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Podcast – How to Select an ERP Consultant.
Time for Profit From ERP
(MFX)
Today It’s the big one – you’re thinking about ERP – processes in the office are overwhelming and it seems like everyone is chasing their own tail 110 percent of the time – there has to be a better way.
And given all the choices, and the long lines at the ERP store – oh, wait, there’s no ERP store.
How do you go about getting a new ERP for your business?
Well, for reasons we’ll talk more about later, many companies turn to ERP Consultants.
So the next question, are the lines long at the ERP Consultant store – oh wait, there’s no ERP Consultant store – so what to do?
Well, you’ve come to the right place at the right time – as we’re going to guide you through the world of selecting an ERP Consultant – who are they and what do they do? How do they fit in and what do they cost? Where to start and what to look for at the finish line.
I’m Gene Hammons, Director of Profit From ERP and the host of ERPodcast – and besides being ERP Consultants, we’ve also seen quite a few others over the years – so buckle up your headphones and hang on for the ride as we look at the world of ERP Consultants and how to best find your fit and truly, Profit From ERP
Today’s ERPodcast is brought to you by Eide Bailly Technology – purveyours and partners for NetSuite, Salesforce.com, Sage Business Software and more.
You know, once your ERP Consultant has recommended likely ERP programs – the next big leap is finding the right partner for that ERP product.
If you think NetSuite might be your solution, then it’s a fair bet Eide Bailly should be your partner.
Eide Bailly started out over 100 years ago as a CPA firm – trusted by businesses large and small – and that continues today in the Eide Bailly Technology Group. They’ve been leaders in NetSuite consulting from the early days of cloud ERP and now, with nationwide reach Eide Bailly is recognized as Partner of the Year, National Partner of the Year and even Worldwide Partner of the year by NetSuite themselves.
That’s a reflection of the depth and breadth of talent on the Eide Bailly Team.
And it’s also why when I have a client looking at NetSuite, I’m calling in Eide Bailly. It’s sort of because of my likes and dislikes.
For instance, I dislike explaining to my clients why a project ran into cost overruns.
Eide Bailly brought my last project in under budget AND met a totally unrealistically short client deadline for go live – that I like.
I dislike complex and confusing software implementations
Eide Bailly has so much experience, they’ve highly streamlined the implementation delivery so everyone is on board with the same goals and objectives – I like that.
I just generally like working with Eide Bailly and I think you will too. You know NetSuite doesn’t absolutely fit every company everywhere – but when NetSuite is the right ERP, Eide Bailly is the right partner. Contact them today at Eide Bailly.com – that’s E I D E B A I LL Y.com
Welcome back to the ERPodcast – I’m your host Gene Hammons and today, it’s How to Select an ERP Consultant. My primary goal here is not to sell you on signing on with Profit From ERP – my goal is to educate you on the ins and outs of ERP consulting, because the more you know, the better we’re going to look – and at very least – you can avoid the most common pitfalls in the ERP Consulting area.
First of all, Why do you need an ERP Consultant?
Here’s the deal, ERP Software is expensive, the stakes are high and the failures are more common than successes. Done right, ERP can drive 3-5-7 percent more profit to your bottom line. Done wrong – well it’s generally accepted that over 8 of 10 ERP projects fail when you measure them by
1) Time to go-live
2) Cost overruns, or
3) Expected Functionality
1) Time to go-live – are you trying to hit July 1 go-live to run FY 2020 books on the new ERP? Well, it’s April, so you’re way too late. So December 31? Maybe. But how are you going to look setting that 12/31 goal only to see you’re still not live next April?
2) Cost overruns – the average ERP project will end up costing about twice the budgeted estimates. Is that a conversation you’re wanting to have with your CEO next year at this time?
3) Expected Functionality – Most companies see things in the demo that end up not being in the software – is this some devilish trick by the demo team? Actually, often what you think you’re seeing is not exactly how the software works – but that’s what you’d expected to see so the mind makes assumptions and jumps to conclusion – and remember – you’re evaluating a very complex program by seeing it the first and second time – throw in 4 or 5 other ERP products you’ll review and suddenly what you saw where gets pretty convoluted
It is a complex process – and most companies undertake this kind of effort every 10 years or so – which means there’s not much ERP evaluation experience in-house. Also, if you’re counting on someone who was in the last ERP evaluation 10 years ago, are you really ready to base everything on outdated technology experience? Let’s face it, 10 years ago in tech is a couple of generations behind.
The conclusion? It’s a big expensive project. We don’t want an 80% failure rate. We don’t want to have to explain 200% budget overruns and most of all, we want the ERP to do what we wanted it to do – so maybe bringing in a consultant is a good idea.
Let’s talk about consultants.
With ERP, there’s all this talk about consultants – it seems like there’s a lot of them.
There are. With a big SAP or Oracle ERP project, you could be looking at a team of 10 – 14 for a larger organization and each consultant brings specific skills to the table.
For the mid-market it’s simpler, but still… to understand.
When you purchase ERP software, you’re buying the licenses to use the software.
Then a partner team or other team of SOFTWARE COSULTANTS will be assigned to help you implement, configure, install, train your staff and support your ERP project.
Software Consultants might be Technical Consultants who help with the technology part, setting up networking, servers if needed, that sort of thing.
Integration Consultants might help you with data migration, bringing over the data from your old system. You may also have other programs, CRM that you want to pass information on an ongoing basis.
System Architects – will help design the layout and flow of your software – how it integrates, what it connects with.
General Software Consultants may specialize in Financials, Operations, Manufacturing, or any of a number of specialties, as well as helping run the overall project.
All of that team, in whatever combination, will be from the software partner or in some cases, some ERP platforms have a direct team. And with smaller ERP, it might be one or two people handling several of these roles –the larger your ERP effort, the more specialization occurs. You will probably deal with your main Software Consultants for the majority of the project, and they might call in a specialized consultant for a day, a week or two.
Software Consultants bill at an hourly rate of $175 – $250 an hour – and good ones are worth it – they often have degrees in accounting and IT – plus if you find an experienced consultant, they’ll get more done in an $225 hour than the $175 hour guys can do in three – so look at the overall value.
Next, let’s talk about ERP Consultants.
That’s where the Profit From ERP team comes in.
ERP Consultants don’t work on a specific ERP platform, but are generalists among several ERP types. They may break down into ERP Selection Consultants or ERP Implementation Consultants, and again, there may be some specialization. Process Manufacturing, Pharma Manufacturing, Food & Beverage – Project Accounting are all areas I specialize in, but I work with general ERP projects as well.
In our case, the ERP Consultants focus on process. What’s the best process for selecting ERP? What’s the best process for implementing ERP?
In essence, our ERP Consultants become part of your internal team – helping plan, manage, advise and guide your internal process.
An ERP project is definitely a software project – but at the same time, it’s a business consulting project. There’s change management involved. As well as project goals and objectives.
For Example – a recent client had a particularly difficult purchasing process. Step One, Employee fills out a PO. Step Two it’s scanned and sent to the Department Head who prints it out, signs it. Step Three it’s scanned and emailed to Accounting, who prints it out and collates with others for Step Four Final approval by Purchasing – then forwarded to Step Five VP for final batch approval. There was also a signature by each of these managers approving the budget in the first place and there’s still a round of signatures on the invoices before it’s paid.
So as the ERP Consultant we led a process to get all of these people in the room together and finally determined – if we could make the budget approval for the expenditure – and the ERP system controlled that no one could enter a Requisition that exceeded available budget – then we could skip eight secondary signatures on each PO – slash – invoice.
When you begin to multiply the time savings of 8 signatures, across several hundred PO’s and several hundred invoices – not to mention that in a rush, interrupting each person along the way resulting in that crazy lag time it takes to get back to what you were doing in the first place….
Now – all this is possible because the new ERP does a better job of budgeting, a better job of controlling requisitions – and even has online approvals so instead of print-sign-scan-send over and over, it’s now simply an email to smartphone approval.
But it’s not just the software consulting of installing these functions, you also need the business consulting to address the internal workflows to take advantage of the new technology.
Up to now we’ve been talking about implementation – take this a step back to Selection in the first place.
As your ERP Consultant learns about your business, it’s workflows and processes – they can see where these areas of significant improvement exist.
We just covered one simple process within the purchasing function. The ERP Consultant uncovers this and it brings up several issues for selecting the right ERP in the first place.
· We’re going to need an ERP with a good Requisition/Purchasing process
· We also need a strong budgeting module or the right tool to feed into the budget controls
· We have to go with one of the ERP’s that has lower cost Requisition/Approval only users because making everyone in this process a full user would be cost prohibitive
· Will the company be able to change this process to take advantage of the technology – maybe walking paper around for signatures is how this management team communicates – there’s quicker ways to do it, but this keeps them up on what’s going on within the company
And this is just one issue in one department – your ERP Consultant is going to be interviewing Accounting/Finance, Purchasing, Inventory, Quality, HR, Sales, Operations, Manufacturing, Supply Chain, Warehousing, Shipping/Receiving – the list goes on.
You’ll need to be capturing this information and data flow and addressing it through the entire selection process – but let’s not chase too far down this rabbithole.
Where do you find qualified ERP Consultants?
ERP Software Companies and Partners have ERP Consultants – but remember, they exist to sell their own ERP platforms. Ideally, you want someone who’s focused on what you need, not what they need to sell.
Many times a companies’ audit partner or Big Consulting Firm is the go-to source. But then there’s some questions – With Big Consulting, sure they have thousands of people working for the firm, but do they have dedicated ERP Consultants or are you getting a junior project manager who’s between projects? Do they have an Oracle practice as part of the organization, and will all recommendations lead through Oracle?
For the Big Consulting Firm, ERP is a very small part of a very large organization – let’s do some click through.
And now, for comparison, let’s look at Profit From ERP.com – Oh wait, there it is, would you look at that – 100% focus on ERP Consulting – right there – right up front.
The bottom line is, here’s what happened to one of our clients.
This was 2012 – I was working with a client who was on the last legs of an old Epicor ERP system – and they wanted to do an evaluation and find a more modern approach to ERP.
We met several times – and this was early in my consulting career – I’d been with different ERP companies for 20+ years but just gone out on my own after the third or fourth merger/takeover.
Anyway, the client company really liked my approach – but in the end, they told me that top management would be more comfortable going with a large firm – which I can understand.
18 months later – they called back.
They’d been through a 4-month exhaustive search, selected Intacct ERP, which is a pretty good platform – but a year after the start of what was supposed to be a four-month project – after a year and spending twice what they’d expected to spend – they were no closer to going live on the new system than the day they first started.
Here’s what happened. After signing with the national firm, they were assigned a project manager a couple of years out of college. I don’t know her background specifically, but from the reports and documentation, it was clear she couldn’t spell ‘Epicor’ which is one of the older names in midmarket ERP so not a good sign from the start…
The selection process had shortlisted down to two products, a Microsoft offering that was from another division of the big national firm and Intacct – with a partner that was very new to the platform.
Based on cost and feeling they’d been pushed too hard toward Microsoft, they went with Intacct.
It turned out, it was the very first Intacct implementation by their new software consultant. And as you might imagine, disaster followed shortly and continued expensively.
They asked me to come in and see what I could do to salvage the project before they shut it down completely.
Well, we let the initial partner go and brought in the team we rely on for Intacct implementations. While it looked like we’d have to start over, we did find a lot to salvage – and the client team had been working on Intacct for over a year, so training was shortened.
Within 90 days, we had them up and running – and they’ve been a huge success ever since.
The point is, Big Consulting firms have some really talented people who are working on large multinational opportunities – which is great. But the question is, are you one of their priorities?
And the question is, did those impressive guys who were there in the sales presentation show up for the consulting engagement – or did they send someone else to do the actual work?
Here’s the thing. Several times over the years, especially when I was working as an independent consultant, I’ve had clients who told me personally, they had to go with the Big Name Consultants. After the Intacct rescue, I realized that clients who’ve gone with Big Name Consultants in the past represent a great source for rescue work. As of today, I’ve either been called back, or called and was asked back to 58% of the companies that decided to spend huge sums of money with Big Name Consultants.
The only sad thing is, sometimes, when a client makes a bad decision, they’re too embarrassed to admit it – so I lose out on this month’s billings, but they lose out on years of productivity improvements – which can mean millions in lost profit.
But I’ve learned lessons too.
It’s good to have a sizeable team behind your effort – so today, that’s where our Vaco connections come in. Profit from ERP is a concept, not a company. It’s what we deliver – thru being the Practice Director for the Software Selection and Implementation group at Vaco. Vaco has offices in 43 cities nationwide – 3,000 consultants in finance, accounting, technology, IT – so the depth is there – but in this case, so is the focus.
With the Profit From ERP team in the lead, you know you’re getting 100% dedication to your effort. With no software division to sell you, so you know you’re getting unbiased recommendations. And without junior project managers assigned to your account, you know you’re getting senior expertise managing your project.
And with a proven methodology, we can help you actually Profit From ERP – using the same steps you see in our other customer success stories. But as they say, your mileage may vary.
And don’t forget your free, no obligation high level ROI estimate – where we compare your company metrics to over 400 past ERP projects to project the average results of your ERP efforts.
Should you decide to move forward, we’ll fine tune those projections and back it up with onsite research into learning about your business….and show you in detail, how to Profit From ERP