This article outlines the business, technical and financial reasons why you need a partner when selecting an enterprise resource planning application (ERP) from a software vendor. Keep reading to discover the questions you should be asking, best practices for implementation and where investing in a partner can save your in-house resources.
They bring a lot to the table
Even the smallest software vendor will have a number of new deals, or customers, signed every year. Your company, on the other hand, may be negotiating its first deal in 10 years. Experienced vendors know how to negotiate and are typically motivated to get the highest price from you. You need someone on your side to make sure you get the best value.
Having a partner during the software selection effort is like having Consumer Reports by your side while negotiating car prices 25 years ago. With an experienced partner dedicated to finding your best solution, you know what the software vendor across the table knows. It’s a way to equalize the playing field before, during and after you’ve decided on an application.
Your best people are keeping the lights on
You may be thinking, “Why not just use an existing employee?” The in-house employees that would best support the selection process are the ones keeping the business running. They don’t have time to develop requirements, put together a request for proposal (RFP), evaluate the vendor, and negotiate a services and support agreement, all while keeping up with their regular responsibilities.
The trade-off is either take them away from their day job, or attempt to have them do both and never be able to implement the software after its been selected. Pretty much a lose-lose situation. Instead, set yourself up for success from start to finish by partnering with someone who can perform due diligence, negotiate the deal in your best interest and augment your staff.
Time is money
A recent Gartner study of 506 technology buyers shows that the average sales cycle to complete a new IT purchase is 16.3 months. If that sounds long to you, it will be even longer without a trusted and dedicated partner.
Consider the time frame acceptable to you and determine the financial and personel investments you’ll need.This can be tricky if you’re not familiar with the process and the resources necessary. An experienced partner can help you realistically define the “buy” strategy, drive consensus across business units and make sure you achieve your financial goals within the time frame.
Understand what you really need
In the enterprise software space, you have a number of players with their own goals. In most cases, you have the software vendor, a system integrator (SI), your IT staff, and various third parties with different solutions. The allure of customizations is very strong in this environment. The SI, for instance, makes their money on customizations and will always try to accommodate that desire.
Of course, customizations are the longest pole in the tent when it comes to go-live, and are typically the biggest reason why you can’t upgrade your solution. A good partner helps you build value out of the box where possible. You want someone who can manage the scope and degree of customizations for your solution. A good thing to remember is, no customer ever says, “I wish we would have had more customizations,” after a go-live.
Understand what you are really buying
Software – Whether it’s on-premise or cloud-based, software should help you run and automate your business. Not only do you need to validate the fit for your business, you need to understand the architecture, language(s), database, reporting and other third-party tools. Something may look modern at first glance, but underneath the covers could be 30-year-old client-server technology. Taking a deep dive is also necessary for third-party software, specifically vendor maintenance plans.
Services – Professional services are typically purchased through the vendor or the SI. These can include project management, training, custom development, general consulting and management consulting. Before considering these additions, you need to evaluate what you will absolutely need versus what can be done in-house. You also need to understand the relative price structure for these services so you aren’t overpaying, or paying for things you don’t need. Additionally, you should know the skills and abilities of your team. Can they evaluate a statement of work (SOW) and confirm that your needs are adequately being addressed?
Support – There is a lot to think about when it comes to supporting your application. Maintenance after you go live, the process between services and support, how vendors get compensated for support, what is “support” and who will provide it. Discuss these post-implementation questions before agreeing to services so you gain a full scope of the application over time.
Also, with more vendors moving to a cloud-based solution, customers are missing the built-in support contract. Be careful not to pay for support twice – baked into the per-seat price plus a yearly percent contract. You’ll want someone on your team who can walk you through the complexities of yearly price increases embedded in contract details.
Nothing is perfect, but keep these best practices handy to avoid missteps:
- Define a clear intention of purpose that states why you are buying the software to drive alignment across business units.
- Develop a solid timeline to make a “buy” decision that everyone in the organization has bought into.
- Compile a team that is dedicated to the hours and months required to fully release the vision with executive support.
- Create a set of business requirements that reflects what makes your business and/or process unique.
- Think up a customer-specific demo to see if the vendor has taken the time to learn enough about your business to show how the software fits your needs.
- Utilize a consistant negotiation strategy across all vendors for an apples-to-apples comparison.
- Build a project plan for implementation during negotiations that is agreed to by all parties.
- Sign your contract on December 31 – or at the end of the vendor’s fiscal year – in order to maximize leverage during negotiation.
Stay tuned for future posts that take a deeper dive into the world of vendor negotiations and getting what’s best for your business. For more valuable information immediately, visit Statêra.
About Murray Ray
Murray is a management consultant with over 30 years of experience in software development through a variety of roles and projects. For over 20 years, Murray worked at a number of software companies with responsibilities including R&D, professional services and pre and post sales support. For the last four years, he has spent time helping companies select and implement business enterprise applications.