ERP Horror Stories – Don’t Be the Next One

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You’ve heard the horror stories. They go something like this: “We spent $75,000 and a year of critical staff time only to decide that there was no way the new system was going to work. We canned it.” Failed Enterprise Resource Planning (ERP) system implementation is one of the big nightmares many company presidents fear most.  Yet many march into the tough world of implementing new ERP systems anyhow, because the potential rewards are great, and the prospect of doing nothing is frightening. Some manufacturers are still dependent on spreadsheets and uncoordinated data, making needed improvements in day-to-day management nearly impossible.

So face the fear and take a wise approach by hiring an ERP selection consultant before settling on a system. The GLTAAC funds a couple of these projects every year, and typically the feedback is that every penny spent was well worth it. Relative to the cost of a new ERP system, the cost of a selection process will be modest, and will save money overall.

Why hire ERP Selection Consultants?

Hiring a consultant to help with software selection and contract negotiation can seem like an unnecessary added cost, especially to managers at smaller companies. But it’s actually the small to medium-sized manufacturers that can use ERP selection help the most. They are least likely to have the depth of experience on staff to navigate all the issues that will come up during selection and implementation. And often, they can least afford to make a mistake in this arena.

It’s a little like planning a foreign vacation for your family. Sure you can figure it all out yourself, but you’re going to get huge value in many ways if you can find a friend or friends who have already been there (i.e. consultants). In ERP selection it’s similar. A consultant who’s already taken the journey a few times will add value in more ways than just recommending how to save money. They will typically offer a step-by-step process, which leads a company safely through the phases of software selection. One consulting group we spoke with breaks the process into these five common phases:

  1.  Defining the organization’s business processes
  2. Identifying a short-list of vendors with possible solutions
  3. Defining and prioritizing the requirements for a new solution
  4. Conducting vendor demonstrations based on a script/checklist to allow valid comparison
  5.  After vendor selection, negotiating the details of the contract.

To some, the five phases may look simple. “Why pay a consultant to help?” But anyone who’s ever attempted to select a new ERP system knows each of these phases holds several potentially damaging problems leading to failure down the road.  For example, understanding your business processes in detail, and whether your processes are sufficient for managing within ERP software, is a crucial first step.

One experienced ERP selection consultant told GLTAAC that a wisely selected ERP system should be in service at least seven years. Any system that’s being replaced sooner is considered a failed implementation in his book. So avoid having your firm be the next featured victim in the “ERP horror stories” series, and look for an ERP selection consultant that can work well with your company. GLTAAC can help!