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Supplier or Off-the-Shelf

In today’s age of complex information technology, major manufacturers exert considerable pressures on their independent dealers to adopt costly accounting software systems to manage information in a more uniform format and to ensure that their software for managing sales, rentals, parts and service sales is sufficient. Many of the specialized niche software suppliers tend to be relatively small businesses with high turnover in personnel and poor or expensive local support. On the other hand, they offer a product designed with our business in mind.

Many larger suppliers offer superior local service; however, it is really up to the dealer to ensure the system is fine-tuned to process information the way the dealer wants it done. Do you believe that an independent dealer is better off choosing the software supplier being promoted by its major supplier, or going it alone with an off-the-shelf software solution from a major software developer? What are the critical factors in making this decision?
                                                                 
—  Edward R. Otis, president, E.D. Farrell Co. (West Seneca, NY)

Loren Swakow: Great question, Ed! The software system we choose is the bullet we sometimes have to bite in our business careers. It is a major and costly decision. Due to the expense involved, we must make a well thought out and intelligent choice.

Efficiency was the key for us. Once we entered a piece of data, we wanted it to hit every ledger and journal account, as needed, to reduce entering information twice. We wanted the system to track cost on every piece of equipment we worked on. We wanted a broad customer database to keep information such as paying habits, year-to-date sales and last year’s sales by department.

To this end, we chose an industry-specific software system. Yes, we had a long and arduous learning curve, but as time went on, our questions became fewer and fewer. Each department became more and more efficient. No matter how good the service provider is, when you are down, the response is never fast enough. We have one person who is extremely well-versed in the system for those questions or procedures that only come up once a year or so.

The system you choose must be able to import and export files with your vendors and customers. This is where it can become tricky. Which system is right for each dealer? You should do a “needs analysis” for your business and then interview the providers with your requirements. Call as many dealers as you see fit to see what they are using and how they like it. Make sure you are forward thinking at this point. You want to make sure the system you choose will be applicable in the future as you grow. Before making the decision to buy a system, I believe the most important part is to interview as many users of that system as possible to determine ease of use, service level and compatibility.

Duncan Murphy: After working with three different MIS suppliers over the last 15 years, we can declare, as did Thomas Jefferson, that all are created equal. Whether they are equally good or bad is in the eye of the beholder. One constant across all vendors is that we as dealers do not invest the time and talent to fully utilize the software available. Dealer principals tend to distance themselves, and no strong MIS champion emerges. We should treat this key vendor like other key suppliers or customers and develop relationships, cultivate a strong vendor advocate, and make your company important to them.

Given this, your choice for MIS supplier should not be based on someone else’s need, but should be one with whom you are matched and comfortable. They all can provide more programs than you can use. Each has its strong points, which you can match to a critical need of your company.

The decision will become easier very soon. All system providers are moving to Web-based Windows environments. This commonality will allow more software to interact, including with suppliers, or at a minimum, ease download/upload. Fundamentally, know your needs and capabilities first if you wish to make the most of your computer system.

Jack Phelan: I don’t have any suppliers who demand that we have a certain type of accounting or operating software, but I certainly appreciate that each segment of our industry has unique needs and operating methods. Our company is in the process of adapting Microsoft products to our business, which we chose for these obvious reasons:

  • Microsoft is the largest provider of product offerings.
  • Microsoft is the standard for the world.
  • Our back office (accounting, job costing, human resources, etc.) works in concert with the office and customer relationship management product lines. All our company’s operations will be driven by Microsoft, and data will easily be transferred from one database to another.

The one bit of advice I can offer is to make sure all of the data you collect will be in a format you can mine at a later date. For example, all of our accounting and customer data is in a Microsoft SQL database format. With everything in the same format, we can use off-the-shelf report programs and get the exact information we want from all our databases. To me, this is one of the most important features that you should be concerned about. If you have two different database formats, it is difficult to combine the data in one report.

Bob Weeks: This decision should be made after evaluation and consideration of both options. Distributors need to do what is best for their companies regardless of the pressures exerted by the manufacturers. One question that comes to mind is: Does the accounting software selected affect the decision to utilize different suppliers? I don’t think there is any perfect answer.

Material Handling Equipment Distributors Association

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