In the first of a three-part series, ERP expert Bill Isherwood examines the various influences that conspire to make choosing the right ERP solution so problematic.
I was torn on how to title these articles. I could very easily have proposed that we swap the final word for “Expensive”, “Time Consuming”, “Risky, or “Vital to Your Company’s Survival”. Or even one of a few other choice, four-letter adjectives we don’t normally print. Even the title I settled on is problematic, since selecting your ERP system can actually be very easy if you approach it without due care and attention.
Pick two or three potential suppliers, call them up, and they will be keen to visit you and give you what seems like a budget price for a complete system. Call one of the “tame” reference sites by way of due diligence for each vendor, and then just sign up with the cheapest – or the one where you have the best relationship with the salesman.
Sounds easy, right? It certainly is when we compare it to doing things properly. But the fact is that if you employ a selection process similar to this, then you are unlikely to arrive at the best solution for your specific needs. Every vendor will claim they offer best practice processes that will suit your unique requirements down the ground, but the reality is that these are broad processes designed to loosely fit as many different customer as possible. And not only will you likely not have chosen the right solution for your needs, you’re even less likely to have negotiated the best deal for either party.
As you can probably tell, here at WhichERP, we strongly recommend you employ a more detailed and scientific selection process. And yes, one that is subjectively more “difficult”, but also one that’s objectively more rewarding and effective.
The intention of this paper is to demonstrate that selecting a good ERP solution for you takes a lot of your resources and commitment, as well as potentially the assistance of an impartial advisor who can safeguard your interests and maximise your chances of a successful implementation. It’s vital to remember, after all, that selection is just one component of an ERP project, and it’s equally possible for a poorly managed implementation to damage your business as it is badly-defined selection criteria.
No doubt you will have heard one or more ERP horror stories – there are certainly plenty out there – but often these neglect a key aspect of the failures they document: they lay the blame entirely at the vendors’ feet. In fact, while the suppliers themselves are often not squeaky clean, scope creep, poor project management, and a lack of focus on the part of the customer are often just as responsible for project overruns and failures.
When you begin to run an ERP selection process, as a customer, you will encounter dynamic and driven sales professionals whose main motivation is to get you to sign a contract, with all the risk on your side of the equation. Without proper planning and due diligence, it can be very easy to fall into this kind of situation, exposing yourself to undue risk and minimising your chances of achieving return on your ERP investment. To avoid this, you must be just as motivated and proactive as the salespeople and implementation teams you’re dealing with, from the first demonstration right up to the day you go live. We’ll be covering the later stages in future articles, but in this article I want to concentrate on how you, as a customer, can prepare yourself for and operate the most effective selection process possible.
So, without further ado, we’ll look at three reasons why choosing the right ERP solution is so difficult, and explain why we believe that any customers about to undertake a selection process must understand the size and potential impact of the task.
At the last count, we identified more than 300 ERP systems either specifically or secondarily targeted at the fashion sector. These range from the huge household name (often known as Tier One) suppliers to the smaller niche companies who offer packages to a specific territory, language or industry sector. When we consider that new products are continually being launched and each extant system is continually being developed with exciting new releases, you can begin to see the enormity of the task at hand. It would be literally impossible for any potential customer to consider and evaluate anything other than a tiny subset of all the solutions that exist, and of even then only at a specific moment in time.
The logical starting point for any selection project, then, is beginning to categorise the solutions themselves. We would suggest dividing them at this early stage along the following lines:
High End “Generic” Packages
These include the Tier One, household name applications which offer fashion specific functions as well as features provided for other industries – most of which you are likely never to require. These applications may be a combination of elements brought together by acquisition or partnership between suppliers. Because of their size and complexity and the huge amount of expertise needed to set these up, these solutions have a reputation for horrendous implementation, configuration and customisation costs.
Many ERP project horror stories are associated with these solutions as they can be very expensive and prone to project and scope creep – especially if they are purchased after only a superficial evaluation. To tackle these issues, these suppliers now offer “pre-configured” versions, where many of the system variables have been pre-set and if you can implement their packaged solution “straight out of the box”, this approach can slash implementation costs and timescales and offer an extremely quick project competing with those of a niche product.
WhichERP would insist however, that a detailed evaluation is still absolutely essential even if you feel as though the pre-configured solution fits your needs, since any significant deviation from the supplier’s “best practice” configurations can cripple budgets and timescales. It’s also extremely unlikely that any one supplier pre-definition could satisfy every client requirement in such a wide customer sector, so the likelihood of your needing to deviate from their script is high.
Best of Breed or Industry Specific/ Niche Packages
These include regional solutions, maybe created as an in-house application or developed from scratch to cater to the needs of a specific market. Because of this, they do not have to include the myriad of functions unrelated to your industry (or language, or country) that the high-end generic equivalents do. This typically leads to faster and more agile development, since the requirements of multiple business sectors do not need to be balanced. However, it almost goes without saying that any such package may not necessarily be a good fit for your specific language, fiscal, legal or functional needs and may not provide essential features if your company’s product profile changes to include non RFA (Retail, Footwear & Apparel) elements.
Furthermore, these suppliers rely on a much smaller sector (and therefore a smaller pool of potential revenue) to remain profitable. These suppliers can grow extremely rapidly if their sector is successful, but conversely may be swallowed up by a larger supplier otherwise. Once you have been able to identify which of the industry-specific or regional solutions do potentially fit your needs, each of them should be assessed against various criteria. It’s important to satisfy yourself, for example, that their being smaller organisations will not jeopardise ongoing support or that key supplier staff members will not be pulled away to join other projects at an inconvenient time. Whilst you are likely to have access to the top management and be a much bigger fish in a smaller pond, the associated risks need to be considered.
Whichever pool you choose your shortlist of suppliers from, you will find that the pool is far from stagnant. New suppliers emerge all the time; existing suppliers and their implementation partners are taken over or bought out; and the same people appear at events, trade shows and seminars wearing different badges. Before you place the survival of your company – and your career – in the hands of any ERP supplier, key questions and due diligence are absolutely critical. The last thing you need is to buy a solution and during implementation find your new supplier has been bought out and your vital system support and ongoing product development is at risk.
Here at WhichERP, we maintain listings of suppliers in all areas of the globe, which can be an extremely useful tool for paring a very crowded market down to a manageable shortlist.
As you can probably tell, solution selection, integration and implementation are daunting tasks. The sheer choice can be paralysing, and coupling this with the significant and very real risks associated with failure can easily scare off even the biggest retailers and brands!
You would be extremely lucky (some might say unique) to have the requisite expertise and experience in-house to handle an entire ERP project from selection to implementation. Which means you should consider employing the services of an impartial, third-party advisor – using their help to define what your needs actually are, plan the selection process, find the best solution, and finalise a contract which protects both parties at a reasonable price.
As with any partnership decision, though, there are some questions you should ask of any third party expert, since the choice of selection advisors can be as important as the choice of the solution itself. We recommend taking the following into account:
Evidence of experience working with your type of business in your market (for further detail, see below: “Everyone Has Baggage”)
Your consultant has the responsibility of understanding and quantifying your requirements as well as helping you to actually pick a solution, and as such it’s vital that they understand your industry. At WhichERP, we regularly meet suppliers and management firm “consultants” who do not know their own product or the client’s business sector in what we consider to be sufficient detail. If at any point in the process you feel a consultant is struggling to keep one page ahead of you in the manual, or that he or she does not share what you deem to be essential knowledge of your industry, demand that they be removed from the project immediately.
Often, during the ERP selection process, a supplier consultant or salesperson will build a great relationship with your selection team and guide them on what they should be looking for. Whilst these are often good guys in the short term, they will usually move onto the next prospect at the point the contract is signed, and they are still financially motivated by their own sales targets, so you should not base your decision on their personalities or on the strength of the relationship you may have built with them during the shortlisting and selection process. Similarly, an employee working for a consulting organisation which also has an implementation or product-related practice can be influenced to some extent by other considerations. They may either consciously attempt to guide your selection in the way that provides revenue for their implementation counterparts.
As is the case when it comes to choosing a supplier, your selection consultant’s objectives must be identical to yours. At WhichERP we provide selection consultancy and advisory services, but we strongly resist any client requests – however heartfelt or insistent – to remain on the project after the contract is signed. Whilst we would often like to, and are often invited to, use our intimate knowledge of client businesses to streamline the solution delivery, we are extremely protective of our impartiality and cannot be seen to influence our clients’ selection process to our own advantage.
Whomever you choose to help manage your selection process, you must be sure that they do not have a vested interest in seeing it turn out a certain way.
No matter how hard people try, the way we behave is fashioned by our previous experience. Your company will, for example, pick your very best people (those proven on previous projects) to be part of your ERP selection and implementation team. However, their own view of systems and business needs is inevitably affected by their past experiences. This may sound beneficial if anything, but as keen and intelligent as your chosen team may be, they may in fact be weighed down by their prior experiences rather than buoyed by them.
With more than one prior enterprise-level software project under their belts, the inevitable thing for an experienced project lead to do is demand the replication of the hard-won features they fought for in their last implementation, since they consider them to be absolutely necessary. This often manifests in the form of strong insistence for a specific report or enquiry type, which may not actually be the best or even the correct way of doing things within your new ERP framework.
In short, experienced internal team members can actually become blinded by their past successes, and it often takes the experience, impartiality and objectivity of an external advisor to help find more viable alternatives.
This will not be exclusive to your own team members, though. We see the same behaviour displayed by consultants. Where a consultant has little or limited experience, he or she may claim their own restricted experience or product offering is “best practice”, when in fact it has been proven only in very select circumstances, and may not be at all suitable for your challenges. This results in an impasse or conflict: users are demanding what they think they need, and the consultants employed to analyse and prioritise their needs are unable to add value outside their own limited experience. If this arises after the contract is signed, during implementation, then the inevitable result is cost, delay, finger-pointing, posturing and aggravation – all of which have no place in a well-run ERP selection and implementation project.
As you can see from our images and biographies here on WhichERP, our consultants are handpicked, mature (very mature in some cases, it has to be said) and bring a strong depth of knowledge to our clients selection processes. When we speak of best practices (as my fellow board member Nancy Winslow does in her launch article) we do so from decades’ worth of experience and a genuine understanding of the fundamentals and finer points of working with ERP. Whether your project leads you to work with our advisors or not, it’s important to remember that identifying and resolving conflicts of understanding and experience will always be to everyone’s advantage.
In the next article in this series, I’ll go on to examine a couple more of what I consider to be the major factors conspiring to make ERP shortlisting and selection such a difficult topic.
If you have any questions in the meantime, please feel free to contact me or another member of the Editorial Board directly.