Hiring an ERP Implementer
It has been our repeated observation (over hundreds of projects) that there is no practical way to accurately estimate implementation costs. In general, this is because of the varying statuses of companies that will be implementing and using new enterprise software and the status of the selected implementer—all of which is not assessable by the buyer or the seller when estimates are being made.
Related to the buying company’s status, the project cost and time duration of the implementation effort will be significantly affected by the compounding influence of:
- General complexity of affected business processes
- Current status of processes and company coordination between process areas
- Level of clarity on appropriate future-state processes and related change management skills
- Overall skill and capacity of the internal team supporting the implementation project
- Executive commitment and skill to lead and protect project integrity
- Project scope control skill for the initial implementation
- The level of typical and unplanned demands on the company (unrelated to the ERP project)
For example, if a company that will be using new ERP is highly prepared, the skilled implementer may require X consulting hours to reach impressive results. If the same company is generally unprepared it may take 2X consulting hours to ultimately pull the plug on the project—even with a skilled implementer.
Based on all these factors, no candidate implementer can be certain about the implementation effort needed for a particular company. In reality, they have very little certainty in general. NOTE: It should be presumed that any presentation on Implementation Costs and Approach from an implementer is a sales presentation intending to impress the potential buyer and likely a ‘wishful thinking’ cost scenario. In other words, there is nothing that can be said or documented at the point before an implementation starts (words, proposals, contracts, etc.) that will accurately reflect the actual effort needed or the ultimate level of results.
For this reason, the SoftSelect process does not use implementation quotes or soft representations from implementers to influence business software selections or selection of an implementer for a particular business software. The SoftSelect process also does not use as a selection influencer the candidate implementer’s detailed Statement of Work (SOW) documents as they can only be very general and inherently inaccurate estimates based on the factors listed above.
What Actually Helps Control ERP Implementation Costs, Calendar Time, and Results
The SoftSelect ERP selection process considers the following items as influential in choosing the ERP implementer:
- Right team: Locating proper experience, skill and capacity of the key implementation consulting team.
- Implementation contracts fixed: Default commercial terms offered are nearly always one sided in favor of the service provider. An EAI-SoftSelect services contract expert will review and adjust service provider contracts using a checklist of objectives as well as fixing problems with existing contract language. This is a process that is not really ‘negotiating’ but instead a process that is endeavoring to fix these one-sided documents.
- Hourly rates: The objective is reasonable hourly billing rates for implementer’s personnel that are fixed from the start of the major implementation for a timeframe that should reach an ERP go-live event. Distinct rates for the different resources contemplated should be arranged and never be a blended rate—which is sometimes proposed.
- Remote service delivery culture: With a well-run project and after the intense work of the early business process design stage, there are many work details that can be executed remotely with the inherent reduction in the demands of travel on the consultants and the reduction in travel costs for the buyer. Many subject matter experts and those conducting development work can usually add their value to the project remotely. Again, if a project is well-run in which tasks and dependencies are clear and with an absence of project drama, then remote work and remote team collaboration options increase greatly.
ERP Selection – Leupold & Stevens
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.
ERP Selection – Cornell Pump
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.
ERP Selection – Provo Craft
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.