ERP Evaluation, Minus the Blindfold
I wonder how many of my readers have heard of – or even taken – the Bird Box Challenge?
Inspired by the blindfolded antics of Sandra Bullock in the Netflix movie The Bird Box, men, women, children, and even families have been donning blindfolds, covering up their eyes and engaging in activities such as basketball, walking in heavy traffic and even driving. That’s right – driving. One 17-year-old bird brain Bird Box fan pulled her hat over her eyes while driving her pick-up, crossed the center line and plowed into an on-coming car. In a twist that was almost as unbelievable as the movie itself, no one was seriously hurt.
ERP Selection – a Corporate Bird Box Challenge?
Now, keeping the Bird Box Challenge in mind, consider the following statistics relating to corporate IT and ERP projects:
- 83% of all IT projects cost nearly double the original budget – or never finish at all 
- 93% of all ERP projects take longer than planned
- 65% of all ERP projects are over budget
- 79% of all ERP projects realize less than half the planned benefits .
Does it look to you like the men and women in the nation’s C-Suites might be running their companies with blindfolds on? Because that’s what it looks like to me.
But unlike the movie fans, who at least have youth and enthusiasm on their side, the corporate Bird Box is played out over and over again because the decision makers, many of them great business people in other arenas, continue to make the same mistakes, over and over again.
Much of the problem, according to my good friend Andy Pratico, goes back to the ERP selection process.
Flawed initial evaluations, based on a legacy selection process, have set countless companies up for ERP implementation failure, which includes, as we all know, the occasional company- and career-ruining disaster.
ERP Selection – The Old Way
So how do we improve the ERP selection process? First let’s examine the standard approach, which follows a fairly predictable pattern:
- Budget Approval
- Define Requirements (RFQ)
- Send RFQ to Vendors
- Request Pricing
- Short List
Let’s address these steps in order.
- Most companies determine their ERP budget by speaking to ERP salespeople. ERP salespeople can have great input, but let’s be honest – their motivation is self-interest, and their goal is not to help you find the perfect ERP, but to sell you the ERP they represent.
- The RFQ process, as it stands, often creates masterpieces of complexity and redundancy. I have seen RFQs for larger companies that run into hundreds of pages. Not only is that not necessary, it’s an enormous waste of time, and confusing, to boot!
- When the RFQ goes out to vendors, it’s in their interest to respond positively. Unfortunately, not everyone is strictly honest about the ease with which their product will perform specific functions. This helps to explain why so much time and money goes into bolt-ons and post-implementation adoption of ad hoc solutions.
- ERP salespeople are motivated to win your approval. It’s in their best interest to come up with an attractive, “low-ball” figure, which helps to explain why so many companies complain of cost over-runs. It also helps to explain why so few companies budget for adequate training and change management.
- The problem with a short list based on the old evaluation process is that it may reflect the “little white lies” of salespeople, rather than the needs of your company.
- Demonstrations are an extension of the sales process. They are usually made by professional presenters, and, although it may be unfair to compare them to carnival hawkers, that’s what some of them remind me of.
- References – even honest ones – can be deceiving. Think about it – if 60% of organizations fail to realize the business benefits they expect from their ERP implementations , is the list of exclusively happy customers sent to you by a vendor credible?
- At the end of this long and largely sales-driven process, riddled with inaccuracy, misdirection and even misrepresentation, the RFQ is usually longer than it started, thanks to the process of up-selling. At this point, the likelihood of success is far from what it ought to be, and it’s highly possible that even the wisest-looking decision will be flawed.
So, what should we do?
How do we take the corporate blindfolds off and repair the ERP evaluation process?
ERP Selection Process – With Blindfold Off
According to Andy Pratico, the solution is fairly simple. He recommends a new, five-part protocol:
- Justify your ERP requirements with a business case. It may turn out that your existing ERP, with a tweak or two, is perfectly fine. You may, in fact, only need to re-engineer your business processes.
- Determine your unique needs. Every ERP out there supports MRP – there’s no need for 20 pages detailing your MRP requirements. Get rid of that ridiculous 200-page RFQ and focus on your critical requirements.
- Talk to unbiased users – not just the ones supplied by your vendor. Make sure that the people you talk to are in companies of a similar size to yours, in a similar industry, with at least one year of use. It can also pay off to visit those users in person.
- Don’t limit yourself to X number of dollars for training. Nobody can predict the cost of training – everyone learns at a different pace, and training is your best hedge again application erosion, and intimately bound to ROI.
- When it comes to demos, insist on the company’s ERP trainers, not on the vendor’s professional presenters, even if you need to pay for their time. Trainers are much more likely to answer your questions honestly, because, unlike the presenters, they’ll be around, and accountable, after the sale.
That, in a blog-sized nutshell, is how to escape the corporate Bird Box Challenge – at least in regard to ERP evaluation. The temptation to make the same mistakes over and over again appears to be part of human nature – even highly-paid human nature. As time goes on, however, I believe that the ERP evaluation algorithm will be corrected, and the days of failed or disappointing ERP projects will diminish to a more reasonable level.
To speak to author Dan Telep on ensuring successful ERP implementation at your company, please contact ESS.
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