ERP Topics for Private Equity Firms

 

For Private Equity companies, the following are a number of opportunity areas when dealing with ERP in portfolio companies and potential acquisitions.

  • The status of the ERP in companies in which your firm is considering an investment. Valuation adjustments and decisions can be based on the target company’s:
    • ERP not being selected and suffering from a combination of poor commercial terms and high ongoing costs, usually with no escalation terms.
    • ERP having dated technology and the status of the ERP seller’s ability or willingness to fix the situation.
    • ERP system’s implementation not well-controlled, and the potentially significant effort and risk to clean up the situation.
    • ERP transfer rights that are cloudy or don’t exist. Without these rights, when a company is sold to a buyer the company’s ERP cannot be transferred without permission from, and usually further fees paid to, the ERP seller.
  • ERP for companies in your current portfolio
    • Accessing a company’s current business enterprise software applications and developing an Enterprise Software Strategy plan that establishes key applications and their functional domains. Such a plan is important to have before improvement actions are made on any application component—especially ERP.
    • Strategies and detailed plans for unifying ERP across multiple companies. Opportunities to control risk and costs are typically many—and hard to effectively exploit.
    • Evaluating the existing terms and ongoing costs associated with the ERP or other enterprise software. Establish opportunities for improvement and timing to execute.
  • Controlling the serious risks of Cloud ERP related to:
    • Unbounded future costs for subscription renewals, new users, functional modules and many other areas in which buyers are charged.
    • The threat of having the ERP company have the ability to shut off the ERP based on their point of view in a dispute. Even the ability to do this enables the grossly one-sided control they typically have.
    • Potential for the ERP not being available when the company team comes to work on a given day—and the resultant damage. Is a Cloud ERP failover plan offered or not?
  • Cash preservation related to ERP
    • An ERP offering is partially intellectual property for which there is natural latitude for the sellers to make adjustments for customers needing to carefully manage cash for some period of time.
  • ERP vendor acquisitions
    • If your firm is evaluating an ERP vendor there are many details about the vendor’s ERP product and market status that can be substantial influencers in the approach to pursue the ERP vendor.

Engleman Associates has conducted over 900 ERP projects since 1996 and developed experience and intellectual property that can effectively identify and control the various issues and opportunities listed above. Our path over the years has been to simply not be pulled into the manipulative forces of the ERP industry and culture.  The results are truly exceptional capabilities having a high correlation to controlling ERP access cost, project risk, and overall improved results.

We welcome a phone call to field your questions and ideas

Long term ERP license costs were initially very difficult to calculate. Working with SoftSelect we were able to insist on a predicable ERP license fee approach and achieve much lower initial and ongoing license fee costs.

Paul Castle

Negotiating ERP costs is complicated and the ERP software vendors take advantage of the buyer’s lack of experience. SoftSelect’s experience and influence helped us level the playing field. We clearly saved money and lowered our long term risk.

Jeff Markham

SoftSelect was a great partner throughout the process of choosing an ERP solution. They helped us control the terms throughout the ERP buying process, and we achieved impressive results in reduced ERP license fees. Having an experienced partner like SoftSelect, helped us negotiate for the products we need and set our expectations for the process of implementing these solutions.

Nate White
Nate White, COO, Provocraft

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