferably also the manager, so he can judge the vendor in terms of cultural fit, in terms of capability and so on, competences. And then on the vendor side, they will show it and demo it, and then you can record that and that will be your documentation. Then you can ask AI to make a checklist based on that and so on. And so, of course, we need the requirements to be documented at the end, but again, let’s keep it short and precise and only on the critical elements and not generic.

Soren Hammer Pedersen (27:08):

No. Would you actually go that far as to include a proof of concept or a data-driven exercise in this?

Benjamin Obling (27:16):

Absolutely. And you could say again, it is a big step to implement integrated business planning. It’s a process change. It’s cultural. It’s a way of working in the company. It does have a cost associated to it. It will enhance the capabilities dramatically if it’s done in the right way. So it’s really critical that you select the right tool, but also you select the right vendor for implementing it, who will understand the business and so on. And again, in doing the POC, what we do is we jump to this period after the honeymoon to get back to that picture, because then actually you have workshops. Say you have free workshops with the client, with the experts who knows it, who will challenge the vendor. The vendor will build something.

(28:01):

Of course it’s going to be maybe 80% of what you need. You’ll still lack the last 20. The last 20 will take more time, certainly. But again, when you’re seeing the 80%, seeing, okay, the vendor understands the business, we like working with the vendor. I mean, they have it under control. They document what we talk about, et cetera. They actually implement stuff and it works and we can see it and they demo it. It’s not PowerPoint, it’s not just checklists, et cetera, because then you can say, okay, this is how it’s going to feel and how it’s going to be in the implementation. And then we jump that step ahead. And in my view, that cost of doing that is very little compared to the risk reduction that we have in those projects when we do that.

Soren Hammer Pedersen (28:45):

So you actually can see the RFP process as having different tracks. You have the functionality track and all check, check, check, and do we have the key areas there? You have maybe the data-driven POC. Let’s show it and not just tell it. And then also in many processes, there are also a track around other stakeholders, IT, finance in there. The role of IT, maybe give a few words on your experiences, because I guess that’s also critical to have that because we’re gone into a IT landscape here. Absolutely.

Benjamin Obling (29:19):

Otherwise it doesn’t fly.

Soren Hammer Pedersen (29:20):

Yeah.

Benjamin Obling (29:21):

No, no. Yeah, yeah, yeah. And the worst implementations I’ve seen is when you then end up having manual uploads to the IBP tool, so your extract thing with Excel from the ERP system, then you’re up. Okay, then you should just close down the project right away, but it should be automated. And so, absolutely important that IT is on board. And again there, I’ll also take, instead of having a requirement list that you need to check and then you need to try to answer to those questions that IT have, of course you should have that, it’s structured, but have the meeting.

(29:54):

Have the meeting with IT and the vendor, let’s find out the different ways of implementing it. Should it be a cloud solution? If cloud, how do we do it? How do we make the integrations to the ERP system? We can have a ton of different ways of doing that, but the company would prefer one specific way because they already do that, for example. Okay, let’s do that. Let’s go that way, instead of we try to answer what we think that the IT department means. So again, let’s have a meeting. Let’s open the helmet to the engine room and let’s look at it together and find the best solution. It’s a lot easier again than having right, back and forward in answers and questions.

Soren Hammer Pedersen (30:38):

Yeah. Would you have a fourth track as well on finance involved in your own?

Benjamin Obling (30:43):

Yeah. Yes, yes. So they should be evaluating and ensuring that the business case is in place so that when the vendor says that, okay, we can reduce working capital, for example, okay, is that really really the case? Is it because they’ll just remove all of our debt stock? Okay, that’s easy. We can do that ourselves. Or is it actually because they’re balancing the inventories? But really you could say ensuring that the business case is solid, the total working capital is correct, the cost prices that we’re using, are those correct, the gross profit, et cetera. So involving finance and also making sure that finance will then follow up afterwards on, do we actually realize these benefits that we set out to realize?

Soren Hammer Pedersen (31:28):

And maybe also, at least I see that in some cases that there are, of course, funny enough, financial planning going on in the finance department. We should expect that, but there are links to the IBP there already in terms of they need input from this into their planning. So I guess also on that track to involve that, making sure, okay, what is it actually they need to make sure that what comes in the future planning actually is aligned with that. So we don’t have crazy manual processes between the planning going forward.

Benjamin Obling (32:05):

Yeah, absolutely. Because here, there are really some synergies that are, you could say, not the harvested currently in my view, the link between the integrated business planning, which quite often resides in the supply chain area, with clear link to the sales department, et cetera. With inputs from finance in terms of cost prices, for example, or gross profit and so on. But with a stronger integration with finance, finance could really benefit from the integrated business planning tools because it’s actually already doing quite a lot of the work that they would be doing in terms of budgeting and estimates, full-year estimates, et cetera, and making that link, because the integrated business planning platform already models a very big part of the company. So we could say expanding that into financial planning is fairly not easy, but it’s doable from the integrated business planning point of view. So taking finance into account early in that process really means that the company could benefit a lot more from it. And there is a lot to be gained in that area.

Soren Hammer Pedersen (33:14):

Yeah, I know. Yeah. So four tracks within the RFP that actually where you end up with, of course, a proposal from each vendor, but much more than that. You actually have seen it with your own eyes and you have a very data-driven approach to selecting a vendor. And I will say maybe also as a last point, also allowing you to have that evaluation of the culture of fit as well. Because again, I know we come back to it all the time, but the seeing things also shows the people, the expertise, the capabilities, the people that actually are going to do this afterwards, not the PowerPoint. I think that is also the last point maybe.

Benjamin Obling (33:58):

Absolutely. Absolutely. I think that the worst example I’ve experienced is actually a checkbox on cultural fit. And that’s like, yes, who would say no to that? It’s like, are you a good guy?

Soren Hammer Pedersen (34:10):

I like that.

Benjamin Obling (34:10):

No, absolutely not. But just an example of something that you really can’t do. And I think it’s the same in many areas. Of course there are something like do you have a multi-factor authentication? Yes or no? I mean it’s a cloud-native, yes, no, obviously. But as soon as you get into the more complicated stuff, and that’s really also where you’re going to run into trouble, then you need to see it.

Soren Hammer Pedersen (34:36):

Yeah, yeah. So in that way you will get hopefully a good process. And not that we are trying to scare anybody here, but of course the reason why we think it’s so important to be so thorough in this is that you see those example out there where you go six months down the road and things are never implemented. You’re stuck on the license cost forever and it becomes very expensive for a company and they haven’t achieved anything. So of course, user resources in this process is the best advice. Yeah, sorry.

Benjamin Obling (35:07):

Oh, yeah. And maybe just on a specific note there, make sure that you can get out of the agreement. But it’s really also, I think, to limit the risk and the cost. And we can really do that a lot in this process because, and we can say when you talk about the cost, the implementation cost, that’s really making sure that the requirements that we list out, are they really critical in terms of what we want to achieve? So let’s remove all the really, really complicated stuff that is not really benefiting the business case.

(35:40):

It would be a nice to have and so on, but it’s not really a lever for realizing the business case, because just as the whole IBP project itself would be a risk-reward matrix, so which should be compared with other initiatives in the company, should we build a new production line or should we have a IBP tool? I mean that would be a prioritization in the management group. But just like we have that prioritization, we also have that in the IBP project itself where we could say, okay, these different capabilities, we can actually map out what is the cost, how difficult is it, and what is the reward from that.

(36:17):

Of course, it’s going to be difficult to have the vendor to put a cost on each of all the different elements. That would be going way too far. But understanding during these sessions, understanding with the vendor, with the company, what is really critical here and what is really important, and also from the company point of view, understand from the vendor where is it really complicated. So if we do this, we can do this. And the vendor would say yes, probably in more cases than they should in the sales process.

(36:45):

But try to force them to say, but this is really complicated, are we now moving into something where we are customizing way too much? There is a risk that we’ll have many errors in this and so on? So actually, if we remove this part, we could remove the implementation budget, let’s do that. And then we actually reduce the cost for the company and at the same time we reduce the risk of having a failed implementation from the vendor point of view. So there should be a joint interest in actually making sure that the scope and the functionality and so on is limited and to the point compared to what we want to achieve.

Soren Hammer Pedersen (37:19):

Yeah, excellent point. And I think it dives in, now I can see time is also running, but maybe as a last point is on the pitfalls we of course want to avoid and we have covered many of them. So let’s not repeat those. But I think just touching on what you just said, realism is maybe a word that we should highlight. Also talk about the pitfalls because it is nice and we are, as people tend to see, we see this extremely optimistic project plan. We see a lot of pretty powerful, we maybe see a very low cost of things, and especially the realism in terms of what kind of exercise is this to get it into our organization, and get the value out of it. Is that done in three weeks? Probably not if you’re a large organization. So having that in back of your mind, okay, it looks good, sounds amazing, can it be done?

Benjamin Obling (38:29):

Yeah, yeah. And what is the timeframe? When we need to onboard people, we need to change the processes, et cetera. Be realistic about that. And then make sure to put something early in the process that will give you some successes in the project. So that could be implementing demand planning, for example. Okay, fairly fast. Maybe reduce some of the functionality in the beginning, phase one, get that out there. Then the sales department will start to say, okay, they get a pretty good proposal, they just need to do changes, answer a few alerts, et cetera. Compared to before, they had to do everything bottom up.

(39:01):

Okay, so this is a good project. Let’s then put on the more advanced functionalities or maybe reevaluate, do we actually need it or is it good enough? Okay, let’s leave it out. Let’s use it for something else. So that we really make sure, I mean always to make sure that we’re doing exactly what we should and not more, because then we just risk the complications. And that is really the complexity is the enemy of the IBP projects, that it gets overly complicated because we want to solve everything upfront. We want to build a space shuttle to go to the moon, but actually what we need is a solid bus that can take us from A to B.

Soren Hammer Pedersen (39:39):

Yeah. And then how do we get that solid bus into the whole organization, remembering that it’s you that knows the organization, not the vendor? So if they say, we can implement this site in three weeks and you know it took 17 months last time we did anything there, let’s get the realism in, how do we have this excellence there? How do we actually get that in maybe then in three months or how much we can do it? I think that’s-

Benjamin Obling (40:04):

Yeah, yeah. And maybe also, you could say, a red or orange flag from observing the vendor, if the vendor says yes to everything or at least says yes without saying yes, but it will take dot, dot, dot. It will complicate and so on, so we just need to take that into account because we could say, yes, we can do a ton of things in the IBP, but it will be complicated. So should we do it or should we go, how fast should we go? So we go far enough. So we solve it, but not so far that we’ll fail on the implementation.

Soren Hammer Pedersen (40:35):

Yeah. Excellent. Benjamin, we are running out of time here today. I think it was excellent advice you gave here today. Many good points. But just to sum it up, the four tracks on the RFP, really focusing on those, having that thorough approach to things, showing things not just in real life, not just telling and of course involving all the stakeholders. And remember the realism. I think important points if you want to succeed going forward. So thank you for your input here today. And also thanks to you listening in out there. We always appreciate you dialing into our master classes and of course, hope you come again. If you have any questions, anything you want to ask to dive more into or have a look at our website, reach out to Benjamin and I. We are always happy to talk to you out there. Otherwise, have a great day out there and we hope to see you soon again.