“Gotchas” to Look for When Hiring an ERP Consultant
Being an ERP consultant isn’t necessarily the most glamorous or well-respected career that one can pursue. Example cases in point: ERP lawsuits and failure rates are alarmingly high, the industry is littered with notoriously shady consultant practices (such as those outlined in the State of New York’s recent timekeeping and payroll entry system implementation), and the cable show “House of Lies” even devoted an entire episode to some of the challenges of ERP implementations. In short, the ERP consulting industry hasn’t done much to help its cause to underscore the importance and value of the profession.
Although I think we have navigated some of these pitfalls by assembling the world’s best ERP consulting team here at Panorama, there are admittedly thousands of ERP consultants across the globe angling for contracts. The industry has been around for a long time and there are plenty of ERP vendors with experts trained on their specific software, so there are definitely a lot of options to choose from in the market – and they certainly run the gamut in terms of skill sets and ethics.
Given the vast differences between individuals and firms in the market, choosing an ERP consulting firm can feel a bit like walking through a field of landmines. But after 20 years of navigating these challenges in my own career, I’ve narrowed down three key “gotchas” or things to look for when hiring the right ERP consultant for your organization.
Hiring an ERP Consultant: 3 Traps
ERP consultants are the masters of failing to deliver to expectations. In the myopic view of a typical ERP consultant, their job is to deliver software that works from a technical or functional perspective. From a businessperson’s point of view, however, a consultant’s job is to deliver a solution that works for the business, which is very different than delivering a software solution.
So when an ERP consultant says that his or her firm can deliver an implementation in, say, nine months, that estimate typically just accounts for their portion of the work. When looking at the project more holistically, this estimated implementation duration could easily double to 18 months or more to account for non-software-related activities such as business process reengineering, organizational change management, customizing training materials to fit your business, infrastructure upgrades, and a host of other items critical to the success of a project, but frequently outside the scope of most ERP consultants.
One of the biggest challenges of the consulting field in general is misaligned goals and incentives. Although ideas originate with the best intentions, these incentives can set up both the consultant and the implementing organization for failure.
For example, fixed-bid contracts are one of the most destructive contract mechanisms in the ERP industry. The idea of containing cost, time, scope and risk may sound good in theory, but it creates conflicting goals. The implementing organization is unintentionally incentivizing their team to get as much out of the consultants as possible since the cost is fixed, while the consultants are incentivized to do as little as possible without getting fired, since that will inherently increase their budgets. While neither party will typically admit to these motives – and most of the conflicting behavior is subtle – they do exist and can be extremely damaging to the project as well as the relationship between the two firms.
ERP vendors and consultants are the masters of oversimplifying ERP systems and overemphasizing the wrong things. Whether the discussion surrounds technology, best practices, certifications, SaaS or any other aspect of the software, these topics generally pale in comparison to the things that really matter.
For example, reengineering your business processes, defining how your organization is going to standardize operations across multiple locations, and implementing an effective organizational change management plan is much more important than whether or not your team is fully certified or which set of alleged industry best practices you use to configure your software. Don’t let an ERP consultant needlessly confuse the situation or divert attention from the bottom-line goals, strategies and tactics necessary for ERP success.
The Bottom Line
The bottom line is that buyers of consulting services need to be aware of these pitfalls and shortcomings of many ERP consultants in the industry. The key is to recognize where your organization can most benefit from a potential ERP consultant and identify a consulting firm that best mitigates the risks outlined above. Not all ERP consultants are created equally, which is why the industry has a history spotted with plenty of failures and black eyes, so it is in your best interest to find a consultant or consulting firm that is going to help you accomplish your goals for your ERP implementation.
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[This post originally appeared on the 360 ERP blog and is republished with permission.]