TECHNOLOGY AND IIOT

5 Tips for Vetting ERP Vendors

It's a long partnership and a big investment, so it's important to ask
the right questions.
Jay Deakins | May 08, 2019

ERP evaluations are often done as a result of a previously failed

implementation project. In fact, nearly 50% of ERP projects are
unsuccessful the first time around, according to analyst firm TEC .
Whether it is budget overruns, longer-than-anticipated timelines, or
change in the technology capabilities, it all comes down to the failure
to meet a company’s objectives.
So how can you make sure your upcoming ERP project doesn’t
become part of this statistic?

1. Start by Defining the Project ROI

Unsuccessful projects tend to start with a statement like “our ERP

system is dated” or “our ERP system is not supporting our growth.”
Before embarking on an evaluation, define the business return on
investment for your ERP project. Share the project ROI goals with
each ERP vendor you are considering and work with them to
understand how their platform is going to help you achieve that
expectation.

The project ROI will also be a critical internal selling point to

company owners, stakeholders, and even end-users and will help set
benchmarks that can measure the health of an implementation
project down the road.

2. Get into the Functional Details

For large ERP projects, the vendor will most likely come onsite to
demonstrate the capabilities of their software. Avoid high-level
software demonstrations, like “how do you void a check with your
system” as much as possible. Instead, have them prove that the
software can handle the unique challenges of your specific business.
Pick five of the most complex processes that are currently handled,
document them, and deliver the scenario to an ERP vendor only a
few days ahead of the demonstration. This will give them time to
prepare but prevent them from making significant coding changes to
mask a potential gap in the software. As the vendor goes through the
demonstration, throw them a curve ball at the end of each scenario
and ask them to configure the solution in front of you to understand
the process. If they struggle, consider it a red flag that you will find
additional software gaps during the implementation process. As the
number of gaps increase, so does the likelihood that you will
encounter cost overruns, workarounds and, ultimately, failed
projects.

3. Understand How the Vendor Overcomes Implementation

Hurdles

ERP projects are significant undertakings, and no matter which

vendor you select, there are going to be hurdles that arise in the
implementation process. Thus, it is critical to determine how the ERP
company is going to react to challenges during the implementation
process.

Some specific questions you may want to ask the vendor are:

• We find a gap in how the software handles one of our business

processes. What is the remedy to address this gap?
• We discovered that we did not purchase a required module for
our business up front. What is the additional cost to add that to
the scope of the implementation?
• We do not find the consultant you selected for our project to be
a good fit. What is the process for replacing this resource during
the implementation?
• We discovered a few corner-case scenarios during the end-user
training that we forgot to account for in the process design phase.
We need to take an extra month to re-design these processes.
What is the impact to our project cost?

Proceed with caution if the responses you receive include pricing

change orders and/or process workarounds. These answers are often
the ones that lead to implementation failures and projects failing to
meet their objectives.

4. Talk to Two to Three References

An ERP sales representative’s favorite word is “YES!” Unfortunately,

after you sign a license agreement, that answer may not always be
reality, and it has the potential to significantly impact your business.
To validate what you have heard from an ERP vendor’s sales team,
ask them for 2-3 reference accounts that you can speak with about
their experience.

To make the most of a reference call, stay away from specific “how
do you…” type questions. There is no business exactly like yours, and
this will not help you understand the typical pitfalls of an ERP
implementation. Take advantage of this opportunity to get first-hand
insight into what life would be like if you selected that vendor. Stick
to questions such as:

• What were the three biggest challenges you faced throughout

the implementation? How were you and the vendor able to
overcome these challenges?
• How many functionality gaps were discovered during the
project? What was the response like from the vendor when a gap
was discovered?
• What are the three biggest support issues you have had since
your ERP go-live? How has the vendor responded?

5. Uncover What it Would be Like to Live with the Software Over

a 10-Year Period

Your partnership with your ERP vendor does not end after the initial
implementation has completed, as ERP platforms are typically used
for about 10 years. Thus, it is important to understand what it is like
to live with the software and work with the vendor after go-live. The
most important questions to ask are:

Support

• What is the expected response time to a system-related issue?

• We are required to support a new process for a customer. How
can you help us?
 • Is a specific resource assigned to us to make sure we continue to
be happy with the ERP product?

Upgrades

• How often would you expect us to implement a major upgrade?

• How long do major upgrades take to test?
• How are patch releases done?

Technology

• How do you evolve to support changes in technology over time?

ERP is one of the most significant investments that businesses will

make, and rightfully so. It is the backbone of a business – collecting
and delivering critical data points to help businesses thrive in
competitive markets. Make sure that you are taking steps to truly
understand what life is like with both the software and the vendor—
and also if that is in line with your company’s ROI.

Prior to establishing Deacom, Inc. , Jay Deakins was the founder and

CEO of an all-natural cleaning product manufacturing company,
distributed through national supermarket chains and other retailers.
Discouraged by the complexity of software options available at the
time to run his business, he took it upon himself to program a solution.
He set up an office in his basement and built the Deacom ERP platform-
-and the company--from the ground up.

Source URL: https://www.industryweek.com/technology-and-iiot/5-tips-vetting-erp-vendors