Enterprise Resource Planning (ERP) has been around for a long time, yet there is no de facto guide to making it work or any guarantee that you’ll get what you want if you invest in it. Yet many thousands of instances of ERP from a range of software vendors are in play today. Despite the uncertainties, businesses make it work. So what stands between success and failure if you want ERP in your business?
We have already discussed two of the major areas: defining requirements and selecting a supplier. The biggie we’ve not touched on yet is how you get the software through the door and working in your business. That’s where choosing an ERP implementation partner comes in.
Going it alone with ERP is not recommended for most organisations, so what needs to be considered when evaluating consulting and system integration firms to help? Knowledge of and track record with the software is obvious, so too is a demonstrable knowledge of your industry. The latter should ideally involve more than just ’ticking a box’ or presentations from reference customers though.
Asking straight questions here can help you identify, for example, if a consultant has been recruited from your particular industry and has practical first-hand experience, not just theoretical knowledge to offer. The better services firms with serious industry focus often have a policy of recruiting native talent into their practices, so it makes sense to exploit this if you can.
Another good sign is the use of industry templates and other pre-built assets (sometimes called ’shelf mods’) to streamline implementations. While by no means mandatory for success, the ’productisation’ of ERP delivery for a specific industry in this way promotes the principle of configuring or tailoring by exception. This can lower both the cost and risk of an implementation, as well as reducing overall implementation times. If the starting point for a project is a pre-configured system with most of the software switches already set to your needs, obvious extensions already in place, and industry specific reports ready to go, then a lot less work needs to be done.
Conversely, if the implementation partner is proposing to start from scratch, particularly if they are proposing spending a lot of time and resource analysing requirements in areas that you would consider basic, then you might question their experience and suitability. Even if they are very knowledgeable about underlying software, engaging a consulting firm that is clearly working ’off patch’ will invariably mean not just higher consulting costs and increased risk, but more need for you to make key people available from within the business to guide what they do. Given that freeing up employees from day jobs to work on ERP projects is a challenge at the best of times, you really want to avoid increasing the burden in this area.
Another angle worth taking the time to explore is how a partner is proposing to engage from a financial perspective. Some will put forward a time and materials (T&M) based approach founded on a rate card for different types of resource (senior consultant, junior consultant, coder and so on). Others may offer a fixed price based on the requirements you have defined. Figuring out which of these is most appropriate, particularly if you are comparing firms that are offering different approaches, can be a challenge.
Attention to detail is important here; for example getting clear estimates of T&M costs and making sure you understand the parameters that will drive variation. And even with T&M contracts, you can still try to lock down costs associated with elements where the work that needs doing can be defined precisely and unambiguously. The trick is to leave things open only where absolutely necessary.
Beware, however, of firms apparently willing to enter into a fixed price arrangement when you know the requirements are still a little fluid. They will sometimes do this to sound more attractive than a competitor offering a T&M deal, but the big danger is that they will arbitrarily limit the scope of their activity or the resources they allocate and stitch you up later with extortionate fees for change requests.
The key, of course, is to remember that while you might negotiate such a services agreement every 10 to 15 years, they are doing it week in and week out, so they have a lot more practice and tricks up their sleeve. To protect against being fleeced, it is important to take advice, check out reference sites, and generally exercise due diligence.
These are just some of the angles that need to be covered when choosing an implementation partner. If nothing else, they point out that no decisions should be taken in isolation. What it boils down to, or in fact where it might be best to start from, is finding a partner whose expectations are aligned with yours and that you feel comfortable with. Mindset and cultural fit is a big deal in IT, and although it’s not that easy to articulate, most people reading this will have experience of it in positive and negative guises.
Done properly, ERP will grow and change over time with the business. Finding the right partner to help you start the process off is worth spending time on. It’s also likely that you will need their services again. Making the right decision is therefore important to help you avoid having to switch implementation providers each time you want to add to or build out a system. The risk is that by changing partners you add a certain amount of ’overhead’ to each subsequent project, which will ultimately be at the expense of realising the benefits from a time or cost perspective.
Of course, establishing requirements, choosing a product and an implementation partner may not happen in that exact order. Depending on how you procure technology, there may already be links between an ERP product and the implementation options available. For example, you might already have a relationship with a local systems integrator.
Successful ERP projects which were influenced by trusted relationships suggest but do not prove that getting it right depends on the people installing it, not the software chosen. In truth it’s likely to be a combination of the two. Even a great implementer with your total trust will struggle with software that doesn’t match your underlying requirements. To mitigate the risks as best we can, we need to take sensible steps in the areas we’ve now covered, and heed the experience of the supplier community and that of our peers.
Content Contributors: Dale Vile & Martin Atherton
Dale is a co-founder of Freeform Dynamics, and today runs the company. As part of this, he oversees the organisation’s industry coverage and research agenda, which tracks technology trends and developments, along with IT-related buying behaviour among mainstream enterprises, SMBs and public sector organisations.