“So there’s a whole bunch of stuff we need today that’s in the vendors next release? Didn’t we buy into that the last time we bought ERP software?” Did you ever hear the joke about how you can tell when a software vendor’s sales person is lying? His lips are moving. Anyone that has bought software should know better than to buy into the concept of “next release”.

Let’s be realistic, provided the vendor has a decent business there will be a “next release” and obviously there will be enhancements. But when will you get what you need? Most vendors work in 18 – 24 month cycles. They have “bug fixes” rolled up and sent out about every 6 – 8 weeks and “small enhancements” (sometimes just bigger bug fixes) about every 6 – 9 months. Those are usually called “point releases” as in a number after the decimal point, the major version number is in front of the decimal point (major release). Major releases, on average, are only done about once every 2 years.

A couple of notes on software vendor R&D. Vendors should be investing between 15% – 20% of their total revenue into R&D to improve the software. If a vendor owns multiple packages, each package should be able to stand on its’ own for revenue compared to R&D investment. Too many vendors tell you how they invest 20% of their money in R&D but most of this is going to one or two packages while they own 12 different systems. The vendor should be willing and able to prove their R&D investment right from their financial ledgers. If they can’t or won’t, skepticism is well in order.

Further, they should be able to provide the scheduled enhancements documents. It’s best to ask for these right at the beginning of the sales cycle or have them included with the RFP response so the documents can’t be “doctored” later. By understanding when the new release(es) are due, how much their investing, and what’s in each release, a much better evaluation can be made.

As we discussed in an earlier post, virtually all of these enhancements, large or small, come from previous modifications or requests from customers. But just because you request an enhancement, doesn’t mean you’ll get it unless you’re willing to invest a lot of time and money.

In the next post, we’ll discuss how to pick a vendor.


Clark Green

Clark brings a deep level of experience with ERP companies to KnowledgePath Consulting. He has strong leadership skills, and demonstrated success in manufacturing, supply chain, business unit, and operations performance in multiple industries.