Recently, I was working with a potential client whose ERP evaluation process was rigged. The potential client didn’t realize it at the time, which made the situation especially risky.
I started Panorama 12 years ago, because of this very concern. Most ERP consultants, system integrators, and value-added resellers represent the software vendors rather than clients’ best interests. It concerns me that so many firms operate with economic incentives. These “incentives” can be misaligned with what’s best for companies. Keep in mind that these are often multi-million-dollar ERP initiatives with a lot at stake.
Part of the conundrum is that it’s not always obvious when a third-party is biased. There are a host of things that can lead to a rigged evaluation process, but here are some common ones to watch out for:
1. Your consultant is a value-added reseller of one or more software vendors
This is probably the easiest one to sniff out, but one that is often overlooked. If your software vendor is a reseller of software or has any sort of economic incentive to sell a certain software, then you’re probably not getting a truly agnostic and unbiased recommendation. Be especially aware of companies that claim to be agnostic because they represent more than one solution (see point #2 below).
2. Internal politics or economic incentives of your consulting firm can lead to a biased recommendation
Even if a consulting firm or system integrator isn’t a formal partner, there still may be other economic or political incentives that cause bias. For example, many large consulting firms are resellers of both SAP and Oracle. In theory, they could help you decide between the two systems, but you will always be nudged toward the group with the most internal political clout or the one that provides the biggest economic incentive.
Before launching Panorama, I worked for one of the big consulting firms. We helped clients evaluate multiple systems that we represented, but we had our preferred solution. The prevalent choice was often pointed to the one with the biggest bench of resources that we had to keep busy. The only way to receive a truly independent ERP recommendation, is to ensure that there are literally no financial ties with vendors or any solution-specific resources on the consulting team.
3. Software vendor demos can create false internal perceptions of the software
Whether you work with a consulting firm or not, you will want to make sure that your vendor demo process doesn’t create a biased view of your software options. Your internal employees will form opinions based on emotion or sales spin if you let this happen. It’s important to have a structured and disciplined demo process based on your specific needs and requirements, rather than what a software vendor might want to show you. It is not unheard of for demos to contain “future-state” features. These future-state applications may not even exist in the current software, but are a glimpse of what might exist in the next release.
4. Your consultants or internal resources don’t understand ERP implementations
This is all about having the right people in the room. If you or your team haven’t been through an ERP implementation (or better yet, several implementations), you may have very different expectations within your group. Unfortunately, an uninformed view can become misaligned with reality and create a high-risk backdrop for your project.
This sort of bias leads to a number of challenges, including an incomplete or misguided plan of how to implement the solution. For example, you may not know enough to realize how important business process management, organizational change management, program management or data migration are to a project. You may also not understand what level of effort these work streams will entail. The symptoms of unrealistic expectations often don’t emerge until the project is underway. The amount of time, money and resources required to make your implementation successful, are also common risk factors for teams that struggle with this bias (see #5 below).
5. Unrealistic expectations of your implementation timeline and budget
Someone in your company has probably designated a timeframe and budget for your ERP initiative. While not arbitrary, it is also unlikely the work of an experienced ERP implementer. A software vendor is not going to tell you if it’s realistic or contradict your wishes. Unrealistic expectations are often a root cause of many ERP implementation challenges. Wouldn’t it be great if the project took less time, money, and resources than planned? Rarely is this the case. Forcing a timeline could lead to some bad decisions later.
For example, if you find that you can’t complete your project within that unrealistic timeframe or budget, you’ll be more inclined to cut organizational change management activities, which are arguably the most important critical success factor for an implementation. These pressured decisions are often forced upon you. An initial bias in planning your implementation is where the downward trajectory begins. Relying on a biased software vendor or ERP consultant’s opinion to validate your planning process only adds fuel to the fire.
There are ways to combat and mitigate biases. The straightforward answer: hire experienced independent ERP consultants (like Panorama Consulting) to help you with your evaluation, implementation planning and implementation process. This is the best way to smoke out biases while adding valuable resources to your bench.