Software Vendor Red Flags
Published On: January 21 2008
So you’re well on your way in terms of deploying the enterprise software. With great care and diligent planning you have assembled your team and despite your best efforts in securing resources and communicating schedules and responsibilities your Project Schedule is falling behind. You wonder if only I had selected the other vendor I wouldn’t have to be preparing this project update for first thing tomorrow morning.
There are always issues which don’t come up in the presentation with the software vendors, but you wonder how I could have missed this and now I faced with explaining why the project milestones are falling behind. If the above scenario sounds all too familiar take comfort according to a recent study published in Business Week (May 2007)
“It is estimated that ERP projects fall off track due to these common oversights:”
A lack of comprehensive planning can lead to oversights and unpleasant surprises. If your plan left out something small, you might be able to absorb the additional expense. However, if you left out something large, it will require an embarrassing renegotiation with the client.
There is difficulty in tracking progress, prioritizing critical decisions and maintaining accountability of key players. Decisions must be made on the basis of complete information rather then just the assumptions of the software vendor’s integration partner.
Lack of role definition for team members
If there is confusion about who is doing what or who is responsible for what, it could lead to serious overlaps or gaps. Establish individual accountability for tasks and make it clear who has the authority to make decisions on any trade-offs.
Third Party Software Vendor Applications
This is a subject unto itself but in many instances software vendors which are eager to display their software products functionality fail to admit that they do not support the Third Party Software. One way to minimize the unpleasant surprises related to third party applications: During Product demos make the vendor show you the complete functionality of the solution. Do not accept just the vendor’s word at face value... If they cannot show you, assume it can't be done. Chances are what they're telling you is either a "Sure, it can do that after they fix the feature", b) "Sure, it can do that if you buy all the add-ons" Beware of any large module purchase (HR, CRM, ERP) which doesn't offer some guarantee to your satisfaction. Furthermore be concerned of any large purchase with an implementation plan that doesn't have a price cap. Let me explain: if the vendor says to implement you have to use their staff, that there is an hourly rate per implementer and that there is no cap on hours or total cost... you're about to get taken.
Beware of any large purchase for which the vendor refuses to give you customer references. This is, perhaps, one of the most telling. One of my very first experiences was with a software vendor whose idea of providing references consisted of excerpts from magazines which supported the marketing efforts of the vendor. Take note of any customer sites they have mentioned and ask for names which you may contact to obtain an independent review of the software and the vendors support.
Trust Me I have seen this before
The vendor has installed software in companies in similar size and in the same industry but appears to have overlooked parts of the RFP, and offers the reassurance that they “have seen this before”
This is not in my contract
In any software purchase and implementation it is very important to obtain information to the kind of support they offer you as a customer. For example do they outsource the support and when you think your calling Toronto you end up in Calcutta or do they provide local support .What is included in the support many vendors offer varying levels of support beware of the vendor that suddenly adjust the price of the software to win the bid thinking they will make up the difference in the support portion
We do not require an executive briefing
In any project having senior management support and approval, it also is important to nominate a Project Sponsor .This role is to represent the project at the Senior Management level of the company
It’s all the same
Sometimes a vendor will try to assure you as a potential client that they have sold and installed their software in a company within the same industry and size of your organization. However as each company has its own processes and methodologies the vendor may overlook the unique way in which your business currently processes data and as a result end up costing you the client time and money for something which was overlooked.
It’s Seamless Integration
In ERP deployment sometimes a vendor will try to position their solution by touting how well their product can integrate with your firms legacy applications. In so doing they will have reduced the price of modules a potential client may have to purchase. Some products can integrate with certain legacy applications however in some cases it becomes a time consuming and thus expensive in the long term solution. To counter this have the vendor demonstrate how the application will integrate
Traditionally a vendor will try to cut corners in order to not cut into their profit margin .The emphasis will be to try to sell you additional training time apart from what is offered as part of the standard contract. As a rule one should as much as possible budget 20% the total cost of the project towards training. The idea being that in-house resources can train other employees the application once they have received the training from the software.
In general be aware of these and other potential red flags and by doing so you can save yourself and your company both time and money by being vigilant to potential pitfalls.