At some point in your company’s life, you have likely heard about the powers of Enterprise Resource Planning (ERP) software. So what have you already heard about how integrating an ERP with your firm’s processes can make your operations faster and more efficient?
ERP software is incredibly important.
Even during the Great Recession, a 2009 study by Forrester Research found that out of 400 enterprise software decision-makers in North America and Europe, two-thirds still invested in implementing and/or upgrading of ERP systems, despite the substantial upgrade and maintenance costs.
Moreover, the study (as reported in CIO.com) showed that at a time when companies were scrambling to reduce overhead, only 1% of respondents actually planned to reduce their spending on ERP systems.
According to Forrester researcher Paul D. Hamerman, “This level of activity is significantly higher than the other key packaged application categories, including customer service, human resource management, order management, and supply chain.”
These statistics are a testament of just how powerful ERP solutions can be. But for companies looking to acquire for the first time, upgrade, or replace their existing ERP solutions, just getting an ERP is not enough. The key is first figuring out what exactly you want the system to do for your business.
For instance, do you want your ERP software to:
- Handle your scheduling needs?
- Monitor production and manufacturing?
- Ensure quality control?
- Streamline communications?
- Help you transition to the cloud?
As important as these core factors are, the functions of an ERP system are just one section on the list of considerations to make before acquiring an ERP system. For starters, you need to consider the software’s technology and vendor. Only when you look at the system as part of an overall package can you make a safe and informed purchase decision.
Given the complicated process of buying software, you may want to consider the benefits of hiring an independent ERP consultant to make the acquisition faster and easier. A consultant can prove useful for companies that think they know their business processes, but may not have a full understanding of ERP software functions.
Here are 6 reasons to hire an ERP consultant when you’re searching for solutions for your business:
1. Consultants Have the Skills and Experience to Understand Your Business Processes
A business consultant offers an outsider’s perspective that forces companies to step back to evaluate and understand how their business functions. Because business executives are busy taking care of the company’s daily operations, it’s not uncommon for the documentation of business processes to be neglected.
Having someone from the outside who is familiar with the process of analyzing and documenting business processes, as well as spotting weaknesses where software implementation can prove most useful, can be of incredible value to your organization.
2. Consultants Can Negotiate Better Deals During Software Acquisition
Most ERP system vendors have in-house consultants who will try their best to convince you to sign up for their IT consulting services. It’s easy to see why it would make sense to do so; This keeps your expenses limited to just one billable name and gives you one a single point of contact for questions and clarifications. However, this approach is not without caveats.
As Hamerman warns, “The vendor has the brand name of the product and tends to command higher rates, but that doesn’t necessarily mean it has better skills to implement the system. Sure, the vendor will argue that it has an advantage, but I don’t really see it. Companies are just as well off with third-party firms.”
ERP consultant Eric Kimberling, president of Panorama Consulting Group in Denver, echoes this point, adding that external ERP consultants can help reduce expenses in ways vendors can’t. For example, third-party consultants are better positioned to negotiate low software product rates because they’re not bound by contractual obligations with vendors.
She notes, “We will generally save our clients four to five times our fees just in negotiating with the vendor. It’s all about knowing what levers to pull, how they make their money and knowing what other clients are paying for the system.”
3. Consultants Can Provide an Objective Reason to Purchase an ERP Solution
ERP vendors will gladly provide you with a laundry list of the benefits you get by buying their product, but ultimately there’s no way you can tell if they’re doing it out of genuine concern for your company’s well-being.
And even if a vendor truly wants to help you out with its software solution, it’s wise to get a second opinion. An outsider with no stake in which product you purchase (besides fulfilling the terms of your agreement) and with a strong familiarity of ERP solutions can provide a fair and objective analysis of your options.
Of course, this all depends on whether you can find a reliable consultant. As Kimberling points out, “It’s important to have someone who’s not in bed with any of the software vendors, because you want to find the software that’s right for you — not the one that the consultant is getting the kickback on.”
4. Consultants Understand the ERP Vendor Landscape
Although it may seem like the ERP software industry is a narrow niche, most businesses that decide to acquire an ERP solution find themselves confused by how complex the landscape is. Not only are there are a multitude of established vendors and developers, there are also hundreds of ERP providers specializing in different software solutions, further complicating the process of finding the “perfect” product.
It is an obvious statement, but it’s crucial to remember that not all ERP solutions are the same. Each one comes with its own pros and cons based on your circumstances and needs. And to know just what your organizational needs are, you need to go back to the task of understanding your business processes.
ERP consultants help perform this vital task, and then their expertise in the ERP landscape makes them invaluable in determining the most relevant vendors and products for your specific needs. Based on your weaknesses and strengths, a consultant can provide a shortlist of ERP software suggestions, helping you make a purchase in the shortest time possible.
5. Independent Consultants Can Provide Honest Brokerage Services
Successful partnerships with ERP consultants hinge largely on trust and integrity. There’s no point discussing performance unless you’re confident in the intellectual value and objectivity of the advice you’re getting.
This issue highlights just how critical it is for an ERP consultant to be open and honest with your company’s ERP decision makers, and vice versa, when discussing the variables of your partnerships. Otherwise, it’s likely that some highly specific process, element, and/or vital idea will be left out or lost in translation.
Synergy is also important because it’s easy for enterprise managers and decision makers to underestimate or ignore certain factors of their operational processes and requirements, which generally results in rough patches or hastily conceived and inefficient workarounds. If you want the ERP system to work for your business, you need to work seamlessly with your consultant.
6. Consultants Can Facilitate Faster Acquisition and Deployment of ERP Solutions
As crazy as it sounds, it’s not uncommon for deployments of enterprise ERP solutions to take multiple years. But as Hamerman points out, “By bringing in outside resources that have experience with ERP software, the job can get done quicker.”
ERP consultants bring a unique set of skills and connections that allow them to not just locate ERP systems, but also deploy them with speed and efficiency. And that ability can easily translate into saving several thousands of dollars in actual cash outlay plus employee hours spent.
Any business leader worth his or her salt grasps the virtues of integrating an ERP system into your business processes. But knowing the value of integration isn’t enough. To get to that successful endpoint, your business needs to find a reliable ERP software consultant who understands the ins and outs of procuring software solutions.
While independent consultants are generally the safest option, it’s still important to ensure that you hire someone who’s honest, competent, and objective. Take your time when dealing with a consultant, because the process can be tricky. And be sure you hire someone who’s willing to sit down with you and understand the dynamic and unique needs of your company. Be sure to ask thoughtful questions and check each consultant’s list of references.
And as you might have figured out by now, the services of ERP consultants do not come cheap. But while the initial cost of bringing in a consultant can be high, it pays to compare it to the long-term savings they bring to the table. ERP consultants are all about efficiency and guaranteeing a high rate of success — results that take time to produce ROI. Do things right, and you should be able to avoid some of the most common mistakes companies make with ERP solutions and set your company up for long-term success.