🧮ERP: Implementations (Part XVIII: The Price of Partnership)

ERP Implementations Series

When one proceeds on a journey, it’s important to have a precise destination, a good map to show the road, the obstacles ahead, and help to plan the journey, good gear, enough resources to make it through the journey, but probably more important, good companions and ideally guides who can show the way ahead and offer advice when needed. This is in theory the role of a partner, and on such coordinates should be a partnership based upon. However, unless the partners pay for the journey as well, the partnership can come with important costs and occasionally more overhead than needed. 

The traveler’s metaphor is well suited to ERP implementations and probably many other projects in which the customer doesn’t have the knowledge about the various aspects of the project. The role of a partner is thus multifold, and it takes time for all the areas to be addressed. Typically, it takes years for such a relationship to mature to the degree that it all develops naturally, at least in theory. Conversely, few relationships can resist in time given the complex challenges resulting from different goals and objectives, business models, lack of successes or benefits.

Usually, a partnership means sharing the risks and successes, but more importantly, building a beneficial bidirectional relationship from which all parties can profit. This usually means that the partner provides a range of services not available in-house, allowing customers to pull resources and knowledge on a need-by basis, providing direction and other advice whenever is needed. A partner can help if it has the needed insight into the business, and this implies a minimum of communication in respect to business decisions, strategies, goals, objectives, requirements, implications, etc. 

During sales pitches and other meetings, many service providers assume themselves the role of partners, however between their behavior and the partner role is usually a considerable gap that often may seem impossible if not difficult to bridge. It’s helpful to define as part of the various contracts the role of partnership, respectively the further implications. It’s helpful to have a structure of bidirectional bonuses and other benefits that would help to strengthen the bond between organizations. A framework for supporting the partnership must be built, and this takes time to be implemented adequately. 

Even if some consultants are available from the early stages of the partnership, that’s typically the exception and not the norm. It’s typical for resources to be involved only for the whole duration of a project or less. Independently of their performance, the replacement of resources in projects is unavoidable and must be addressed adequately, with knowledge transfer and all that belongs to such situations. Moreover, it needs to be managed adequately by the serve provider, however resources can’t be replaced as the parts of an engine. The planning and other activities must consider and accommodate such changes.

Also the replacement of partners in mid of the project is possible and this option should be considered as exception in projects and planned accordingly. The costs of working with partners can be high and therefore organizations should consider the alternatives. Bringing individual resources in projects and even building long-term relationships with them can prove to be a cost-effective alternative. Even if such partnerships are more challenging to manage, the model can offer other advantages that compensate for the overhead of managing them.

Outsourcing resources across geographies or mixing models can work as well. Even if implementations usually don’t allow for experiments, they can still be a feasible alternative. The past successes and failures are usually a good measure of what works and doesn't for organizations. 

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🧮ERP: Implementations (Part V: It’s all about Partnership - An Introduction)

ERP Implementations Series

Unless the organization (customer) implementing an ERP system has a strong IT team and the knowledge required for the implementation is available already in-house, the resources need to be acquired from the market, and probably the right thing to do is to identify a certified implementer (partner) which can fill the knowledge and skillset gaps, respectively which can help splitting the risks associated with such an implementation.

In theory, the customer provides knowledge about its processes, while the partner comes with expertise about the system to be implemented and further technologies, industry best practices, project methodologies, etc. Further on, the mix is leveraged to harness the knowledge and reach project’s objectives. 

In praxis however finding an implementer which can act as partner might be more challenging than expected. This because the implementer needs to understand customer’s business and where it’s heading, bridge the gap between functional requirements and system’s functionality, advise on areas of improvement, prepare the customer for the project and lead the customer through the changes, respectively establish a basis for the future. Some of the implications are seldom made explicit even if they are implied by what is needed by the project. 

Technology is seldom the issue in an ERP implementation, the challenges residing in handing the change and the logistics required. There are so many aspects to be considered and handled, and this can be challenging for any implementer no matter how long has been on the market or how experienced the resources are. Somebody needs to lead the change and the customer seldom has the knowledge to handle the change. In some cases, the implementer must make the customer aware of the implications, while in others needs to take the initiative and lead the change, though the customer needs to play along, which can be challenging also. 

Many aspects need to be handled at management level from a strategical point of view on customer’s side. It starts with assuring that the most important aspects of the business where considered, that the goals and objectives are clear, that the proper environment is created, and ends with the timely decision-making, with assuring that the resources are available when needed, that the needed organization structures and roles are in place, that the required knowledge is available before, during and after implementation, that the potential brought by the ERP system is harnessed for the years to come. 

A partnership allows in theory splitting the implementation risks as ERP implementations have a high rate of failure. Quite often the outcomes of such projects don’t meet the expectations, the systems being in extremis unusable or a bottleneck for the organization. Ideally one should work with the partner(s) and attempt solving the issues, split eventually the incurred cost overruns, find a middle way. Most of the times it’s recommended to find a solution together rather than coming to a litigation. 

Given the complex dependencies existing between the various parts of the project, the causes that lead to poor implementations are difficult to prove, as there are almost always grey areas. Moreover, the litigations can require a considerable time and resources to settle. These can be just extreme situations, and as long one has a good partner, there’s no need to think that far. On the other side, even if undesirable, one must be prepared also for such outcomes, even if the countermeasures may involve an additional effort. Therefore, one must address such issues in contracts by establishing the areas of accountability/responsibilities for each party, document adequately the requirements and further (important) communication, make sure that the deliverables have the expected quality, etc.

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💫ERP Systems: ERP Software Predictions for 2010

ERP Systems

Writing again on Panorama Consulting Group’s 360 ° Blog post on Top Ten ERP Software Predictions for 2010. Given the current economical context, excepting the eventual acquisition moves and few sporadic attempts to change something in ERP vendors’ strategy I don’t feel anything big coming for the next year. Most probably ERP vendors like any other companies will be more focused on cutting down losses, reducing the headcount, introducing one or two features in their products, maybe putting on hold some of the projects they are working on unless immediate profit is expected, the shift changing from “thinking big” to “focused thinking”, keeping the flag up.

It’s true that the crisis we are going through stresses the importance of having tangible benefits after implementing an ERP solution, cutting down the costs, breaking such projects in easily chewing pieces in the attempt of reducing the risks and obtaining results faster, though whether phased rollouts is best approach for that it’s more a philosophical question. Even more, an ERP solution is just a piece of the puzzle, you have to consider in the end the overall infrastructure, the many other systems floating around as isolated islands, the culture of people, the maturity of the business, and maybe the most important - the means by which an ERP system could be leveraged to higher level of performance, and maybe this is the best factor considered when calculating the ROI; however you can’t achieve that if you’re not having in place adequate (business intelligence) tools and mindset to derive benefit out of your ERP system! Maybe that’s the direction CIOs have to follow – striving for performance and eliminating waste, thinking lean and green, sustaining business value.

The crisis stressed also the importance of having in place adequate risk management, though that have been on managers’ plate since several good years, and if they ignored it until now, most probably they won’t change things over night, as some experience and again mindset is required in order to get things right.

I agree on the increased adoption of SaaS by SMBs, though I wonder if that can be achieved at large scale, how SMBs will deal with specific requirements, how they will integrate the SaaS ERP solution with the existing systems. I don’t think the ERP and SaaS market is mature enough to address the challenges concerning the merging of the two solutions. Of course, that don’t mean that attempts won’t be made in this direction.

For small vendors will be difficult to enter on a market dominated of giants like Oracle and SAP, it takes lot of time and effort to come up with a feasible ERP system, maybe small vendors can better address the requirements of SMBs by offering more customized solutions, better and cheaper support than big vendors do. Everything is possible, first of all you need to have a good product, a good marketing strategy, gain customers’ trust and maintain it over time.

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🧮ERP: Implementations (Part I: The Right ERP Software)

ERP Implementations Series

In ERP implementations, there are still many organizations that ignore their important needs and go with big names following the trends or first impressions, much like buying a car and going with big brands, ignoring the fact that ERP systems come in different sizes and one size usually doesn't fit all! Poor choices add to the fact that an ERP implementation is much like a Pandora's Box - no matter how much we like to be confident and connoisseur about it, the end result will probably surprise us!

Ideally, an organization should start with a process of self-discovery, if that's not already achieved! It should address the business strategy which considers the business needs in terms of processes, procedures, roles, etc. Once such aspects are understood, an organization must decide which is the right infrastructure to support all this, and this might resume to more than choosing an ERP software! Focusing only on the ERP software and building around it can work as well. Independently of the approach, one should expect surprises as strategy's execution proceeds!

Organizations might choose to talk with sales representatives or partners, have maybe several presentations with Q&A and awareness content. Sales representatives' skills, convincing tone or business relations of the sales representative can be a decisive factor in choosing the solution, such meetings barely scratching the surface! Many vendors provide similar functionality, though, as usual, the devil lies in details and the gaps are discovered usually after the fact!

The initial meetings usually involve a mix of experienced and inexperienced people and there are lot of questions worth answering! What's an ERP system about? How much can the participants articulate organization's needs, respectively identify which are the details that make the most important impact on the business? How much has the sales representative understood customers' business and the overall context? In definitive, the representative tries to sell a product! How much is the representative willing to dive into the requirements, analyze them and identify feasible solutions? How deep do such meetings need to be held? A few sales pitches are usually not enough! It might take weeks, a whole team of resources, multiple iterations until an accurate perspective is achieved and even then, surprises will appear later!

Sometime after Go-Live, most probably the organization will understand what an ERP system is about, which were the challenges, what is missing from the bigger picture, what should have been done, how much the expectations were met, etc. Unfortunately, for some organizations the contact with reality will be harsh, harsher probably than expected. Some organizations will learn from the whole process, and use the knowledge further, though there will be also many exceptions!

An organization must have a certain maturity when implementing an ERP solution, and the lack of maturity must be addressed by vendors or/and organizations themselves in order to increase the chances of success! Learning by doing syntagma can be applied to ERP implementations too, though the costs for experimentation and discovery are quite high in such projects!

The bottom line - the vendors want to sell a product and profit on customers' expenses, often not being interested in whether the product fits the purpose as long as more issues lead to more revenue. On the other hand, the customer wants an affordable flexible solution that allows the business to higher level of performance. The optimal solution lies somewhere in between, however many of the solutions the customers get are suboptimal. Probably, something must be changed in how the various parties work together, and this is one of the most important challenges that must be addressed!

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Rewritten: Apr-2025

From were it started:  "Top Ten ERP Software Predictions for 2010"