Know your rights in the ERP buying process
Know your rights in the ERP buying process
Postmodern ERP is in danger of becoming tech-speak. Vendors love to use it, and buyers are getting sick of hearing it.
Yet the term is so overused precisely because it is so significant. Ever since Gartner coined the term, vendors have been scrambling to distract customers from what it really means: that they have options and, therefore, power.
Sadly, some aging vendors have succeeded in duping buyers. Too many regard Postmodern ERP as nothing more than a synonym for hybrid or best-of-breed: a fragmented system for a fragmented world.
I’m not condemning customers who have fallen for this.
Think about it: for decades, the ERP market consisted of a few massive vendors selling an exclusive product for exorbitant amounts of money. Buyers faced prices they couldn’t negotiate and costs they couldn’t avoid.
It’s no wonder that they approach today’s market with the same mindset.
Yet in that mindset lies a cruel irony: all the power in the world won’t do buyers any good if they don’t exercise it.
So what exactly do I mean by power?
1. The right of refusal
Modern ERP buyers have more choices than ever before in ERP history. They can select from multiple models, vendors, and products. With so many option, compromises should be few and minor. After all, the average organization will keep its ERP system for 5-13 years.
ERP buyers have every reason to maintain high standards.
Sadly, most don’t. The majority of ERP buyers spend six months or less on their search process. According to a Select Hub study, 87% of those who searched for six months or less never even contacted vendors or participated in demos.
I repeat. Nearly half of all ERP buyers fail to get a tailored demo before purchasing.
Part of the blame lies with vendors. Legacy vendors have played fast and loose with the truth in their haste to ‘cloudwash’ aging products. Cloud vendors have snuck in needless relics: years-long contracts, license requirements, upgrade fees.
Yet the fact remains that buyers have allowed these distortions.
The age of the omniscient vendor has ended. As an ERP buyer, you have the opportunity—and therefore the responsibility—to make a reasonably informed decision.
You can take your time. You can verify. You can say no.
ERP systems themselves should reflect this. Regardless of model, they should integrate. They should adapt to the customer’s dimensions and requirements. They should offer expansive functionality along with an appealing interface.
2. The right to be treated as a partner
The spread of SaaS pricing upturns the financial relationship between vendor and customer. In the ERP market, SaaS structures have proven notoriously hard to sustain. Both NetSuite and Intacct were millions in debt when Oracle and Sage purchased them.
What makes SaaS so difficult? It makes the business dependent on customers to an extent never before seen. In a pure SaaS model, customers should have the right to cancel at any time for any reason. SaaS relationships should last only as long as vendors treat customers like partners.
Yet the SaaS model can bring success. For instance, Cloud ERP vendor Xledger has remained profitable while growing, without debt, to over 10,000 customers around the world.
“We could go out of business tomorrow if we stopped meeting our customers’ needs,” says product director Jarle Sky. Driven by this conviction, Xledger has built a reputation for outstanding customer service, with one of the highest customer-retention rates in the industry.
When interacting with a vendor, pay attention to the tone and rhetoric of sales representatives. Watch their behavior, their method. If a vendor does not respect you or believe in your organization, you should look elsewhere for a software partner.
3. The right to know
It is at once the simplest right and the most revolutionary: your right to know everything about a prospective vendor before purchasing their system.
This right entitles you to, among other things:
- See a demo of the actual system, not a beta version. What you see should be what you get.
- Get a demo specifically tailored to your needs and pain-points.
- Understand the full extent of a system’s Total Cost of Ownership. You should be able to ask the vendor detailed questions about charges and contingent fees.
- Examine the full legal terms of your relationship with a vendor. If the vendor misplaces or accidentally corrupts your data, they, and not you, should be solely liable.
- Decide on your timetable, free of any pressure or manipulation by the vendor.
- Interview the vendor’s past and current customers.
- Know if the vendor is counting on anyone else to help implement or host their system. Any third parties should be disclosed and vetted in advance.
- Hold the vendor responsible for claims and promises made by its representatives.
This is not a bill of rights. Numerous other rights hinge on and derive from these three. The list is by no means exhaustive.
But even these three have seismic implications.
For nearly two decades, ERP systems stood as one of the most expensive and perilous purchases in the corporate world. A bad implementation could bankrupt even large companies. Buyers paid huge, recurring sums: for licensing, installation, customization, training, and upgrades; then for re-licensing, re-customization, retraining, etc.
That world is no longer economically necessary. But so long as they allow vendors to confuse and wheedle and bully, buyers will continue living in it.
Customers hold the power.
It only remains for them to use it.
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