Chapter 1 – How to Select ERP Without Losing Your Mind (or your job)
“What the ERP Salesperson Doesn’t Tell You…”
They say the difference between an ERP and a Car Salesperson, is that the Car Salesperson knows he is lying. Is the information the ERP Salesperson telling you the truth?
Reviewing ERP systems is not an everyday task. So it is no wonder you don’t know the right questions to ask. This chapter will provide food for thought regarding not only what to ask, but how to interpret their answers.
What the ERP Salesperson isn’t telling you (and various claims they might)
“The most important goal should be to ensure your company is successful.”
According to an article in The Wall Street Journal, 73.8% of ERP projects fail in one of three key dimensions: cost, duration, and/or realized business benefits. Much like the characters in Charles Dickens’ novel, those trying to select and implement ERP software are faced with high hopes and great expectations, only to face significant challenges and some bad decisions along the way.
The good news is that there are some lessons to keep expectations aligned with reality. It is important to watch for the pitfalls and land mines that often lead to unrealistic expectations. For example, how many of the following statements sound familiar?
“Let me show you how easy our ERP software is”.
Salespeople or professional demonstrators are trained to present their software to appear as easy as possible. The truth is it is impossible to know how easy the software is until you have been using it for over 12 months.
Ask the Customer references you speak to if the system is as easy to use and implement as they originally anticipated.
Ask for a list of customers in your area that have been using the ERP system for 12+ months, preferably in the same industry (similar requirements) and a similar size. Then from that list you can choose which to speak to, and visit at least one (you might even recognize one).
If they do not have customers in your area that meet all the criteria, ask to visit a local customer that is a similar size, and to speak over the phone to a customer in a similar industry (confirming the system has had success in your industry).
“Let’s schedule a demo…”
All “sales demos” look great. If they didn’t, the ERP software company would go out of business.
The only way to truly evaluate a system’s suitability is to visit a company that has been using it for at least 12 months.
Why do you think the salesperson is so anxious to provide a “sales demo”, but are not so quick to give you a list of local customers you can visit?
“Our ERP software is being used by 1000s of Companies…”
But which trainers will implement the system with you and how much experience do they have? The ERP software may be the rated best in the world, but how many companies similar to yours has the reseller worked with? Some resellers use new customers (you) to gain experience with the software. Or would you prefer to work with a re seller that has experience already?
There may be thousands that use “a version” of the system, but how many are on the version you are being shown? Be careful with this especially if the ERP has had a complete re-write and not tested yet.
“We can implement the ERP system for you in three months or less…”
You can have a Cheap, Fast or Quality implementation, but you only get two. The software VAR may have one example of a fast implementation, but did they have previous experience with that ERP, how much did they pay for services, and how complex was that company’s requirements?
The ERP industry average time to implement is six to twelve months. Ask references how long it took them to implement versus what was promised. The longer it takes to implement, the more it will cost in lost staff productivity as well as additional training costs.
Software vendors are notorious for over-simplifying the implementation process during the sales demo. Most sales reps don’t know (and in some cases, don’t care) what it takes to do an ERP implementation correctly, but they do know they want to make the sale. So it is in their best interests to downplay the potential time, costs, and risks associated with implementing their software.
Most projects take longer than and/or cost more than expected, so make sure you’re not basing your time line and budget (and career) on overly optimistic and unrealistic estimates. Instead, use benchmarks of what other companies similar to you have actually achieved. A more realistic expectation: ERP implementations are difficult and complex business transformations, so budget time, money, and resources accordingly.
“The ERP industry average time to implement is six to twelve months. Ask references how long it took them to implement versus what was promised.”
“Our next version has that…”
The next version does not exist today and may never. Software developers change their Product Road Maps weekly. What is promised this week can change next. And if the vendors’ next upgrade is a “new technology” complete re-write, the only guarantee you can bank on are that it will be completely different to what you are seeing today (and probably very buggy).
“Make sure you’re not basing your timeline and budget (and career) on overly optimistic and unrealistic estimates.”
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About Andy Pratico:
Over the past 30 years, Andy Pratico (ex-APICS Chapter President) has worked with hundreds of manufacturers. During this time he has seen many implementation success stories, but sadly even more failures. To help companies increase their probability of success, Andy presents common sense workshops on how to select ERP systems. In addition, he authored “How to Select ERP Without Losing Your Mind (or your job)”.
Andy provides common sense advice on how to uncover the truth about ERP’s so you can make your own informed decision.
Here’s what Andy’s audience and clients are saying about him…
“Thanks for your hard work on that presentation. I liked your low pressure approach and your affectionate cynism for the ERP industry. Very enlightening and fun. I particularly liked how you did not attempt to sell anything.”
“Andy has an uncanny ability to provide a simplified story line to what is often a highly complex topic. If you believe ERP to be the life-support system of any manufacturing environment, then you’ll need to consider Andy as the ‘oxygen’ behind that system”
“Congratulations on the well-delivered presentation. Usually, I attend these to roll my eyes at the triviality of the ideas discussed. In your case, the presentation actually covered all the key points anyone needs to remember about the ERP selection process. It should be of much value to all attended, as it was to me.”
“Thanks for the informative presentation on ERP evaluation. Your comments about focusing all facets of evaluation on a company’s idiosyncratic and non-negotiable requirements were spot-on! This is the key take-away for prospective ERP buyers. You did a nice job. Thanks, Andy”