As I shopping this past weekend, I had an interesting experience at one particular store. The friendly salesperson accompanied me around their store for an entire hour. She made great suggestions and steered me away from some “bad choices.” After leaving the store, I was grateful for getting so much done but I was a little perplexed at the amount I ended up spending. It led me to think, “How much can we really trust our advisors when making important decisions and purchases?”
Similar to the concept of commission for many retailers, the majority of ERP consulting firms are aligned with one or more ERP software vendors. If the consulting firm is successful in recruiting new business to the ERP vendor they are aligned with, it will receive significant kickbacks from the contract. Of course, these motives are not always easily detected or understood because often, the ERP consultants will portray themselves as trusted and unbiased advisors. This dawned on me as I realized my “trusted shopping advisor” was also looking out for her own interests as she recommended the most expensive options throughout the store. I had fallen for her strategy!
Watch our on-demand webinar, How to Spot ERP Implementation Warning Signs and Integrate Quality Assurance Into Your Project.
So in light of the holiday season, I wanted to share some important questions for you to ask your “trusted advisors” in order to help you navigate through the clever sales strategies of ERP consulting firms:
1. Which ERP software systems have you evaluated for previous clients? If the consulting firm is aligned with one or more ERP software vendors, they will typically evaluate the same ERP vendors in the long and short lists for the majority of their clients. This demonstrates that they may not be fairly considering ERP systems which may be a better fit for your institution. With nearly 200 ERP systems out there, it is crucial for you to work with ERP consultants who will independently identify the best software for your unique processes.
2. Do you earn money or other incentives from software sales? Although it may be challenging to obtain an honest answer for this question, it doesn’t hurt to directly ask this. Nearly 100% of ERP consultants earn revenue by selling software or recommending specific products to their clients.
3. Will you be charging based on the savings you negotiate on our behalf in the software purchase? Even if a consulting firm indicates they do not make any money from software sales or recommendations, they may be receiving incentives indirectly through other avenues. For example, a common rigged approach is collaborating with select ERP software vendors to present a higher initial price. Then, the consultants will present a lower negotiated price. Unbeknown to you, the initial price was artificially inflated and the consultants will receive an incentive on the back end.
Just like you wouldn’t want to buy an expensive present that the person will end up hating, you also do not want to commit to an ERP system that will be a poor fit for your government institution. In Panorama’s experience, we have seen how detrimental the wrong ERP software can be to government institutions trying to serve citizens and make a high socioeconomic impact. During ERP selection, it is important to perform adequate due diligence to ensure you are working with ERP consultants – such as Panorama’s team of independent ERP consultants – who do not have a hidden agenda and are truly on your team.