As an old saying goes, “An ounce of prevention is worth a pound of cure.”  This saying is directly applicable to government RFP drafting for ERP selection and implementation services.

In a recent State government RFP for ERP software selection and implementation, the State required software selection bidders to decide whether the State should do the following:

  • Release one RFP to select a ERP vendor that would also perform the software implementation
  • Or release one RFP to select the ERP vendor and then release another RFP after software selection to select an implementation vendor

On the surface, the first option sounds better. The State would select one vendor to provide both the software and implementation in one fell swoop. Also, the State would only require one RFP, and there would be no lag time between selection and implementation. Although I have no proof, I have the feeling most software selection bidders presented this option to the State because they could show a lower cost and shorter timeline compared to those who went with the second option. “Shorter time and less money” is a great selling point.

What the State failed to realize is that the first option is not the most prudent approach. It would either be compromising on the quality of ERP software and/or the quality of implementers, which could cost the State, and ultimately the taxpayers.

It is undoubtedly going to take the State longer to select an ERP vendor and implementer under the second option. However, two RFPs will allow the State to select the best software and the best implementer. Under the first option, the State takes a high risk of having to settle. While there is the small chance that the best ERP vendor will be the best implementer, my experience has rarely found this to be the case. When selecting the best ERP software for a State – or any organization, for that matter – there will never be a perfect solution out-of-the-box. When comparing ERP software solutions, a State will always face trade-offs in items such as functionality, price or implementation time. However, through business process mapping, the State should have a very good idea of one or two ERP vendors that are close to meeting all of the organization’s requirements. Issues arise when a State must select among the third or fourth best ERP software solutions because the first and second choices fell short on presenting an implementation plan.

Another issue arises when organizations assume that the ERP vendor is the obvious choice as implementer. Most ERP vendors have networks of dependent and/or independent implementers that implement their ERP software. With dependent implementers, it is difficult to know whether the State will ultimately be receiving the “A-Team” implementers or the “B-Team” implementers. At times, ERP vendors have internal pressures to place B-Team resources on projects, to keep the internal peace among the dependent implementers.

By not requiring separate RFPs to select the ERP vendor and implementer, the State decided to take the risk of selecting a single vendor to provide ERP software and ERP implementation services. The State may end up settling on the second-best software and third-best implementation plan. As a taxpayer, I would prefer that the State spend more time and money upfront during the RFP process to select the best ERP software and best implementation plan independently.

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