4 Questions for your ERP Vendor

2bc3270A well-tailored Enterprise Resource Planning (ERP) system can deliver significant results in productivity, transparency, and collaboration. A recent study from Nucleus Research showed that the average ROI on ERP implementation is $7.23 for every dollar spent.

But if you’re not careful, ERP implementation can easily become costly. A 2013 study showed that 53% of ERP projects went over budget. And it’s easy for software vendors to over-promise with flashy demos but fail to deliver on the finished product.

At Bizowie, we frequently hear stories from customers, partners and prospects about problems they encountered with past ERP systems. Many of these problems can be averted by asking the vendor these simple questions to ensure that your investment in the software implementation is protected.

Will you provide a written statement of work dictating what work will be performed as part of the implementation? Is there a flat fee or capped number of hours associated with that work?

In their haste to close a sale, many vendors are quick to over-promise and under-deliver. The customer then winds up on the hook when the implemented system is missing important business processes, frequently-used reports, and other critical features.

Unless you have experience with the software package you’re using and are 100% certain that it can accomplish everything you need, insist that the vendor provide you with a written statement of work detailing exactly what functionality will be provided as part of the implementation. The statement of work should be tied to a flat-rate price quote or capped hourly rate, to ensure that mistakes on the vendor’s part won’t lead to costly overruns down the road.

Will necessary customizations be made using stock functionality, or custom code? Will the customizations prevent us from upgrading later?

I believe that customization is truly critical in ERP software. Even for small to mid-sized businesses, it’s critical that your software aligns with your processes, procedures, and competitive advantages.

Most ERP vendors and implementers share that philosophy. However, many turn to custom programming to achieve necessary customizations. Custom code is often a “quick fix” to cheaply obtain a desired result, but it can cause significant issues. Badly managed custom code can cripple your software, preventing you from upgrading to the newest version without hiring programmers to upgrade the customizations.

Today’s cutting-edge ERP systems feature a high degree of out-of-the-box customizability, allowing unique business processes to be accommodated without custom code. Don’t settle for less!

What investment will I need to make into IT resources to ensure that the ERP implementation is successful?

When choosing an ERP platform, it’s important to make sure you have an accurate picture of the costs involved – not just on the implementation side, but also in terms of ongoing maintenance and support.

Traditional premise systems generally require a hardware investment in the servers and network equipment necessary to maintain the system in-house. You’ll also want to consider the manpower necessary to maintain this hardware, either via in-house or outsourced IT staff.

Cloud ERP systems, with infrastructure maintained by the vendor, can deliver significant IT savings, but can also have supplemental costs. To ensure constant connectivity, many cloud ERP users elect to have backup Internet connections installed to ensure consistent uptime.

Whether you choose a cloud or premise system, ensuring that you have an accurate budget for supplemental IT resources will prevent costly budget overruns down the road.

Will I need to work with an outside vendor to exchange EDI (Electronic Data Interchange) transactions?

EDI refers to the exchange of traditionally offline transactions – such as purchase orders, invoices, and order acknowledgements – electronically, generally via the Internet.

Electronic transactions are nothing new – EDI has been used since the first computer networks were introduced. However, many large vendors have recently begun introducing EDI requirements for their suppliers, spurring an increase in interest in EDI technology.

Many ERP systems, such as Bizowie, offer built-in EDI functionality. Others require that you work with a third-party middleman, whose (often costly) fees won’t be included in a quote from your ERP vendor.

Regardless of which option you choose, it’s important that EDI costs are considered when budgeting for a new ERP platform.