Not only are ERP vendors experts in the field of enterprise software, they also are experts in marketing, negotiations and contracts. These companies employ highly skilled, very experienced staff whose mandate is to promote the company and negotiate contracts that are beneficial to the vendors. In fact, it’s important to remember that each salesperson’s compensation (or lack thereof) is usually directly linked to the contracts he or she secures so negotiating a contract that benefits the customer is not in typically in his or her best interest.
This structure and motivation likely differs significantly from the structure and motivation in your own organization. While your staff may be professional, well-meaning and dedicated, they probably have very little ERP sales or negotiation experience. A major ERP system acquisition or upgrade may be a once-in-a-career event for your staff while the vendors’ staff, depending on how successful they are, may participate in ERP projects every week. Also bear in mind that the vendors’ employees have vested interests in maximizing value to the vendor as any success directly relates to their compensation and continued employment. Your staff probably has very little, if any, vested interest in the contract so they have no incentive to negotiate with the same enthusiasm as the vendor’s representatives.
Some organizations, in an attempt to maximize the value they receive in their ERP investment, “partner” with an ERP vendor believing that this will make the vendor more inclined to put the organization’s interests ahead of their own. While this may be true to a certain extent, the reality is that the vendor is in a conflict-of-interest situation. The more they take your interests into consideration, the less potential revenue they will receive. This means they may be reluctant to provide guidance they know will benefit a client organization. This would not be an issue if your staff was as experienced as the vendor’s but as they likely are not, you will have to rely on the advice of your “partner” – even though they may not be working in your best interests.
While I may be coming across as unduly harsh on both your staff and the vendor community, the reality is that there is no way that your staff can have the same knowledge as the vendor and, as each vendor’s mandate is to maximize profits, your organization will always be at a disadvantage.
One of the key ways you can be on the same footing as the vendors and maximize the value you receive from your investment is to employ an independent third-party ERP expert with the same level of experience as the vendor. This party, who is a true “partner” as they working for you, can provide insight that your organization does not have. You may think this article is a plug for Panorama Consulting (I assure you I have no relationship whatsoever with them) but you are being naive if you think that you can negotiate the best value from a vendor without the assistance of someone who does this for a living!
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