If ERP software system integrators were as smooth at integrating new or upgraded projects as they are at selling, it is likely they would be involved in fewer court disputes with users. Often, disputes happen because senior management hands off responsibility for the effort to the integrator rather than owning it as an integral part of management’s job.
In reality, people in charge of an organization cannot delegate authority for an ERP project to either the vendor or an integrator. Interests are usually different. Ensuring this does not happen should start when the project is in its inception phase, before vendors demo the product or submit a proposal.
This carries through to the contract negotiation stage, while the software is being customized and when the integrator starts to mesh ERP with other business systems.
Avoiding Integrator’s Tricks
The development and launch of an ERP software system should be owned by the executive suite, similar to a launch of a new product line.
Deciding to proceed or restart a digital transformation – whether during or after COVID-19 – is a huge effort. Top executives – even the board, in some instances – must set the pace, tone, and boundaries of the project.
This includes riding herd on the integrator.
Indeed, a survey of ERP users done by Third Stage Consulting found that managing deficiencies with the system integrator is one of the most common problems that organizations have as they strive to make the system operational and bring it online.
During the sales cycle, integrators will assure a user they will be partners on the project. The integrator’s main job is to make the system work properly. But an undisclosed part of its job – and compensation – is to upsell additional services to the user during the project. So, it is incumbent on the user to control the integrator closely.
The starting place for controlling an integrator is to specify in the contract with Accenture, Oracle, SAP (or any other outfit) precisely what they are obligated to do. There should be a number of detailed provisions:
- Spell out who has the authority inside the user’s company to approve change orders.
- Name the third-party contractors that will be used by the integrator, and include in the contract their experience with both the ERP software system being integrated and the user’s specific type of business, and how they will be managed.
- If practical, include the names of specific people who will work on the project both at the integrator and third parties, along with how the user will be notified if there are personnel changes at any of the service providers.
- Require monthly or quarterly reports on both the progress that has been made, and exceptions to either the contractual timeline or what was stated in the integrator’s RFP response.
- Provide contact information for a designated, senior-level person at the integrator with whom the user can discuss everything from progress to resolving problems. This person should be an executive, not a project manager or account person who may be motivated to protect their position with their employer.
- Include an ”out” provision that lets you fire the integrator if they are not meeting certain, defined obligations or causing issues with the project.
If an integrator recommends buying additional software licenses, ask it to specify in writing why they are needed, how they will enhance the project, and when they will be used. Vendors and ERP software system integrators are notorious for recommending license add-ons that may not be needed for years, if at all. But they receive fees for all of that time.
Integrator’s Secret Sauce
Many integrators do not really want you to know – or understand – how they make their money. The best way to protect yourself and your organization is to be aware of how they work, and to have a tightly written contract.
While this should be a last resort, do not be afraid to fire your integrator if discussions fail to resolve a major conflict. Doing so is never easy, but it is easier than suffering a failed software implementation.
If you have questions or concerns about an integrator, or the contract it wants you to sign, feel free to call or email Taft’s Technology team. We will be pleased to share what we know and help you through the process.