FIVE MOST UNREALISTIC EXPECTATIONS OF AN ERP BUYER (Part 1)
This is the first of a three part blog series in which we highlight what we feel are the most unrealistic expectations and beliefs of ERP buyers, ERP providers, and ERP publishers. We do this in order to shine some light on some of the most common weaknesses in our industry, so that they may be recognized and corrected or avoided.
1. “Most ERP systems are so flexible that they will be able to handle all our requirements, even if we forget to mention some of them to our new provider.”
This is far from the truth. Most successful companies have special processes or standards that help them stand out from their competition, or help them give better customer service, or help them operate more profitably. It is true that most capable ERP packages have a great deal of flexibility and built-in customization capability, but you cannot ever be sure that an ERP package will accommodate your most cherished business practices unless your ERP provider has confirmed it.
It is not uncommon for an out-of-the-box ERP system to have to undergo expensive and unexpected modifications due to the discovery of needs that were unstated during the evaluation process. This is particularly true in a rushed implementation, possibly just before the end of the fiscal year, when a last minute decision was made to upgrade to a more capable system. Programming modifications can rival the cost of the software, and can add a substantial delay to the implementation schedule.
Don’t rush your evaluation. Give full access of your business and your staff to your prospective ERP providers, and do a thorough job of documenting in advance those places in your operations where you know that you deviate from the norm. These are generally areas in which you wouldn’t want your competition to know what you’re doing. See the blog “For the Best ERP Providers, Success is in Their DNA”.
2. “Our record keeping and documentation is sloppy, but our new ERP system will help us tighten that up.”
Possibly, but not likely. There’s an old acronym in the computer world – GIGO. It stands for garbage in – garbage out. It means that if your staff doesn’t have the discipline to keep your databases up-to-date, then your new system will not give you the expected results. Your new ERP system can certainly sound an alarm when there’s missing information, but it cannot force your staff to be more conscientious about providing that information. If anything, your new ERP system will likely make life more miserable for your least organized staff members.
3. “We must find a system that does what we need it to, without requiring any special modifications”.
If you can find such a system, buy it. But don’t overpay for it because you are afraid of customizing a less expensive one. See our eBook entitled “Customizing Your ERP System”. A quote from that eBook:
“Customizing your ERP system might be the only way to imbed it with your company’s “special sauce”. Those are the business processes that give you a competitive edge. Very simply, your special sauce is what differentiates you from your competition. Lose your special sauce, and you lose your competitive edge.”
4. “Installing a new ERP system is always like opening your wallet up to your ERP provider. It’s done on an hourly basis, and you never really know how much it will cost until the project is done.”
That’s true sometimes, but certainly not always. It’s true when a buyer doesn’t get a fixed price for the implementation, training and data migration services. But there are MANY providers who are willing and able to give you a fixed price for the entire system. That says a lot about their services. It says that they have such a high degree of confidence in their implementation and training skills, that they are willing to back that up with a fixed fee.
Is your ERP system implementation on a time and materials basis? Buyer, beware. If it’s on a fixed price basis, then buyer, trust!
5. “We are purchasing a software product. It makes good sense to get that product for the lowest possible price.”
No, actually you’re buying knowledge. You’re buying the ERP provider’s knowledge of your industry, their knowledge of your most important and cherished business practices (learned via a Detailed Needs Analysis), and their knowledge of the ERP products that they support. You wouldn’t shop around for the lowest price on brain surgery, and you could do a lot better than shopping around for the lowest price on an ERP system. Are there discount providers who will give you a big discount on the software? Sure, particularly if they didn’t have to spend the time learning about your business processes. Is that really who you want to trust the success of your ERP implementation to? I hope not.
Understanding these misconceptions will help an ERP buyer to make the best possible purchase decision, and will result in a system that is most likely able to solve all your key business issues and needs, at a fair price.
About the Author
Doug Deane is President of DSD Business Systems, an international provider of on-demand (cloud) and on-premises ERP and CRM software, specializing in wholesale distribution, manufacturing, warehouse management, inventory, business intelligence and eCommerce software. DSD offers NetSuite Cloud ERP, NetSuite CRM, NetSuite eCommerce, Sage 100 ERP (formerly MAS 90), Sage 300 ERP (formerly Accpac), Sage 500 ERP (formerly MAS 500), Sage FAS, Sage HRMS (formerly Abra), Sage CRM, Sage SalesLogix, Sage Add-Ons (Extended Solutions), and Custom Programming. DSD has been a multi-time Sage President’s Circle award winner, a two-time Sage Gold Development Partner of the Year recipient, has been recognized by the San Diego Better Business Bureau (BBB) as a Torch Award Finalist (2009) and Torch Award Winner (2010) for Marketplace Ethics, and has been recognized by the Council of Better Business Bureaus as a 2012 International BBB Torch Award Finalist for Marketplace Excellence.