The Hard Truth About MIS/ERP Implementation

Understanding the Importance of Accurate Cost Data

If you have been involved in an ePS Avanti MIS implementation, you are likely aware of the significant emphasis placed on accurately calculating actual costs during the process. While this focus may occasionally lead to friction or prolonged discussions, it's a deliberate approach that is vital for long-term success.

Many companies begin MIS implementations with a list of estimated costs. Some estimates—such as those for paper, labor rates, and click charges—tend to be fairly accurate. Others, like budgeted hourly rates for production tasks, often remain vague or outdated.

This discrepancy typically arises from two main issues:

1. Lack of Data – Many businesses are unaware of their true costs. Fortunately, this is becoming less common due to the increasing availability of tools and resources.
2. Fear of Exposure – Some organizations hesitate to share internal cost data, particularly with external parties, fearing competitive disadvantages if that information is leaked. While this concern is understandable, it overlooks the role of the Implementation Consultant, whose primary goal is to ensure a successful and sustainable implementation.

Relying on estimates or clinging to outdated cost models can undermine your MIS’s potential. Inaccurate data forces the system to rely on intuition, often resulting in inefficiencies and limited trust in its reports and findings.

The Impact of Not Using Actual Costs 

The primary goal of implementing an MIS system is to enhance productivity and automate routine processes. However, when inaccurate costs are entered into the system, the opposite effect occurs.

Rather than serving as a reliable source of truth, the MIS's data requires manual corrections or interpretations—usually by the owner or a key leader. This diminishes the credibility of reports, turning costing, profitability, and forecasting into mere guesswork. Employees are unable to make independent decisions because they lack confidence in the system.

The outcome? Increased meetings, excessive manual oversight and heightened stress levels. Instead of freeing up time, the system becomes yet another bottleneck in the workflow.

A well-implemented MIS system allows data to inform decisions. However, flawed data leads to decision paralysis, creating an over-dependence on leadership for every minor choice—even when the business is technically profitable.

The Benefits of Knowing Your Costs

When a company possesses accurate cost data, every processed order contributes to a comprehensive performance overview. Insights at the task level aggregate into significant trends, allowing businesses to:

• Identify the most profitable jobs and customer types
• Adjust pricing strategies dynamically based on capacity
• Justify changes with solid data rather than gut instinct

Consider capacity reporting as an example. When you understand your breakeven point and current load, you can increase prices when capacity is limited—maximizing revenue while maintaining efficiency. Such agility is only achievable with clear cost visibility.

In the Field: A Real-World Example

Years ago, I collaborated with a rapidly growing commercial printing plant in the western U.S. During our first week together, we input their estimating data and began blind testing jobs, calculating estimates without reference to their existing pricing.

As we reviewed the results, the owner—let's call him Dave—became increasingly frustrated. Most estimates came in 10–15% higher than the prices he had been quoting. We double-checked the data: materials, speeds, spoilage, and labor rates were all accurate, and markups aligned with his targets. Yet, the estimates still seemed excessive.

During a dinner discussion, Dave revealed the problem. His business had experienced significant growth over the past decade, transitioning from duplicators to a brand-new six-color Heidelberg CD102. However, about 50% of his sales originated from 15 legacy customers who had been with him since the beginning, and their prices hadn’t changed in ten years.

The MIS wasn’t mistaken; it was exposing the fact that these long-standing customers were costing him 5–10% per order. Although the rest of his business was slightly profitable, those losses were dragging him down.

Crafting a Plan for Change

Dave and I had an open conversation about the next steps. We agreed to the following:

• He needed to evaluate the financial impact of each customer.
• He needed to renegotiate outdated contracts – or walk away.
• He needed to document the changes and track results moving forward.

The results were:

• Five customers (30% of production) refused to adjust their pricing, leading Dave to part ways with them.
• Ten customers (20% of volume) accepted new terms, allowing their jobs to shift from 7% losses to 15% profit.
• The newly available capacity enabled Dave to take on more profitable work at 25% margin.

It was a challenging process, but entirely possible because Dave had accurate data and the courage to act on it.

Steps to Regaining Control

If you’re embarking on an MIS implementation or reassessing your cost model, consider these crucial steps:

• • Request updated material cost sheets from suppliers.
  • Audit current production rates and spoilage trends.
  • Collect actual payroll and overhead information.

2. Calculate Budgeted Hourly Rates (BHRs)

• • Utilize tools such as:
    • PIA cost calculators
    • Cost Rates Advisor
    • In-Plant Impressions BHR Guide
    • Your CPA or financial controller
    • Pixel Dot Consulting and What They Think's Ryan McAbee’s analysis

Note: Maintaining a regular schedule to review your BHRs is crucial for ensuring that your costs accurately reflect any changes or adjustments.

• • Decide whether to embed overhead into task-level BHRs or use visible markup layers (“above-the-line”).
  • Ensure sales and estimating teams comprehend how costs, overhead, and margins are represented.

• • Protect sensitive data while empowering your team to make informed decisions.
  • Use permission controls in your MIS to share necessary information.

Facing the Fear

Dave’s story is just one of many. If you feel reluctant to disclose internal cost structures during implementation, remember that while change can be uncomfortable, is essential.

Success hinges on transparency, preparation, and the right tools. With accurate data, you can:

• Make objective, confident decisions
• Measure the real impact of changes
• Empower your team with visibility and trust

What could you achieve if you truly understood your costs?

The MIS experts at ePS Avanti know the ins and outs of implementation, ensuring every customer's requirements are respected and handled as a partnership. If you're interested in a workflow evaluation to determine your MIS and implementation needs, contact us. We're here to help.