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E37 Companies without ProfitFromERP – A Retrospective.
Sounder & MFX
Chapter: Monologue
Hey folks – Gene Hammons, Founder and Director of ProfitFromERP, a consulting firm that helps companies evaluate, select and implement ERP software. We help them not only pick the right ERP, and manage complex implementations but ultimately, see a great deal of return in terms of staff efficiencies, data validity and increased revenue opportunities – ProfitFromERP.
So what about the companies who don’t engage our services to help with the project? What about the companies that don’t get ProfitFromERP? Well, in an industry with an 80% failure rate, it’s not good.
Most companies that don’t engage our services, from our perspective they just kinda fade away into a foggy nighttime, never to be heard from again. But every once in a while, we hear things about former clients who ‘decided to go a different direction’. The direction of No ProfitFromERP.
Today we’ll look at three companies. As you can imagine, intense failure is not something companies talk about in press releases – so we’ve changed names to protect the ignorant – but here’s what we got.
A company that decided to go with BigName consulting group, and after the professional sales team left, they got a no-name consultant, a year out of B-school to run their project – she ran it… into the ground.
Another company ignored our findings completely because of a brother-in-law’s advice and trusted their CPA firm’s first-ever implementation. Now the Controller is calling his brother-in-law to see if he knows of any job openings.
And there’s the client who went dark. Just disappeared. Until they hired my MBA techology lab partner as CFO to straighten out two years of disaster piled upon disaster. Instead of ProfitFromERP they chose to spend an extra $300k.
All three of these companies made basic mistakes along the way – mistakes we’ve seen and heard about so many times, we developed the ProfitFromERP methodology expressly to avoid these pitfalls.
And we’ll fill you in on them, so you don’t make the same mistakes – it’s all about ProfitFromERP on this week’s episode of the ERPodcast.
So, I’ve been in company turnarounds since the early 80’s and the ERP business since 1998 – and watched customer after customer do the same things, the same way – treating ERP as if it were a capital expenditure rather than a business transformation. A purchasing decision instead of a concept to transform workflow for the company to get the next level and beyond.
Around 2012, after a prospect sent us a 200 question RFP – the same 200 Question RFP we’d seen downloaded from the internet a few hundred times – I said there has to be a better way.
So we created ProfitFromERP – a way to cut costs upfront and drive revenues in the long term by taking a different approach to how you evaluate, select, and implement ERP software. We studied hundreds of ERP projects we’d been involved with to that point, and set aside the high-performing ERP adopters – and from that, extracted a tried-and-true methodology – the things those successful companies did – things that we’ve replicated hundreds of times for our clients since. And that became ProfitFromERP.
Chapter: Trust
Still, we’re not your brother-in-law, so why should you listen to us – which is how our first disaster story started. It got even worse when the client trusted his CPA Firm’s technology team, a small, fairly inexperienced staff and a First Time ERP program… sold with an established name.
We were working with a franchise bakery outfit – a franchiser that operated kiosks and mall stores for several snack confectionaries. They had stores in multiple countries, several states. They also had to connect to upload reports to franchise reporting, interface with the POS – that’s point-of-sale cash registers, credit card companies – but other than that, fairly simple.
We put together the cost-revenue model, showing a short payback and a fairly comfortable ROI – return on investment. Plus they’d have better data, reporting, segmentation so they could track airport stores vs mall stores, run time of day analysis and on and on.
As we completed the preliminary research and were moving to the selection and demo stage, they pulled out. Said, thanks for your help, we’ll take it from here.
Which is fine. We generally recoup our consulting fees with substantial discounts in the software purchasing phase, and they hadn’t yet made it that far, but whatever.
And by this time, we also had built somewhat of a relationship with the Controller – so told him to call us if there’s anything we can help with.
And he would call back, several times.
In the first call, he told us that the CPA firm they used to audit their financials had a Microsoft Dynamics practice and they’d looked at a demo of Business Central and were going with that. Without looking at anything else. They trusted their CPA firm. Based on their audit competency.
Couple of things immediately stuck out.
Microsoft markets 4 or 5 different ERP products that they acquired in the early 2000’s under the Dynamics name . ProfitFromERP has several clients using various Dynamics versions. Historically, one of the weaknesses of Microsoft, in the ERP space, is the variability of ERP expertise in the reseller channel. There are hundreds of great IT groups, who see one more product as another product line to sell their customers. ERP isn’t just another commodity. IT guys are infrastructure guys. I hear it’s relatively easy to become a Microsoft reseller – but managing Teams, Outlook and Exchange is pretty different than crafting strategic workflow changes with ERP – Not to say there aren’t some top level Microsoft ERP resellers – we know of several trusted groups who’ve done stellar work for our clients in different industries – it’s not that there’s not top talent, it’s just that there is thousands of lesser experienced folks out there – you have to know the difference.
Secondly, there’s a potential experience match. When you’re dealing with ERP partners, consultants, etc, you assume you’re dealing with people who have rolled out ERP in many situations across many industries – they’ve seen the hurdles and missteps. So you assume. The first thing to ask is, ‘How many of these implementations have you done?’
Which we, of course, told our Controller friend. And he, according to form, he ignored us.
Microsoft Dynamics has 4 different ERP programs that were acquired in the 2005-ish timeframe. Navision, Axapta, Great Plains and Solomon. Those became Dynamics NAV, GP, AX etc. Around 2015, NetSuite started winning a lot of ERP Selection evaluations. Microsoft decided to create cloud versions of their ERP’s to compete. The AX conversion went pretty well, it was newer technology and easier to port to the cloud. The NAV project hit some snags.
And NAV, from the Navision codebase was a great ERP – you could do all kinds of things with it you couldn’t with other ERP systems – we’d recommended it since 2002.
But the cloud conversion was taking a bit longer. And while Microsoft is a huge name in business software, ERP is a micro-fraction of Microsoft. They make more money selling Xbox gaming gear.
Anyway – The cloud version of Navision, called Dynamics Business Central was late getting to market and they released limited modules in 2017, with more and more development planned for ‘the next release’.
Free software evaluation tip – never buy based on the next release. It may or may not be what you dreamed of in your assumption of what you’d wish it could have been – wishes, dreams, expectations – look forward to them, but don’t buy them unseen.
2017, People all over the country were having huge issues with Business Central or BC. It was good if you only needed a couple of the base modules, so there were limited success stories in the trade mags, but for other companies – – – Business Central was a nightmare – everyone was talking about it wasn’t ready for prime time. There were failures everywhere. People saying ‘it’s just not ready’.
The Controller told us he trusted his CPA firm, based on the Dynamics NAV programs they’d installed in the past.
We told him, Business Central is a completely different program – you’re going to be among the FIRST running BC.
We advised against moving forward with BC and suggested the Controller at least look at demos from some of the other ERP’s we’d suggested –
Then he told us his Brother-In-Law worked in IT and his Brother-In-Law told him Microsoft would ‘really stand behind Business Central’. More like hide behind Business Central.
Newsflash.
These software companies, all of them are in the business of selling software. That’s it. Yes there’s some support – but it’s up to you to evaluate that it’s going to work in your business and it’s up to you to make it work.
And, the only thing our Controller did right – he negotiated a ‘not to exceed’ implementation contract. That is, the implementation would cost $67,000 – and even if it did take more $190 per hour consulting billables, they’d not charge past the $67k mark.
Three or four months later, we heard from him again. The Controller that is. Disaster had struck, the budget overruns were huge. They couldn’t connect to the Franchiser’s system, the POS integration needed to connect to another new POS system and that new POS system was not yet released, but would come out any day now – due to be released soon, they would be the first to deploy it. First. When it comes to ERP, First should sound like fingernails on chalkboard – if anyone is old enough to remember chalkboards. But I digress…
The CPA’s technology team was way over budget and was becoming less and less responsive. They told him, Business Central is a Completely different program – the CPA installer techs hadn’t realized that at the beginning – they certainly didn’t mention it in the sales cycle, but now they were over $122,000 in billable hours – which was capped at $67k payable, so they’ve been basically working for free – taking twice the time they’d projected to implement. They can’t get the system live so they’re stuck on this project. Fingers are beginning to be pointed. It not really the implementers’ fault as they’d not scoped out the integrations and understood the connection points and data transfers – and the internal Controller was too busy talking to his brother-in-law to worry about integrations…
Today, 2026, Business Central is working great for several of our smaller clients.
But our story happened back in 2017 –.
OK – the situation is, every single one of these issues would have been avoided by following the ProfitFromERP basic methodology – it’s spelled out. Plus things like, don’t try to implement software that’s not finished. Don’t be the first implementation of anything, ever, never.
We did hear from the Controller a few weeks later. He was asking if we knew of anyone who needed a good Controller – yeah – he lost his job over this one.
Never be the first one of anything – which takes us to our next story.
ProfitFromERP is a pretty boutique consulting firm. We work on ERP only. Selection, Implementation, plus a few things that lead to ERP success like teambuilding, internal staff augmentation, and about a dozen other things that lead to actual Profit, from ERP.
But sometimes we have to compete with the big name consulting firms. Which is fine. Plenty of work for us in our niche, plenty of things the big name consultants do that we don’t.
So the client in this case, a company that did technology networking infrastructure for county and local governments – sharing data and such. Large operation. They had an old version of Epicor running – very static, lots of ongoing consulting work – they had to hire a report writer at $150 an hour to make any minor change to a report or heaven forbid, create new ones. Very old school, so they’re looking to upgrade to cloud software.
They had us in there talking about the ERP selection and implementation as well as Big-Name Consulting firm, one of those groups that’s changed and merged their many Big Names together several times – today they often hire our team to subcontract these days so we’ll keep their current Big-names out of the ERPodcast for now.
Anyway, the client tells me, Hey Gene, we liked you a lot – we could tell you’re just as smart as Big-name consultants, you guys are pretty equal in every way, but the CEO wants to go with a big name. At this point, I’m just happy someone thinks I’m smart – so I thank them for considering us and call us if there’s anything we can help with in the future.
18 months later, the Controller is on the phone again. ‘Gene we’re double our original budget and it’s been 18 months and we’re no closer to going live on the project than the day we first started. They’ve got a 9-month expedited project proposal on my desk and before I sign it, is there anything you can do to help us out?” I liked the guy because he’d told me I was smart, so I jumped in with both feet.
As it turns out, he told me, the initial sales team from Big-Name Consulting WAS senior-level, experienced people, with well-equivalent experience to mine. But when it came time to start the project, they sent a young lady who had just graduated from business school to run it. With ProfitFromERP, I personally run all the projects – it’s hard to beat nearly 30 years of ERP experience.
Looking at the Big Consulting young lady, my first clue as to her expertise was that she didn’t know how to spell ‘Epicor’ on the flowchart Visio. Epicor has been around since the beginning of ERP, and while they’re not the major player they were five mergers ago, they’re still pretty well-known if you’ve dealt with any ERP projects to speak of. As to the Intacct implementation project, It had gone downhill from there.
Big-Name Consulting had a NetSuite practice at the time. They had pushed their own NetSuite option which is weird if you’re doing selection recommendations, but never mind. and BigName had brought in an Intacct reseller to have one other option to compare to in the demos. Intacct was kind of new on the scene at this point, this was before they were acquired by Sage, but a really solid accounting package and a great approach of being able to connect with other software to build out the entire ERP infrastructure. Due to the newness of Intacct – the pricing was significantly lower.
My client had gone with the lesser-priced option. Intacct. Apparently the client had spent a lot of their budget on Visio diagrams from Big Name Consulting.
So now we’re in rescue mode and what it’s going to take to fix all of this. I started looking at the implementation project documentation. Wait a minute, I know the woman who’s the lead implementation consultant on this project – she’d been one of the leading MAS-90 consultants at a company I’d worked for back in 2004. MAS-90 was big in those days, but was really fading by 2015.
Anyway, asked around and found out she was getting out of MAS-90 and moving to Intacct – and this was her FIRST Intacct implementation project. The reseller company she was representing had no other Intacct consultants on staff. This was their FIRST company implementation. Have we talked about FIRST? It was a first-rate disaster.
So we completely shut down the project, fired the Intacct implementation team, BigName Consultants were already long gone by this point. Then we brought in one of the top Intacct resources in the country. We even found a VP Sales we knew at Intacct and he negotiated some free months of Intacct subscription to help defray the huge budget overruns the client had experienced.
They went live 90 days later.
And look, I’m not slamming the BigName Consulting team, or even the first Intacct reseller team – what I am saying is that in the sales process, everything is bunnies and kittens and sometimes you get rainbows – – – if you don’t know how to navigate the sales process – I mean – you have to validate every single assumption – it’s not good enough to ‘really like’ these guys, you have to find out if the other people who used them still really like those guys.
And know exactly who will be on the implementation team before you buy the software and talk to other clients of the BigName Consulting firm – what? You find out the other clients of BigName are $500m annual revenue companies and you’re way smaller than that? Probably not good.
Even if I’ve recommended the same exact software to dozens of bakeries before, and everything worked out for those bakeries – I’m still going to create workflow schematics for the next bakery client and have the software team show me exactly how they handle this specific process. That’s how you learn crossaints are different than madelines. And macaroons have a different process than those pumpkin pies you see at Costco.
Buying any name is a recipe for disaster in the ERP world. What works for 1,000 other customers might not work in your specific instance. With ProfitFromERP, we make sure we’re investing in results, regardless of what name they come under. We make recommendations with known entities, people we’ve done business with over 28 years and we know they aren’t going to leave us hanging. Still, show us how these specific results will work at this specific client prior to signing anything. Buying results – the results the client intended from the beginning – is all that matters when delivering results at the end of the project is the focus.
Bottom Line – we had the client live on Intacct in 90 days, and the cost concessions from Intacct helped us recover some of the overspend the client experienced. Now, today, after global software provider SAGE has bought Intacct? I don’t think any discounts are being handed out for failed projects – so, don’t try this at home, as they say.
Chapter: Lack of Project Goals/Adverse to Change
Next Story – – – Step one of the ProfitFromERP methodology is to create a financial model of system improvements. If ERP will cut labor by 43 man-days per month, what’s the daily cost of those salaries? How long will it take us to achieve that productivity? And what else of value can the people we’re empowering do? Lots of variables, a good deal of assumptions – but overall, in the average client – we’ll have 20-30 ways ERP is going to benefit the business. And a financial analysis of the value of that benefit, payback cashflows, ROI all documented and defined. You know you’re getting ProfitFromERP
You may have heard me talk about what happens when you skip a step. Well, here’s what happened to a client that didn’t get ProfitFromERP – or the methodology we use.
The company is an Advertising Clearinghouse. A little tricky because there’s different shows, media outlets, different ad rates based on daypart. The primary customer is usually an ad agency, but they’re placing ads for their different advertisers and those ad buyers have different campaigns, locations/divisions. So it’s a little complex but NetSuite has a version designed for ad agencies and so there was a fit..
The advertising ClearingHouse had been running the company on QuickBooks and spreadsheets. Hundreds of spreadsheets. File Cabinets in every room full of spreadsheets. Walls of file cabinets. Spreadsheets. Everywhere.
I’d worked with them early on, before they started their ERP project. We demoed the NetSuite option, Looked at Intacct and even Acumatica – put together some initial pricing – all very high level at this point. I was subbing out to another ERP reseller at the time and it was their client – the Ad Clearinghouse just kind of went dark – I mean dark when it comes to their ERP project, the advertsing operation was fine. The Clearinghouse accounting staff just stopped returning calls and it all kind of went away.
I never really knew what happened until 5 years later…until they hired a new CFO. The particular CFO they hired, well, I knew him. We were technology lab partners together in an MBA program for about 2 and a half years back in the dot-com boom days, the Y2K scare days. The beginning of the internet. He went on into the financial world, I got into technology and the emerging ERP industry.
He filled me in on what really happened.
Once you get enough of your accounting out of the system and onto spreadsheets, you eventually reach a point where you can’t reliably close the books, because the books become too complex – nothing ties back together. That’s the non-accountant’s version for simplicity’s sake. Just understand, they were out of control, financially.
So, months after talking with us, long before the new CFO got there, they did what any panicking accounting department would do and went out and bought NetSuite on their own. Like I said, I’d put together some pricing for them prior. We’d gotten pricing from NetSuite, estimated the both the software license and Consulting services hours for implementation… so all in, software/services – it was just over $216,000.
But I was long gone by this time, and the Clearinghouse was handling their own negotiations, they’d gotten several so-called discounts – but then came the implementation overruns… they also had to hire expensive temp staff to keep up with the manual data entry processes during implementation which turned into $100k+ in extra labor costs the first year, and everybody hated the new system. Instead of $216k they were just short of $400k
That’s when my MBA-partner stepped in as CFO.
At first, he heard from the team that NetSuite was absolute junk and they wanted to rip the whole thing out. Everybody hated it. As he dug deeper, he found out that their implementation strategy was to replicate QuickBooks with NetSuite. Actually rebuild the functionality of QuickBooks using a more complex and expensive technology. Did we mention the QuickBooks system wasn’t working for them in the first place? This is sort of common among change resistant ERP customers. Some people call it ‘paving the cow path’. For the non-agricultural listeners in the audience, cows walk in a meandering back-and-forth manner, going back to the barn. Super inefficient and pouring concrete over a winding path and you don’t get more cows in the barn quicker. I heard another ERP team call it ‘creating a digital dinosaur’. Yes, you can do it. It’s still a dinosaur of a system.
But whatever you call it, they obviously didn’t want to change the way their out-of-control system was running.
My MBA partner – now CFO realized they had to do a re-implementation. Started over with NetSuite. Called a real team of implementation consultants, put together a project plan, outlined goals and objectives, very similar to Step two of the ProfitFromERP methodology, so things were looking up from there.
Not surprisingly, success followed. After reimplementation, the CFO couldn’t say enough good things about NetSuite – it was amazing what they could do with the new system. Simplicity was the order of the day. And the rest of the team agreed. But at this point, adding up license costs, years of additional labor, implementation cost overruns, months of poor performance, now comes a second implementation team and the billable consulting hours there – a $216,000 project coming in at just over a half million. But they avoided the $10k initial ProfitFromERP planning project.
Here’s why things went wrong.
#1 – In the beginning, they didn’t have ANY program goals other than to replicate what they already had. If ProfitFromERP had been on the project, step two of our pre-purchase methodology – defining the financial return on project goals – we would have uncovered this issue before they spent the first dollar of the $500,000+ they’d eventually spend.
#2 – They were averse to change, thinking they’re the only organization who has the complexity they had – complexity created, because their old system, QuickBooks, had no capacity to handle their processes in the first place. Step Four and six of the ProfitFromERP process has us doing proof of concept demos with workflow schematics and matching that to software features and functions. Remember, the actual purchase phase is around Step 7. We would have seen this resistance to change long before spending the first dime on software.
#3 – No ERP project management experience in-house. This is again our SOP – using an internal PM to replace $ 175-per-hour outside consultants with a $65-per-hour internal contractor. You save over $100 per hour AND…AND – put someone with real ERP experience on your internal team AND…AND provide staff augmentation so you’re not working your existing team to the bone trying to get the ERP live. AND..AND you don’t have to hire expensive temp contractors to do manual data entry – which keeps the business going, but adds no value whatsoever to the project.
Bottom line. After a hard and overly expensive start, they ended up going from a NetSuite system they initially hated to one that turned everything around. Timely financial data. Better Control. The accounting department says the entire organization looks at them differently now. Management has better understanding over the business.
Your decision point is, every one of these project mistakes is addressed by ProfitFromERP’s methodogy and knowing how to deploy it. At a lower net overall project cost. We’re not talking about lower cost than the resulting overruns, we’re talking lower cost than even the original project plan.
Anyway – there’s more to these stories but the main thing to realize is going it alone, cost them these guys over $500k. Had they brought our team in, it would have been around $200k – and that would have happened early on, saving lost years and avoiding cost overruns of $300,000. We would have uncovered these issues long before the first software dollar was committed, and once we dealt with these issues and decided to move on, we would have further controlled implementation costs. Did you know the average ERP project ends up at 186% over budget? Our last NetSuite go-live happened at 61% of project estimates – a nearly 40% savings over the resellers estimate and 120% savings over the industry average.
These stories really illustrate the value of using ProfitFromERP, which that’s good in one way, but in reality, these stories kinda make me sick. The cost. The missed opportunity. The waste. Bad for the client. Bad for my consultancy. Everybody loses.
Here’s the thing. We net save our clients money. When you negotiate with a software company, you represent one sale. ProfitFromERP represents dozens of sales, client after client. You’ll get discounts – everyone gets discounts – normally around %20 – %25 – we get 40-60 percent off. We’ve never had a client where our billable hours were more than the difference between that 25% discount you get and the 46% discount we average. And I know the typical CFO says at this point, well, wait a minute, I’m a pretty stout negotiator – and I’m sure you are. The last stout negotiator client I let negotiate software licensing came back with a 7% discount. I didn’t say anything.
We pay for ourselves up front. Then, we save money on the implementation. Yes, we bring in staff augmentation – and you need to understand. In the software sales process, they tell you that if you do more of the work, there are fewer billable hours. Great. We’ll take on the load says every client ever. What they don’t say is for every hour on the implementation estimate, you need three hours from internal staff. That’s right. That 300-hour implementation estimate means you need 900 staff hours – over the next 6 months. It’s mostly because your staff doesn’t do ERP implementations very often and they’re slower than people who do it constantly for years – but ERP is also very time-consuming and a complex process.
Anyway. Lots of numbers. Lots of complexity.
Let’s just leave it at this – do you want to spend $200k on your ERP project or have it explode up to $500k? Do you want it right the first time or is two or three years til you get it right OK? It’s up to you. But unless you want to end up in the next episode of the ERPodcast when we talk horror stories, perhaps we should talk – focus on what’s important to your company, your particular ERP project. Then, we’ll go through our proven methodology with you, showing you each step of the way how we save you money, what we’re doing and how it helps you avoid the half a million dollar pitfalls.
We’d recommend you go for the ProfitFromERP route, but again, it’s your money, — or — sometimes it’s your job, or your cost overrun or even your wasted years. To set up a free initial consulting discussion, reach out at info@ProfitFromERP.com and we’ll get back to you. Thanks for listening to the ERPodcast, Make sure and like our podcast and subscribe to catch every episode. I’m the Founder and Director, Gene Hammons, wishing you a profitable day and Profit from your ERP.
MFX out