Five ERP Vendor Red Flags
Businesses looking to upgrade or replace their legacy software systems with a new ERP system often look for ways to accelerate the selection process. Given the benefits of modern ERP systems, the desire to move quickly is understandable. However, accelerating the review and selection process can result in choosing an ERP vendor that is ill-suited to your business. Choosing the wrong vendor can be catastrophic. After all, not all ERP systems are created equal. How do you know you are talking to the right ERP vendor? Here are five ERP vendor red flags to watch for:
Deceptive Software Demonstrations
A software demonstration is a good way to gain an initial understanding of the features and functionality of a particular ERP system. This is the time to ask pertinent questions regarding use and functionality concerns. However, a vendor that minimizes your ability to ask questions or see the software address your functionality concerns should raise red flags.
A vendor that is not interested in providing an open and honest sales process might:
· Minimize your questions and concerns with excuses. Your vendor may tell you that the software will address a particular type of issue or via a work-around or modification, but never provide specifics.
· Fail to use actual customer data in the demonstration. Without the use of your own data it is difficult for you have to have a real understanding of how the software can address specific functionality concerns.
· Make promises that the vendor cannot possibly keep without understanding your functionality needs or business process requirements. The vendor may assure you that the software will meet your business requirements, but honestly does not have an understanding of your industry or business processes.
Promises the Software Is “Out-Of-The-Box”
Very rarely is an ERP solution ready to use “out-of-the-box” without being customized or modified to fit a business’ needs. Almost all ERP software, whether an on-premise or SaaS solution, will still need to be customized. A vendor who promises that you will save time by implementing their solution due to it being “out of the box” or ready for use is a vendor you should approach with caution.
Accelerated Implementation with Minimal Customer Involvement
A vendor may promise you that the ERP software can be successfully implemented under an accelerated implementation timeline with little customer input. Any such promise should be looked at with caution. Even uncomplicated implementations can take many months and require substantive customer involvement. Timelines for deliverables, deliverable requirements and milestones and testing for deliverables must be factored into the implementation timeline. An implementation that is accelerated may be missing crucial steps in the process — leaving you with a less than perfect ERP software and more money spent.
A vendor may also promise that only a minimal amount of your resources will be needed. An ERP vendor with experience understands that customer resources will always be required. The amount of involvement depends on the type of project, but at least some customer some level of customer involvement will be required for a healthy ERP implementation.
Zero References
You may be able to locate a vendor that seems perfect for your ERP implementation project. Despite the perceived fit, you must always ask for references that have used the software in your industry and that have used any functionality that is important to your business. If your ERP vendor cannot give references for one or the other, you should remain cautious. If the ERP vendor is lacking references altogether, it may be best to look elsewhere.
Your ERP vendor should have experience in your industry and should have implemented functionality important to you for other customers in your industry. A vendor that doesn’t have experience with features specific to your industry, may not be able to implement them. If you are unable to talk to customers that have used functionality that you deem to be mission critical for your business, be wary.
Overly Positive Or Rehearsed Site Visits
Sure, positivity is important. However, a site visit that is rehearsed or overly positive is a red flag. During a site visit you need to be able to ask tough questions about the software’s functionality and see the software being used in a live environment. Vendors that prevent you from asking candid questions about how the software is used in a live environment may be trying to hide something. Vendors that allow you to go on a site visit but don’t let you see the software being used are hiding something. Similarly, be wary of overly positive site visits. ERP vendors often compensate existing customers willing to allow potential customers to see how the software is used.
The Take Away
Deceptive software demonstrations, overly optimistic site visits, accelerated implementation timelines, and inadequate references are all red flags when searching for an ERP vendor.
By recognizing the red flags above, you will avoid ERP vendors that are ill-fitted to your business. For questions regarding the ERP implementation process, ERP contract negotiation or ERP litigation, please contact us at (312) 263–0570.
