Tenders destroy ERP – this is how you avoid the mistake
By Gerrit Olivier, founder and CEO of About IT
“I felt exactly how you would feel if you were getting ready to launch and knew you were sitting on top of 2 million parts — all built by the lowest bidder on a government contract.”
That’s reportedly what John Glenn said as he climbed the gantry to board an Atlas V rocket and the space shuttle Discovery in 1962. It also neatly summarises one of the major challenges that ERP projects face when they go out to tender.
Many ERP projects fail. Deloitte cites a Gartner report that estimates somewhere between “55% and 75% of ERP projects fail to meet objectives.” Accepted wisdom blames insufficient change management, but that’s often an easy, go-to cop-out for vendors and consulting firms.
One of the more routine problems I run into is not the process of going to tender, but rather the tender process itself.
I deal with the mid-size market, so this isn’t your big ticket, global $100 million Nike ERP project failure. Regardless, these are significant projects to the companies involved. ERP failure in any size market can have the same reputational, customer experience and percentage-based revenue impacts on the customer’s business.
Scratch very lightly beneath the surface and you’ll see that the outcome of many failed ERP projects is often joint customer-partner animosity.
Failure comes in many guises and has an equal number of definitions. It could be due to technical reasons, poor change management, or the customer’s failure to understand their own business processes. It could also be due to poor quality data either from legacy systems or suspect new sources, buggy implementation from poor consulting, or implementation that takes so long the market changes and the system no longer meets requirements. In some cases it’s due to truly unique customer business processes unaccounted for when the project starts and for which the ERP system cannot later be easily customised, flipping the switch to go-live too early in an attempt to meet deadlines and KPIs, or the consulting partner going out of business.
Many of these challenges can be mitigated before the project even kicks off, but you have to realise that you’re not buying office chairs or a kettle for the canteen. There’s a lot more to implementing ERP than running your finger down a list of features and benefits in a tender submission before skipping down to the cost estimate line item and inviting the three cheapest proposals in for a quick chat.
That is the surest and quickest path to failure.
RFPs are doomed in these cases, but RFIs, requests for information, can successfully establish potential partnerships worth investigating long before customers start the important considerations around pricing.
KPIs for any RFI should focus on depth and quality of the consulting partner’s discovery process. The time and human resources of both parties must be allocated to this essential step.
When the customer knows that the supplier has walked the extra mile to stand beside them to understand their business, their business challenges, the environment in which they operate, and the specific considerations that must be taken into account, then they can start to whittle down the respondents to find bid-worthy potential partners.
This solves many of the challenges upfront. By taking these deep dives into the requirements, the consulting partner can accurately ensure the system is technically suited to the customer’s requirements. This also informs a sound change management point of departure. It exposes the true nature of the customer’s business processes, not the assumed ones. It exposes the quality of the data, whether from new or old sources. It demonstrates expected timelines and also whether or not the technology partner’s consultants will be up to the job. It will unearth those unique, and often differentiating, business processes for which the technology partner must account.
Crucially, it gives both parties an opportunity to get to know each other. By that I mean to see if they’re a cultural match, which goes a long way towards the success of these projects. The customer can also dig a little deeper into the partner’s business to assure themselves they’ll be around for the implementation and beyond. This is how you learn about a customer’s non-negotiables that define success, attributes they deem important, and those that are nice-to-haves.
Whenever I’ve encountered this process, I’ve seen the project succeed, whether or not my bid was the successful one in the end. It’s a mature undertaking rather than throwing one bone to a pack of dogs and hoping the one with the most potential to become a seeing-eye companion emerges victorious.
About IT, established in 2003, provides agile business solutions for cloud ERP, infrastructure-as-a-service (IaaS), and data analytics for small to medium enterprises. These solutions enable customers to safely and securely deploy ERP and advanced dashboard data analytics in on-premise, private, public, and hybrid cloud environment. They benefit from advanced security, improved reliability, highly accessible data, and the economies of scale. About IT’s advanced dashboard data analytics focuses on bringing customers relevant, actionable operational data to deal with immediate business issues, building associations and insights without waiting on pre-programmed reports. The business has seven offices in major centres throughout South Africa.