BCIC Case Study Library No.

0005 November 2008

Let's Integrate: The Case of Kelowna Flightcraft's ERP

Acquisition Decision

The Kelowna Flightcraft Group of Companies was founded in 1970 by Barry Lapointe
and Jim Rogers and is located in Kelowna, British Columbia, Canada. The Kelowna Flightcraft
Group of Companies comprises three entities: Kelowna Flightcraft Ltd., Kelowna Flightcraft Air
Charter Ltd., and Allied Wings. Kelowna Flightcraft Ltd. is a full-service maintenance and
repair organization (MRO) that operates 12 line maintenance facilities across Canada and two
full-service maintenance, repair and overhaul facilities in Kelowna, British Columbia and in
Hamilton Ontario, Canada. Kelowna Flightcraft Ltd. (hereafter referred to as 'KF') is an award
winning Approved Maintenance Organization (AMO). Kelowna Flightcraft Air Charter Ltd. is
the air cargo carrier for Purolator Courier, while Allied Wings operates the Canadian Forces
Contracted Flight Training and Support Program near Winnipeg, Manitoba. Together, these
three companies form the Kelowna Flightcraft Group of Companies with a collective workforce
of 1000 employees who fly, maintain, modify, engineer and paint aircraft. KF is a one-stop shop
that services the aviation industry worldwide.

Up, Up and Away

In 2006, Kelowna Flightcraft Ltd. (KF) had realized that its existing systems could no
longer support the growth and mission of the company. The systems were comprised of quasi-
inter- and independent systems, and fragmented databases across the company that could not
be integrated. For instance, the MRO, Materials Management and Financials were not linked in
any way and this created process issues and problems. This realization led the company (KF's
executives, senior managers and project managers that will henceforth be referred to as the
Project Executives) to begin a process to seek an integrated software solution that would unify
the three main areas of their business, meet the overall goals of the company and also be able to
grow with the company. A team was formed to meet this purpose and so began KF's
acquisition project for an Enterprise Resource Planning (ERP) software solution that they aptly
titled, "Project Unity". The team (also known herein as the project team) determined that the
company would benefit from integrating its three main business areas—MRO, Materials
Management and Financials. Further, the project team also determined that at least 80% of the
benefits of the new system would "come purely from the integrated nature" of the system. In
addition, as part of its strategic direction, the company was prepared to modify its existing
procedures and processes to match those of the selected software. The type of software that the
project team would be looking to acquire would be an Enterprise Resource Planning (ERP)
software solution.

Professor Jacques Verville of the University of British Columbia – Okanagan prepared this case with the close
cooperation of Kelowna Flightcraft and a generous grant from the British Columbia Innovation Council (BCIC).
This case is intended as the basis for class discussion rather than to illustrate effective or ineffective handling of an
administrative situation.

Copyright © 2008 by Jacques Verville. All rights reserved.

Anticipated Benefits from the ERP Solution

The anticipated benefits from the acquisition of an ERP solution can be divided into two
distinct areas: the benefits from the technology itself and the strategic benefits as derived from
the technology.

Anticipated Technological Benefits

The ERP solution would enable the company to:

1. Improve Aircraft Maintenance Engineer (AME) Productivity, such as improve

parts forecasting, acquisition and delivery—"key was the concept of the process
supporting the AME, of keeping the mechanics at the side of the aircraft doing
his job as opposed to the AME supporting the process/administration" (Project
Manager);

2. Reduce re-keying efforts because of the integrated nature of the software, the
application data import features, and bar coding capabilities;

3. Reduce revenue leakage, improve and systemize controls, improve accuracy and
timely project accounting;

4. Improve scalability and flexibility;

5. Be easy to learn its processes and systems as well as monitor and control its
processes;

6. Improve inventory optimization such as demand forecasting, dependent

demand, productivity and service-level reporting and electronic commerce.

Anticipated Strategic Benefits

The anticipated strategic benefits from the new ERP software would be:

1. Improved control of the business:

• Compliance: GAAP, governance, internal audit

• Complex structure – multi-company consolidations
• Speed up reaction time (to negative trends)
• Provide mandatory reporting as needed (Allied Wings & Purolator)
• Cost and variance tracking
• Purolator (cost tracking and audit)

2. Meet the requirements of Allied Wings and Purolator Courier Ltd. (PCL):

• Enhanced PIF (performance incentive fee) ratings, VIQs (variation in

quantities) that generate added revenues
• New reporting requirements beginning 2009 for Purolator

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 3. Competitiveness

• Capacity (optimized)
• Costs (controlled, analyzed and lowered)
• Quality (maintained and enhanced)
• Aircraft maintenance turn times (generate new customers and business
opportunities)

4. Growth enablement/Scalable processes and systems

5. Alignment with industry trends

6. Future value of the business

Overview of the ERP Acquisition

The Kelowna Flightcraft Ltd. (KF) Project Executives viewed the planning scenario as a
roadmap that would lead them to the selection and acquisition of an ERP system. The roadmap
that KF's steering committee laid out included specific activities that the project team would
complete to meet its objectives. These set of activities consisted of a series of processes that
were based on formally defined procedures and routine project management protocols. The
KF project executives also designed its roadmap to be sufficiently flexible so as to accommodate
unknown circumstances that might arise during the selection process. Also, because this was
KF's first time purchase, they (KF's executives and project management team) did not know
what to expect. Although their Project Managers had previous experience with this type of
acquisition, since they were new to the aircraft industry, KF's project executives could not
predict the challenges that might arise during this acquisition.

The ERP acquisition project roadmap began in the Fall of 2007. Given the broad scope
of the proposed purchase, KF's project executives put together a team that was comprised of
individuals from the various enterprise areas that would be affected by the new technology.
These individuals would not only be part of the acquisition phase, but would, for the most part,
continue on to the implementation phase of the software. The project team would be overseen
by the Steering Committee who would provide governance for the overall project.

During the planning phase, as part of KF's roadmap, KF's project executives broke down
the acquisition and implementation of the ERP software solution into three (3) phases:

1. Financial systems (mandatory for Allied Wings reporting)

2. Materials Management
3. MRO (Maintenance, Repair & Overhaul)

In addition to the ERP technology, wireless technology was to be installed in the

hangers. Under this plan, the implementation of the new ERP would take place over a three (3)
year period and would allow KF's project team to manage the process and mitigate risk. As
part of their plan to mitigate risk, a disaster recovery strategy was drawn up to minimize the
risk following the implementation of the new technology. With regard to post implementation
issues, a plan was developed for the maintenance of the new applications and the level of
vendor support that was required for KF to remain current with its ERP system.

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 The project team's first activity (task) would be to establish the requirements that would
eventually be part of the Request for Information (RFI) and that would subsequently be
forwarded to vendors. To do so, the project team identified KF's critical processes, its existing
technological architecture/infrastructure and critical elements. The team then put together a
list of requirements that included KF's key business functions. Once completed, the team
created a request for information (RFI) that outlined who KF was, its business, its existing
infrastructure and what KF's was looking for. Approximately, ten RFIs were sent out to
various ERP vendors. Included in the ten were a number of MRO point solution vendors.
These vendors were required to include integration details to third party modules (i.e., Finance
package) and told that the responsibility for contracting and delivery would remain with them
as prime contractor.

Eliminating Prospects
From the initial group of 10 vendors, the list was brought down to three vendors—
Lawson Software1, RAMCO Aviation2 and IFS North America Inc.3. Subsequently, in the
Winter of 2008, a more in-depth evaluation of each of these three vendors’ solutions was
undertaken. Each vendor was invited to put together a three to four day session for which
Kelowna Flightcraft brought in approximately 20 of its users to evaluate the functionality
aspects of the software. These individuals were drawn from "across the business, and the
purpose behind that really was the main issue — that we got ownership of the final selection
back very early on and that everybody felt that they were actively participating in the selection
of this vendor" (Project Manager). As part of their evaluation strategy, KF supplied each of the
chosen vendors with scripted scenarios in which specific functions needed to be demonstrated.
This was important to KF because they wanted the vendors to understand their business. KF
felt that they "were going to get the maximum data if they [the vendors] understood the nature
of our business, where we were in our business, the challenges with the business, in essence, all
of the issues related to our business". From these sessions, KF wanted to gain a better
understanding of each vendor’s proposed ERP software and see how their proposed system
would perform. Furthermore, KF wanted to evaluate and validate the information that was
provided in the vendors’ RFI responses with what was shown in the scripted demonstrations.

Analysis of the ERP Acquisition Process

"...Selection is driven by business needs and benefits...the methodology will focus on the best fit
package while managing resources (people, cost, time) to reach the best possible decision..."

This section presents a detailed account of the processes and activities that Kelowna
Flightcraft completed for the acquisition of Lawson’s ERP Software solution.

1
Lawson Software provides software and service solutions to 4,000 customers in manufacturing, distribution,
maintenance and service sector industries across 40 countries. Lawson’s solutions include Enterprise Performance
Management, Supply Chain Management, Enterprise Resource Planning, Customer Relationship Management,
Manufacturing Resource Planning, Enterprise Asset Management and industry tailored applications. Lawson
solutions assist customers in simplifying their businesses or organizations by helping them stream line processes,
reduce costs and enhance business or operational performance. Headquartered in St. Paul, Minnesota, with offices
around the world.
2
RAMCO Aviation is a global provider of Maintenance & Engineering (M&E) and Maintenance, Repair &
Overhaul (MRO) software. Its headquarters are in Lawrenceville, N.J.
3
IFS North America Inc. is a global enterprise application company that provides software solutions. IFS pioneered
component-based ERP software with IFS applications, now in its seventh generation. North American operations
are located in Battle Ground, Washington.

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KF's Planning—The Roadmap
KF's planning encompassed all the activities deemed necessary to complete both the
acquisition and implementation of an ERP software solution. In broad terms, planning
included meetings to determine schedules, priorities, participants, and resources that would be
required; activities and tasks that would need to be completed; and so forth.

The planning phase laid the foundation for undertaking the acquisition of the ERP
solution. The planning addressed the following issues:

• Participants—who would participate in the different phases of the process?

• Strategies—how would the company approach/deal with the vendors?
• Evaluating current infrastructure—what is our current technological
infrastructure?
• Establishing requirements—what are our organizational needs in each of the
areas that would be affected by the software?
• Establishing evaluation criteria—how would we evaluate the software and
against which criteria.

Participants
Individuals were recruited from within the company. These individuals were from
Finance, Materials Management, and Maintenance, Repair and Overhaul departments. One of
the Project Managers' objectives in recruiting individuals for this acquisition project had to do
with his concern for the long-term buy-in and support of the users for the chosen software. As
per one of the project managers:

"...these individuals were drawn from right across the business and the purpose behind that...we
got ownership of the final selection…and everybody felt that they were actively participating in
the selection of this vendor..."

This approached ensured user buy-in of the chosen solution. Consequently user
participation played an important role in KF’s decision process. It was important that users buy
into (actively endorse and support) the new ERP solution. Without this buy-in, KF's
management felt that the acquisition project would be at risk.

Strategies for Success

KF had several strategies that impacted their selection process. One such strategy that
KF used was for the dissemination of information about each of the vendor’s products. To do
so, KF invited the three short-listed vendors to present, over a three-day period, their proposed
technological solutions. For their presentations, each vendor would be required to use pre-
determined scenarios (scripts) supplied by Kelowna Flightcraft.

Another strategy that KF planned was to have, prior to each vendor’s presentations, a
training session for all project team members on how to evaluate and score each of the vendor’s
presentations.

Yet another strategy concerned long-term user buy-in and support. KF's strategy in this
regard was to make certain that many of the individuals on the core team participated not only
in the acquisition phase of the ERP project, but continued on to participate in the
implementation phase of the technology.

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Establishing Requirements
KF's ERP project team established evaluation criteria for three types of evaluation:

• Vendor
• Functionality and Ease of Use
• Technical

The vendor evaluation criteria consisted of size, financial stability, reputation, product
risks, etc. Functionality and Ease of Use criteria dealt with the features of the proposed
software solution and included functionalities specific to front-end interfaces, user-friendliness
and so on. Technical criteria dealt with the specifics of system architecture, performance,
security, database, scalability, to name but a few.

Selection Phase
Subsequent to the planning process, the selection process began upon receipt of the RFI
responses from the vendors. With these responses in hand, KF then preceded with the paper
evaluation of the vendors proposed solutions. This evaluation allowed KF's project team to
compare the vendors' solutions against their needs and to eliminate those that did not appear
(at least on paper) to meet them. In doing so, KF reduced its list of 10 vendors to a short list of
three vendors. Herein, we have chosen to demarcate the selection process as beginning with the
activities following the return of the RFI responses from the vendors. The objectives of this
process were to evaluate the RFIs and derive a short-list of vendors.

Evaluation Phase
KF’s evaluation process focused on three areas: the vendor, the software’s functionality,
and technical aspects of the proposed ERP software solution.

Project Unity Vendor Selection Training

Prior to the in-house evaluation of the vendors and their technologies, members of KF's
project team participated in a training program — Project Unity Vendor Selection Training —
that incorporated all of the main elements and objectives of the evaluation phase which were:
(1) to understand the needs of Kelowna Flightcraft Ltd.; (2) to know the three final vendors
(based on the RFIs and other pertinent information); (3) to be well prepared for the vendors
presentations; and, (4) to be well prepared for scoring each of the critical areas.

"...Success is hinged on an expert team with clear goals..." (Project Manager)

Each of the main elements and objectives were broken down as follows:

1. Understanding the needs of Kelowna Flightcraft Ltd.:

• A fully integrated set of applications with growth potential:

o Major benefits come from industry standard, ‘state of the art’ systems, not
having to transfer, manipulate/validate data and systems which provide
‘value added’ work

• Comprehensive applications with depth:

o Capable of handling most of our current & future business requirements
o Scalable

• Simple to understand and use

o Makes training easier and work flow quicker/accurate

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 • A vendor who we believe we can work with comfortably
o Committed to KF for long term, knowledgeable, flexible, experienced in
successful implementation and support

• High volume processes which are quick and easy

• Complexity is only where it needs to be

• Work flow — to track the progress of activities

o To support KPI’s and continuous improvement

2. Get to know the three final vendors

3. Prepare for the vendors presentations

• Remain discreet and respect vendor information as confidential (not to share one
vendors info with another)
• Do not discuss scoring with anyone outside the scoring team
• Keep all documentation safe and confidential
• Expect possibly longer days during vendor presentation sessions
• Attend one vendor session—attend them all
• Strict time keeping for each meeting—be 5 minutes early—there will be no
delays in start times
• Attend the entire meeting
• Time keeping and be prepared: maximum use of time is critical; keep focused on
‘what’s critical to the business’; do not discuss other vendors presentations or
systems specifically (it is ok to say ‘how would you system process...’)
• Allow others time to speak: everyone wants to get their questions answered
• Adopt the ‘parking lot’ for unanswered questions
• Try not to tell the vendor in too much detail how we do it today (vendors look
for weaknesses and exploit them)
• Do not strike up relationship with vendors that may be perceived to influence
our decision making
• Do not personally accept any gifts from a vendor
• Do not express your personal system preferences to vendors
• Stay engaged even though the presentation may not be covering your specific
area of responsibility
• Be aware of ‘sales tactics’ (functionality, not presentation skills)

4. Scoring

• We will score during the presentation(s)

• Listen and look carefully as the vendors cover each script
• Make a note if you don’t see a script
• Ask clear, simple questions
• We will hand in our score sheet at the end of each scoring day
• We will capture your questions and points of clarification including missed
scripts at the end of each day
• You will score only your area of expertise (FIN/MM/MRO)
o Functionality (how well does it do the job)
o Ease of use (how easy is the system to use)
• Make sure you put your name clearly at the top of the scoring sheet

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 • All scoring information will be held securely until all vendor presentations are
completed

From the perspective of KF's Project Executives, another objective of the pre-evaluation
training was to prepare the project teams sufficiently well so that they could garner the most
from the vendor’s demonstrations. The Project Executives went a step further to establish for
the team basic rules of conduct for and a definition of what it deemed as a good demonstration:

• Keep focused on what we need to see (so as to minimize questions when the
vendor leaves)
• You will have learned more about the overall business and how integrates the
main business areas and functions
• Ask only relevant questions
• Remember the vendor is new to our business (avoid the use of Flightcraft
terminology)

Moreover, the Project Executives also included what a good demonstration should not do:

• ‘Time out’ the vendor by asking too many questions

• Take a ‘stump the vendor’ approach asking difficult questions
• Try to solve your current problems
• Save all your scoring until the end — you will forget
• Spring 20 topics on the vendor at the evening session
• Be late for anything
• Disengage when the topic discussed is not your ‘field’
• Talk or whisper whilst the vendor is talking

The overall objectives, then, of the pre-evaluation training were to emphasize several
points with the project team, namely:

(1) the importance of the evaluation phase of the acquisition;

(2) that confidentiality was critical;
(3) the importance of time keeping and professional conduct;
(4) the need for a firm grasp of the principles of each of the 3 vendors' products (how
they work);
(5) the need to remain focused on the ‘product’ and not the ‘sell’;
(6) to know their scripts very well;
(7) to look for simplicity, ease of use, and ease of training others;
(8) to look for value added activities; and
(9) to think of how they could improve the business by using these new tools.

Functional Evaluation
The functional evaluation was a key component of the acquisition process for KF. For
the functional evaluation of each of the vendors’ proposed ERP solutions, the users participated
in the decision process. Functional criteria, questionnaires and scripted scenarios were used
that had been developed in the earlier pre-evaluation training phase of the process. Short-listed
vendors — Lawson, RAMCO and IFS — were invited to participate in a three-day
demonstration of their technological solutions. For the functional evaluation, Project Unity
Scoring Scripts were used by the team members to score various aspects of the technology
during each vendor’s presentation.

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Scripted Presentations and Scoring

Each vendor's proposed technological solution was presented over a three-day period at
the Kelowna Flightcraft centre in Kelowna, British Columbia. Prior to the vendor’s
presentation, as aforementioned, each team member received training on the evaluation
protocols that were to be used to evaluate the vendors' technologies.

As a strategy, KF elected to use pre-determined scripted scenarios that were scored by

each team member (including users) during the presentation and handed in immediately
following the presentation.

Each scripted scenario encompassed all three areas where the technology impacted the
company: Finance, Materials Management, and Maintenance, Repairs and Overhaul (MRO).
For example, for MRO, under the heading of Estimating and Maintenance, the scripted scenario
was the following:

• Demonstrate the ability of the system to analyze historical information (completed

work) in order to provide estimates/bids for potential future work.

In this instance, the objective for each team member was to evaluate the systems'
capabilities to average past work for estimating future work, evaluate the flexibility and
sophistication of the analysis capabilities, and evaluate how well the system could
compile/create a bid from the analysis.

In another example, this time from Materials Management, under the heading of
Requisitions, the scripted scenario was the following:

• Demonstrate how electronic requisitions are:

1. created,
2. approved and,
3. actioned by the purchasing department for routable/repairable items
(including warranties);

• Then, subsequently, how an electronic purchase/repair order is:

4. created,
5. amended,
6. cancelled.

In this scenario, the objective was to evaluate the systems capabilities to track repair
order requisitions. This function, due to the high volume of transactions, carries significant
financial responsibilities and so approval and authorization are important (serial number
tracking is critical).

Another example in Finance – under the heading of Accounts Receivable – Billing –

highlighted the following scripted scenario:

• Support identification of contract type for reporting purposes (fixed versus Time &
Materials and percentage of completion).

In this scenario, the objective was to evaluate the systems capabilities in handling
various contract types and methods of billing customers, its flexibility and versatility with

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regard to different customer types. The ability of the software to report based on fixed contract
and time and materials performance was a requirement that the project team looked for as well
as its ability to do percentage of completion reporting.

Functionality was scored as follows:

• an ease of use score:

o 0 = looks complex, busy screens, not intuitive;

o 1 = not Windows but not too complex/difficult;
o 2 = it’s like Windows, i.e., everyone will be comfortable with using it

• functionality score:

o 0 to 4, where:
• 0 = no capability;
• 1 = minimal capability;
• 2 = basic capability;
• 3 = meets all requirements;
• 4 = exceeds requirements.

As for ease of use, a score of 0 would be interpreted as 'the software looks really
complex to use, training would be hard and it would be slow to operate’; a score of 2 would be
interpreted as 'the software looks easy, it has simple screens, and it is intuitive’.

Vendor Evaluation
The vendor evaluation was completed from the information that was gathered on each
of the three short-listed vendors. The information came from references, site visits and input
from the visits. Each vendor was also evaluated in terms of its financial stability, reputation,
creditability, success history, a Dunn & Bradstreet report and other, similar types of
information.

Technical Evaluation
The technical evaluation was performed on the major technological components needed
by the proposed ERP solution: the servers, workstations, network components (line and/or
wireless), database management systems, and so forth. Further probing was done to evaluate
the level of maintenance required for the applications, the total cost of ownership, the scalability
of the software, etc. In addition, the technical evaluation determined KF's volume of data
(current and projected), the processing time, and the size of the various components that would
be necessary to support all the processing and data that would reside on them. In addition, the
team looked at the software’s security from the standpoint of how it was defined and how it
would need to be managed.

Down to the Wire – the Final Choice

When everything was said and done, the final selection culminated in the choice of the
ERP system that Kelowna Flightcraft determined was right for them. When the presentations
were done, the in-depth evaluations and analyses completed and the scores tallied, the results
were very close, which meant that any one of the three short-listed vendors' ERP solutions
would do what was needed for KF. As one of project managers noted, “In the process of
elimination, we realized that any one of the vendors will do the job.”

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 Even so, the consensus of the majority of the participants favoured Lawson Software. To
ensure that Lawson was the final choice, Project Managers “did a hands in the air, five minute
voting” session with the project team, along the lines of “Okay, so who would vote for IFS?
Who would vote for RAMCO? Who would vote for Lawson?”

The users and project team members from MRO, however, seemed to favour IFS. Since
IFS's presentation was particularly designed for the aviation industry, with pictures of airplanes
put directly into their software screens (dashboards), for example, the individuals from MRO
were convinced that IFS was the best choice of vendor/software. According to one Project
Manager,

“…the MRO people (the actual mechanics, the hands-on aircraft people) went for
IFS. The reason is that IFS had shown aircraft speed and had shown airplanes on
their dashboard. [Plus,] they had all the right words. … To the MRO group, IFS
focused on the aviation…and appeared to be more industry focused…which
gave them credibility in the eyes of this group…[thus, the MRO group was]
gravitating towards what was known to minimize the risk to the project.”

The challenge for the project team was then “to draw out specific areas of concerns [to the MRO
group] so that we could very carefully evaluate these concerns against the other short-listed
vendors products and remove the 'gloss' of the presentation [that focused] on the comparability
and performance of each system to perform specific functionality.”

Since “the MRO group is critical to the operation of the KF business,” the successful
outcome of this project depended on the group's full buy-in. “The final decision would be
made beyond this evaluation point.” (Project Manager)

Hence, the KF project team provided Lawson with a list of the MRO group's concerns
and “gave Lawson the challenge to demonstrate to the full satisfaction of the MRO group,
beyond reasonable doubt, that their proposed system could successfully meet the business
requirements” (Project Manager). This would provide the MRO team with “further
opportunity to investigate and become comfortable with what Lawson proposed over IFS”
(Project Manager). KF project managers were certain that Lawson would be able to satisfy the
MRO group concerns.

“So we said to Lawson, if you want this business, you have to prove to these
people...[(MRO group)]...and convince them, including the ‘nay-sayers’” (Project
Manager).

In January 2008, Lawson returned and addressed these key issues directly with the MRO
group. They began by addressing the issues from an aviation perspective and “got people on
the implementation team that had aviation experience.” Although they were not able to “get
everyone on board,” Lawson was able to alleviate the concerns of most from the MRO group,
much to the relief of KF's project executives and project team.

Other factors also needed to be considered before a final choice could actually be made.
After some debate, the factors that the KF project team realized they needed to consider were
the less tangible, “softer issues” of the long-term relationship with the vendor – namely
compatibility, that is, could they work with the vendor – and trust. As one of the Project
Managers noted:

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 “The interesting thing was that once [we] got the scoring out of the way, the
softer issues became more important.... [The KF project team] had realized the
subtleties of the presentations and which vendor was going to support their
business in the long-term. [Through] the process of elimination, the realization
came that anyone of the vendors ‘will do the job.’ It took awhile to get everyone
on this same playing field. [Then], each participant began to ask themselves
‘What would the long-term relationship look like with vendor such and such?
Are they the kind of people that we could work with over the long-term? Do we
trust them?’ These were the questions that began to arise in the final days before
the final choice.”

Another factor that played its part in KF's final choice of vendor/software dealt with the
issue of implementation, specifically with assistance and support during the implementation of
the software. According to one Project Manager,

“One influencing factor on the final decision was that one of the vendors came in
and, kind of at the last minute, said, ‘This is our product, but we will not actually
be implementing it.’ ... The impression that gave us was this kind of a ‘cut and
run’, …we will drop the product with you and then we will be off.”

The vendor in question, it turned out, could not provide local support for implementation of
their software, and had withheld this information from KF until the presentation.
Implementation would have needed to be carried out by an outsourced third-party provider.
This was another factor that contributed to KF's final choice.

Another factor that KF was concerned with was training. Here, Lawson came out ahead
of the other vendors. As per one of the project managers:

“With Lawson products, what they seemed to bring out that the other vendor[s]
did not…was their emphasis on training, on the dissemination of knowledge.
This was another critical point [for us].”

Lawson continued to provide the KF team with more reasons, more evidence, to re-
affirm the team's choice.

“Lawson provided the definite impression that they were there for the long
haul...they would be helping with the implementation...providing the support
and that added a lot of credibility.... That was a critical point.”

Subsequent to further investigation and evaluation by the MRO group of

Lawson's ERP solution, and assessment of the other factors by the project team, namely
those of long-term relationship, compatibility, trust, implementation, support, and
training, the final choice of software and vendor was made — Lawson Software.

All-in-all, KF's choice of Lawson was not only based on the technology side, but was
also based on the soft issues, especially the non-aviation reasons — the long-term relationship
with the vendor and the implementation strategies. It was these softer issues that “swayed the
majority of the participants” (Project Manager).

The final choice or recommendation was conveyed to the Steering Committee for final
approval.

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Negotiations – A Two Prong Process
KF's Project Executives began negotiating with Lawson Software once they received the
approval from the Steering Committee. Two types of negotiations took place: (1) business
negotiations; and (2) legal negotiations. According to one of the Project Managers, the legal
negotiations were a “pretty stale process” that focused on the terms and conditions of the
contract. These were conducted between KF's legal team and Lawson’s legal team.

The major issue in the negotiations was pricing. KF had a budget that they quite
naturally wanted to be kept secret from the vendor. They requested a bid from the vendor so as
to have a point of reference for pricing. However, during the business negotiations, the vendor
‘announced’ a new price that was higher than the original bid. Not only was the new price
higher than the original bid (because the pricing was adjusted for the number of KF users, etc.),
but it included some variable pricing, pricing that could fluctuate based on a number of factors
such as the number of licenses. It was in the middle of the negotiations that a key advisor to
Mr. Lapointe informed Lawson that they (KF) wanted a firm, fixed price.

“In the middle of the negotiations, a key advisor to Mr. Lapointe, ‘dropped a
bombshell on them (Lawson) when he stated that they wanted a ‘fixed price.’”
(Project Manager)

This, in effect, was like changing the rules of the game in the middle of the game, and it
put some strain on the newly burgeoning relationship between KF and Lawson Software.

“You see,] KF did not go out initially and ask for a fixed price...we asked for a
bid, ... [so,] to introduce that at that point was fairly late in the discussions with
them.”

Nevertheless, Lawson did what was needed with the pricing in order to satisfy
KF's request. Negotiations then continued based on Lawson's fixed quote.

“When all was said and done, at the end of the day, after all the planning, we
needed a product. We needed a good product and a successful
implementation....” (Project Manager)

In addition to this, one of the project managers summed up what he considered

to be the makings of a ‘successful’ acquisition:

“It is the successful deployment of any chosen system and adoption by the users
that will ultimately decide the final benefits to the company. You can select the
‘best’ system in the world, but if you can't get users to become personally
comfortable with the transition, learn, accept and use the software to its
maximum, then it is for naught.”

Critical Success Factors

The factors that were important and deemed critical to the success of KF's software
acquisition project were as follows:

• Clear roadmap — A clear vision and careful thought and planning laid the
roadmap for this acquisition project.

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 • Buy-in — User buy-in was deemed as critical to the long-term success of this
project. It was so important to KF that even following the choice of Lawson's
software solution, efforts were still made to alleviate the MRO group's concerns
and convince them of the worthiness of this choice. The MRO group's concerns
were presented and addressed by the vendor and even though a few of its
members did not change their opinions, many of the group's members did, and
bought into the final decision.

• Ability to deploy the system effectively — This factor dependent on user buy-
in, sufficient resources, a deployment/implementation plan, vendor support
during the implementation, and post-implementation assistance in the way of
training and technical support.

• Vendor support and training — KF defined the type of support they wanted for
the software from the vendor, which was, on-site support during
implementation, training in the use of the software, post-implementation
technical support.

• Scalability of the technology — The chosen software would need to be scalable

to match the growth of KF over the next several years.

• Ability to work with vendor — Through working with the three short-listed
vendors, KF was able not only to view their products, but to interact with the
vendors’ teams and was able to get a feel for the humanistic elements that would
influence their prospective long-term business relationship.

• Integration — The chosen software would need to be able to integrate KF's main
business areas and functions.

• Scripted scenario — Another important element to making certain that the

software could and would meet the needs of the company.

• Code of conduct — So as not to be thwarted by attitudes, behaviours, egos, and

bad habits, guidelines were established for the type of behaviour that was to be
exercised or avoided during the vendors presentations.

It was not by chance, but rather, through careful planning that all of these factors were
identified and pulled together for this project. No single factor alone could make this project
work. It was the combination of all of them, together, that brought about the successful
completion of this acquisition.

Lessons Learned

Kelowna Flightcraft's ERP acquisition process was a learning experience for the
company. Some of the lessons that were learned from this experience were:

• No two projects are the same. Each project is unique due to the uniqueness of the
issues pertaining to the company itself. Although the project team had managers on
it that had participated with other companies in ERP acquisitions, the experiences
they had with this acquisition turned out to be different. While several issues may
have been similar to the other ERP acquisitions that they were involved with before,
the differences in people, environment, needs, etc., made for a sufficiently different

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 experience as to call it ‘unique’. Hence, the uniqueness lies in the particularities and
subtleties of each company.

• The need to be very clear on what you need, without knowing exactly what you
need.

• Planning: The roadmap was the anchor for the project in terms of where they
needed to get to.

• The need to stand firm on the issue of getting the scripts as part of the statement of
works for the project team and the main business areas for which the software was
being sought.

• The scripts were a “divine” form. They selected the supplier on the basis of how
they performed based on the scripts. Therefore, they contracted with them based on
the software's performance, and thus knew that that was what they would get
delivered.

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