Last week, one of our blogs covered some misconceptions about the age-old SAP vs. Oracle debate. While this topic is typically most relevant to larger organizations, we wanted to follow-up with a relevant discussion more suitable to organizations outside the Fortune 1000: choosing the right ERP consultant for your smaller to mid-size businesses.
Choosing an ERP consultant is an important decision for any organization, but perhaps even more so for small to mid-size companies. These companies typically don’t mesh well with the larger, Big 5 consultancies, and smaller consultancies are hit and miss in terms of independence, depth of knowledge and breadth of services. So does that mean that companies outside the Fortune 1000 need to throw in the towel and handle their ERP implementations on their own?
With the right decision framework, this need not be the case. Below are three questions that small and mid-size businesses should consider when choosing an ERP consultant:
1. Are you considering 100% independent ERP consultants? When we started Panorama in 2005, we were one of just a few ERP consultants that weren’t aligned with or taking kickbacks from one of the major software vendors. Unfortunately, not much has changed over the years, as most consultants are still aligned with one or more ERP vendors. Although that model may be a faster and easier way to grow their businesses, that doesn’t necessarily mean that it’s the best for your business. The only way to ensure completely objective and unbiased advice is to know that your ERP consultant isn’t receiving any form of financial incentive dependent on the specific software you purchase or implement. This means weeding out consultants that are resellers, receive referral fees from vendors and/or share in the negotiation savings – a tactic that is often gamed by vendors to serve as an indirect form of kickback.
2. How broad is the experience of your ERP consultant? Even if your ERP consultant passes the first litmus test, it is even less likely that they will pass this one. If you think about it, any consultant that doesn’t know anything about ERP systems is technically independent since they pass question #1. However, being independent without understanding the hundreds of ERP systems in the market is not a good combination. Most of our competitors that are in fact independent do not understand the strengths and weaknesses of more than just a handful of ERP systems – either because they are too small to have the breadth of experience or because their focus is too narrow to have hands-on experience with all the options in the market. This trait is especially important for smaller to mid-size organizations, as they are more likely to consider the myriad of industry-specific options available to them. To see if your consultant passes this test, ask for examples of which systems they have hands-on experience implementing (versus simply evaluating during software selection) and how many they have evaluated over the years.
3. How robust and innovative is your ERP consultant’s methodology? Finally, methodology is a key differentiator and value point for the best ERP consultants. Our smaller and less sophisticated competitors like to tout the value of having gray-haired veterans shooting from the hip based on experience without structure, but no one person – no matter how experienced or talented – can replicate the value of a finely tuned methodology that has been proven and improved over the course of hundreds and thousands of ERP implementations. For example, our proprietary ERP database contains detailed data, differentiators and functionality assessments of each ERP system we’ve evaluated and implemented over the years. No one person has this level of understanding, so this is just one example of why a robust methodology is so important. Another example: since most ERP implementations fail, it is important that your ERP consultant have a very well-defined and comprehensive methodology to help counter this risk.
These are just a few questions to ask the ERP consultants you may be considering for your smaller or mid-size organization. Companies like yours are less likely to simply call on a Big 5 consulting firm or large system integrator, so it is important to leverage a framework to find the one that is the best fit for your organization.