“The vendor has no solution for our unique process. What are we going to do?” This one single issue can be the most costly and damaging to an ERP replacement project. But let’s understand our options. AND there’s two sides to this discussion, the vendor solutions and the company solutions.

Vendors’ love these situations because of course they always have a solution; customize, modify, configure, export to a tool, 3rd-party solutions – all put LOTS more money into the vendors pocket. You might be able to negotiate a great price for the software and services but the further into the selection cycle, the less leverage you have. Why? Ask yourself; Are you really going to start this project from scratch again? And the vendors know that so now you’re not in a position of strength. Yes, they’ll give you “the best deal ever” because they still need you to be a reference and know there will be plenty more similar opportunities to take even more money. “And this stuff all plugs and plays right?” The bottom line is, you also have alternatives, but you have to know your options.

This is where experience cannot be replaced. If your sole solution alternatives lie in the hands of the vendor, it’s going to get costly. These “errors” are known to easily cost 10’s of thousands if not well over $100,000…each. It’s worth a second opinion. If you have a Professional Project Management team in house (PMO), certainly now is the time to utilize their experience. If not, an independent outsider view may bring some good alternatives.

All vendors sell on the “80% rule”. If the vendor doesn’t have at least 80% of the functionality you need “out of the box”, they don’t belong in the deal. However, it’s well documented that the 80% can cost as much or less than the other 20%. That’s why the 20% is where you spend your time. The 20% is where you can double or triple the time, effort and cost of the entire project. Remember how we defined failure in the very first post? The 20% is the failure zone.

Most companies stumble across some of the “20%” during demos or implementation planning and build a “fudge factor” into the estimated time and cost of the project. Before long, they find themselves at double the cost and time and a hard sell to executive management. This obviously is when projects stall or die completely. If you face reality, you’ll rarely, if ever, find a solution with “100% fit”.

Next time we’ll discuss how to get by in a less than perfect world (less than 100% fit).

Categories: ERP

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.