Aggressive growth plans and Food and Drug Administration (FDA) regulation left Med-Health with some strict requirements...
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for its ERP software -- requirements its original provider could not meet.
When Med-Health was originally choosing ERP systems for three new business units, it selected Irvine, Calif.-based Sage Software's MAS 500 because some divisions were already using Sage's MAS 90 and MAS 200.
But two months into the project, it became clear that MAS 500 was not going to get the job done.
Based in Las Vegas, Med-Health is actually a combination of businesses. The first business, medical supplies wholesale, opened in late 2006, selling everything from gowns to syringes. The company plans to open a pharmaceutical drug wholesaler in June 2007 and a pharmaceutical re-packaging arm in September.
"MAS 500 would have satisfied the requirements for the supplies wholesale business, and about 75% of the pharmaceutical wholesale operation," said Sam Haddad, Med-Health's vice president of operations. "But it wouldn't have worked for the pharmaceutical re-packaging."
The pharmaceutical re-packaging business is subject to FDA oversight and the agency had not yet validated MAS 500.
"We sure didn't want to be the first one," Haddad said.
Med-Health was therefore faced with the prospect of having two software platforms for its three businesses. With Sage having trouble grasping Med-Health's business model, Haddad determined it was time for a change.
The problem was that Med-Health was on a strict schedule to open the supplies wholesale business and had already invested two months in implementing the MAS 500 software. Still, the company felt it was worth the risk and decided to switch.
Med-Health didn't have the luxury of a long vendor-selection process. Haddad had worked with SAP on past projects and knew that its software met FDA requirements, so the company selected Ki4 Wholesale Distribution software, based on SAP All-in-One, from Irvine, Calif.-based Ki Solutions, an SAP partner.
Med-Health fits the profile of the small and midsized businesses (SMB) SAP is targeting more aggressively in its goal to reach 100,000 customers by 2010. In January, SAP updated All-in-One, although its planned release of an additional midmarket offering, code-named "A1S," has been delayed until later in 2007.
While Med-Health had no hard and fast return on investment (ROI) metrics, it did consider the future in its decision to go with SAP. With at least one part of the company aiming to grow rapidly to $4 billion or $5 billion within a couple of years, Med-Health did not want to have to worry about the system down the road.
"Either we could have gone with a simpler solution that may have been less costly than SAP initially," Haddad explained, "or we could invest up front and not worry about upgrading or not being supported four or five years from now."
Also, there was the matter of making up the time lost while implementing MAS 500. SAP and Ki were able to do this -- completing the project in 10 weeks -- while staying on budget.
The process went smoothly, but Med-Health didn't have accurate data, such as part numbers, for many of its products because it was more or less starting from scratch.
"If we had been able to provide SAP with more accurate parts data up front," Haddad said, "the process would've gone even quicker."
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