ERP…Who let the hounds out.

We recently produced a guide aimed at helping organisations achieve the right ERP system, for the right price, on time. The information in the guide is not about helping you obtain the board of directors buy-in, achieving budget sign-off or helping to understand if ERP is for you. Hopefully, you’ve done that and that’s why you are reading this. ERP software is a multi-billion dollar industry which initially focused on larger organisations. It has now become accessible to the smallest of enterprises.

Meanwhile vendor’s aim to disrupt the market, we want to share the knowledge that ERP vendors hope you are not aware of.  Our aim is to save you money, ensure your installation runs smoothly and for you to also understand common misconceptions. Essentially we want your project to stay on budget and most importantly prevent project failure. Below we have posted tips from each of our ‘ERP buyers guide’ sections. We hope you enjoy them, we know the vendors won’t…

Ask for a fixed cost project

As with many projects, once the programme has commenced it makes it harder to object to additional chargeable days. A vendor’s ideal commercial agreement is time and materials (T & M). There is a danger of this becoming an open cheque book. However, if the vendor is confident in their ability to achieve the timescale, their skill in mapping the scope and required functionality, there may be a negotiation to be had. ALL projects overrun in time AND budget.

Development staff

Similarly to Project Managers you want an experienced developer. You don’t want someone learning the ropes whilst you pay a high day rate. Of course you could negotiate a reduced day rate if a junior team member is involved. If this is the case keep an open mind. They will have been taught the latest technology and may be keen to kick start their career. Often a developers background would have been further education then immediately into a software company. For instance, their experience in manufacturing and distribution may be extremely limited. With this is mind you are the expert and you must ensure that the developer knows exactly what you need and why. Document the development scope and achieve sign-off.

ERP Technology

The wrong technology can restrict and cost your organisation dramatically. Insist you will be on the latest release and check out the future roadmap. Ensure the next release isn’t planned imminently. Enquire as to how many customers are on that release, you do not want to be the first test subject discovering all the bugs (hidden features!). Ask what language the software is written in. In addition to ensuring it is a common language that can be supported should the vendor disappear. Uncover the technology limitations, find out what it can integrate with and the available outputs, future-proof your company.

The price is always negotiable

There is a lot of competition in the ERP space. Wriggle room will depend on whether the vendor is the author or a reseller. So, you may find a relatively new reseller will offer a very attractive deal to build a portfolio of reference sites. Negotiate on day rates and understand what day’s are visible to you. Enquire about the licence fees and any banding discounts. If you are unsure as to how many licences you need, ask for a clause that you can buy further licences at the discounted rate for six months post go-live. Negotiate the milestone payments that suit your cash-flow. Ensure they are linked to a deliverable. So, if they don’t deliver on the agreed milestone, they don’t get paid! This aids focus.

Understand the ongoing costs

The software implementation may be a very reasonable cost. In comparison to some of the other shortlisted solutions but be sure to research the Total Cost of Ownership (TCO). Areas to discuss include the technology platform, is the solution cloud based or an on premise server, do the client PC’s and printers need to be a particular specification, what are the ongoing annual maintenance costs?

Hiring an experienced consultant in this field can pay dividends

Above all, you will achieve an insiders view, someone who understands the tips and tricks to ensure the chosen system is fit for purpose, within your budget and without any slippage. The independent consultant will hopefully have experience of many many projects and has learned from each and every install. You can access the complete guide for free here https://far-north.co.uk/contact/

Blog by award winning Entrepreneur, Speaker and Business Coach Ian Farrar, host of the chart topping Industry Angel Business Podcast.

Ian is also the founder of Sales & Marketing consultancy Far North Ltd.