One historical phrase in the IT landscape is the marketing message, “Nobody ever got fired for choosing IBM.” What does this mean? Well, it’s a simple fear tactic strategy, with the idea being that IBM is an established and well-known corporate entity, thus reducing the risk for companies when choosing new software. The message suggests that taking a risk on smaller or independent software organizations can result in failure and, as a result, unemployment.
It’s a brilliant and ultimately misleading marketing statement. It takes advantage of the fears of CIOs faced with the responsibility of selecting a new software system, such as an Enterprise Resource Planning (ERP) package, and their knowledge that if they select the wrong system, their project could end in failure or receive criticism. Eric Kimberling from Panorama Consulting Solutions recently wrote an article on fear of ERP implementation failure and how to mitigate it, entitled “Five Reasons Executives Say “No” to ERP Implementations (and How to Overcome the Resistance).” The article reviews the five main reasons executives say no to ERP implementations and how good management and proper planning can mitigate the main project risks.
Generally, companies considering an enterprise software solution are doing so because corporate growth has rendered the current software systems useless. Implementation horror stories and past failures, however, can cause hesitation among executives, who are then stuck between an outdated software system and taking the leap into unknown ERP territory. One of the biggest risks with choosing a new ERP system and, ironically, one of the least known, is that a lot of software currently being marketed as “new technology” ERP are systems based on older legacy coding—with a superficial face lift.
It can be difficult to detect which software packages are coming with false promises and which ones can actually deliver the desired functionality. Especially when marketing slogans like the one above promise safety with big name vendors, even though some of them are the ones continuing to implement outdated software packages with a shiny and new user interface.
While companies may take comfort in selecting a familiar name and product, it’s important to determine whether you will be dealing directly with the company that built the base software system or with a reseller. In almost all cases, large software companies service and support the mid-tier marketplace by using channel partners that are either value-added resellers (VARs), managed service providers (MSPs), consultants, systems integrators (SIs), or original equipment manufacturers (OEMs). The challenge is to find a channel partner with extensive knowledge of the software product being installed, a solid understanding of the industry, and the ability to fully deliver and support the solution. With so many options and so much to take into consideration, how do companies sort through everything to find the right solution and IT partner?
The key is to be selective. Many resellers and channel partners support several products and have limited knowledge of the products they are selling and implementing, as well as a limited understanding of the requirements and challenges of the industries that they are serving. On the other hand, there are many resellers with excellent track records and good support teams that understand the product they are selling and can support it during and after implementation. Channel partners that are authorized to sell and install the main system, however, have limited control over changes and enhancements to the base product that periodically become available in new releases from the main software vendor.
Initial problems occur when the value-added resellers begin adding their own layer of customization to suit specific client requirements lacking in the main system—in doing this, they often add or create modules and point solutions to supplement this lack of functionality. The result is a mixture of systems that may serve well initially, but need to be maintained either internally or by the channel partners themselves, the reason for this being that when the big name software company comes out with a new release, the customized software cannot be easily updated. This can become a costly if not impossible nightmare for the company to deal with and, more often than not, they remain with the old version of the software and are unable to take advantage of new innovations and upgrades.
Unfortunately, there are far too many organizations that have purchased a software product purporting to be a full solution geared specifically towards an industry, only to find that many of the necessary modules aren’t as effective as advertised or, worse, are not a part of the main vendor enterprise software solution offering.
One example in our experience is a construction company who decided to move to one of the mainline ERP vendors because the older point solutions they had in place were no longer able to keep pace with the business needs and challenges as the company grew. The initial budget for this project was just over $1 million, with a proposed implementation timeline of 9-12 months. Five years later, the budget has been grossly exceeded by almost $6 million and the company has gone through several channel partners. The issue in this case is that the selected ERP system lacks several of the promised components, forcing the company to undergo extensive customization through their channel partner. Because of this, the company no longer has access to support or upgrades from the mainline ERP vendor and must rely on cost-heavy support from channel partners.
A modern ERP solution provider will provide innovation, typically delivered through upgrades and new releases that are based on technology innovations and specific industry demands. Newly-engineered ERP software is designed according to loose coupling architecture, which means that elements of the software are no longer highly dependent on one another. This allows new functionality and features to be added without requiring the full suite to move or change drastically. New features and functions can then be released when they are ready and customers can choose to implement them as required. This type of ERP software has many advantages over the older legacy systems, including:
Expanded functional capabilities.
New and consistent user experiences, as well as new ways of engaging with ERP.
User-controlled work flow and configurations without the need for invasive custom programming.
More innovation to provide functionality and information.
Better overall integration.
Continuous and consistent upgrades to optimize product usability.
From what we’ve seen in our 30 years of experience in the industry, the most important things to consider when selecting an IT solution partner are as follows:
Technology: a modern, fully integrated solution that requires minimal customization can help reduce implementation timelines and overall implementation costs.
Knowledge: whether you’re purchasing from a vendor or a reseller, expert knowledge of the system itself is crucial to ensuring implementation success.
Reliability: there are plenty of big-name vendors out there, but company size isn’t necessarily an indication of reliability. If you’re looking at a new solution, try asking around at companies that currently have it in place. Does it work well for them? If a company replaced that system, what did they replace it with?
When it comes to implementing an ERP system, most of the work begins once the software decision is made and the contracts are signed. While it’s a large task, the benefits of digital transformation are many. With the right ERP, companies can enjoy an improved and consistent business operational model, an enhanced competitive advantage, and better innovation and collaboration both inside and outside the organization. Benefits can also include a faster return on investment and the elimination of information silos throughout an organization.
At the end of the day, the goal is to give your organization the software it needs to continue growing and succeeding. Saying “nobody ever got fired for choosing the big guys” is simply denying the fact that every ERP implementation project is different and that it’s much more important for a company to select a system based on technology, product knowledge, out-of-the-box fit, and industry reliability rather than being blindsided by the promises of a big-name brand.
This article was originally posted on LinkedIn Pulse on March 1, 2017.