Chapter 3 – How to Select ERP Without Losing Your Mind (or your job)

The Importance of References and Questions to Ask

Visiting customer references can be the most important stage of an ERP evaluation. But if the vendor only provides their 3 best customers, what can we learn? How can we interview the other, “not so carefully selected” customers?

The Importance of References and Questions to Ask

ERP Salespeople are trained to make ERP systems look as easy as possible.  All “sales demos” look great. If they didn’t, the software company would go out of business. The problem is it is impossible to know how easy the software is until you have been using it for 12 months.

The only unbiased way to evaluate a system’s suitability is to visit similar companies using it. So why not learn from others?

“Here are 3 references for you to call …”

Software Vendors usually offer three, carefully selected customer references for you to speak to. What do you learn from speaking to their three best customers? Absolutely nothing!

The vendors will often provide customers that are located near their offices. If you are located near their training center, you may get excellent customer service as well. Unless you are next door, the local support this customer has received may not be representative of the support you will receive.

More miscellaneous questions to ask

  • How many years since going live?
  • How is the software support and response time? Where does “local” support come from?
  • Are reports easy to modify to your requirements?
  • Have you ever requested an enhancement and did they listen?
  • Has your company’s revenue grown since going live? If so, what %?
  • How many employees have you added since going live?

Ask for a list of customers:

  • In your area
  • Using similar requirements
  • Have a similar employee size
  • Has been using the same version as the one they are presenting to you for 12+ months, (everyone thinks their system is excellent at the beginning. But it takes at least one year before you know the pros and cons).

Then from that list you choose which to visit, preferably one that you know.

If they do not have customers in your area that are in your industry, ask to visit someone locally that is a similar size, and at least speak to customers in a similar industry (confirm the system works in your industry). But make sure they have been live on the version you are considering for an extended period, or else what is the value of their opinion?

Why local companies?

Two reasons you will want to visit local companies are:

  1. To confirm the quality of local support. If they give you a company three states away to visit, that can only confirm how good the local support is three states away. In fact, the trainers being provided in your town probably have entirely different skill levels than the ones they provide for in Pittsburgh.
  2. It forces the software vendor to not only give you their “best” customer. The odds of your experience being equivalent to their very best customer is very slim. Besides what can you learn from a company that says the software vendor “walks on water”. Asking for local customers to visit should let you into some less than perfect implementations. Likely closer to what you will experience. You want to learn how the software vendor responded when the implementation wasn’t as smooth as silk (as none ever do).

If they say don’t have local customers using the system 12 months or more, they either do not (what does that tell you?) or none of their local customers are happy.

Visit companies that have been on the same version as being presented to you

Visiting companies that have 12 months experience with the version being shown to you, is to counter another common sales strategy used by ERP vendors. Is the ERP vendor giving you references that are on the cool new version or the older, stable (not so cool) version?

The key is to visit companies on a similar version as being promoted to you and are fluent with that version. How else will you uncover the knowledge you seek?

All ERP vendors have a defined R & D/Marketing budget and have a choice on how they spend it.

Some weigh their budget more heavily on developing new technology. Whereas some others are more conservative, spending their budget on product stability and functionality.

Just because some vendors choose to spend more on new technology cool stuff, does not mean their product is not viable. However, visiting companies that are fluent and on the newest version will help you make sure.

Of course, all ERP vendors like to show cool new stuff during sales demos. And it is likely that an ERP using newer technology will have more cool stuff. However are there any companies live or fluent on that new cool version and if so, how many and who are they? Those are the ones you want to speak to.

A few sample questions to ask the references

How much did it cost (over or under their original budget)?

Some software vendors quote a lower amount of training and services than is necessary. If you don’t budget enough for training up-front, guess who you will buy additional training from later? As the FRAM oil filter commercial used to state: “You can pay me now, or you can pay me later.”

Ask if they were above or below their original budget for services

How long did it take to implement (longer or shorter than their original plan)?

They say you can have a Cheap, Fast or a Quality implementation, but only pick two. The software vendor may have completed a fast
implementation once, but what is their average time to implement? The industry average time to implement is 6 to 12 months. If they were able to go live fast, was it because they didn’t have systems in place previously?

What system did they use before?

A person’s opinion of their current system is directly relational to the satisfaction of their previous system experience (at this company or others they’ve worked for). If it was a “poor” system previously, any average system will seem wonderful now.

What version of the ERP do they use now?

What value is there if the software vendor has been showing you the “new version” and the customers you speak to are on the “old version”. The old could be excellent and the new, full of bugs.

The key is to visit companies on a similar version as being promoted to you and are fluent with that version. How else will you uncover the knowledge you seek?

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About Andy Pratico: 

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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.”

Lee BurdenPacbrake Company

“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”

Robert Kheir, MBA, CPA, CMAOntario CPA Association

“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.”

Alec Pestov3B Research and Consulting

“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”

Jonathan Gross, LL.B., M.B.A. Vice President and Corporate Counsel, Pemeco Consulting