Best of Breed ERP Software
Friday, April 19, 2013
We have visited many disgruntled ERP buyers who have been taken in by the term “Best of Breed ERP Software” only to find that the software doesn’t fit their organisation’s needs. It is no secret that ERP disasters litter the ERP world. What was initially thought to be a simple straight forward acquisition and implementation of technology turns out to be an expensive resource sapping nightmare experience costing reputations and jobs and in some cases bankruptcy for the firms involved.
The terms used by ERP vendors in their sales pitch should be seen as just sales patter and should not be taken literally. The job of the software salesman is to get the buying customer across the line. This is usually accompanied by verbal assurances the product will do the job the client wants it to do and together with their proven path implementation methodology jargon and a glossy sales blurb the non-expert customer signs on to the software and accompanying services in the belief they will be well advised.
Most software implementations do not start to present problems until the actual project gets down to trying to match the software with what the company needs to conduct their business. This is where the company finds the software functionality is not a good fit and requires modifications or additional software or hardware to run it. The costs can mount significantly and the client, having already sunk considerable funds into the project, takes the view that for a few more dollars he will get what he wants. In the meantime the ERP vendor’s implementation people are continuing to charge fees way above the original project costs. The buying company has now joined the world of pending disasters!
The original costs quoted, on closer examination, usually turns out to be an estimate with no ceiling attached. The lack of functionality is then referred back to the contract documentation where it is found that the contract is worded in non-specific terms that in fact the ERP vendor can claim he never said the software would provide the functionality requested. So much for the term “Best of Breed”!
Out of frustration many ERP buyers turn the software on before it is really ready due to the enormous costs already sunk into the project in an attempt to get some value and stop the cost bleed. Turning on an ERP system that has not been fully tested in an integrated sense or not having the data cleaned with procedures etc., can turn the exercise into a bigger disaster and cause internal chaos and brand damage. In a worst case scenario, and there are many, actually bankrupt the company.
The best way to for a company to protect themselves against the risk that ERP projects go wrong is to do the work up front and specify exactly what is required and turn these requirements into a model that the software has to be tested through, prior to buying the software. The model should be in the form of a flowchart showing how each area interacts with another and be accompanied by specifics required in each function. This will require a more thorough examination of the requirements by the buying company , not carried out by the software house or consultants with a vested or conflict of interest, and may involve several months to get it right.
The details of the model and specific operating requirements should then become a part of the contract deliverables tied to payments on successful sign-off.
The so-called discovery process software houses claim they go through, discovering what is the question, is supposedly to identify internal issues that need to be addressed and to match their product with the requirements of the customer so that what is really being supplied fits the customer’s needs without the need for modifications or additional software being required. That would make sense however, in reality, ERP software vendors simply offer software modules in the hope they fit the business requirements. This is a recipe for future disputes!
The implications for companies not doing the work up-front is to rely on ERP vendors glossy sales blurb, claims of “Best of Breed” and “Proven Path” implementation methodologies. The record and statistics would suggest extreme caution as poorly planned and managed ERP projects can double or triple in cost and provide poor outcomes for the buyer and in the worst case scenario bankrupt the buying company.
The consequences always rest with the buyer of the ERP software and services as they are the ones who pay the bills!