Have you purchased a smart TV lately? I have, and yes, they are pretty smart. That said, I think I’m smart too, and I still spent a fair amount of time configuring this TV to make it work for me. In other words, it wasn’t exactly plug-and-play. Do you know what else isn’t plug-and-play? Accounting and ERP applications. Sure, you may be able to fire it up, but optimizing it to meet the needs of your organization isn’t included in the box. We’re talking about the difference between “installed” and “implemented” and how some ERP vendors don’t appear to be acknowledging the distinction these days.
Here’s the trailer
Recently, a prospect came to us and shared a (familiar) story. This company was evaluating new cloud-based ERP applications, including NetSuite and Sage Intacct. They received a bid directly from NetSuite rather than through a partner—and (shhh) they shared that bid with us. In addition to discounting the software by more than 50%, the “NetSuite implementation services” were discounted by 80%. This type of aggressive discounting is a common NetSuite implementation strategy and it’s been our experience that unless the customer fully understands what they’re getting for the bargain basement price, they can find themselves woefully disappointed. We’ll explain…
Installation vs. implementation
Companies are savvy to research and seek out the best value, but here’s the problem in this case. After the discount, only $1000 was allocated for the NetSuite implementation (80% off the original $5,000). Speaking from experience (we’ve implemented ERP solutions for 300+ companies across more than two decades), there is no way to implement an ERP application for $1,000 or even $5,000. Install it, maybe. Implement it, no.
For $1,000 worth of services, with no more than 5-6 hours of consulting, there can’t be much time spent determining the company’s reporting needs, configuring its chart of accounts, or defining dimensions. There’s no budget left to address integrations, do proper data migration, or the myriad services it takes to implement a new ERP application successfully. That means there’s definitely no budget to share best practices based on industry expertise or discuss how your company can actually leverage their new solution. As David Thikoll, one of our leading ERP Consultants, stated, “Based on decades of experience, regardless of the technology, the cost must be applied to the customer, but they get value for it. In other words, we are paid to help minimize risk and maximize ROI.
Now this company did not end up selecting NetSuite, but what if they had? What would they have received for $1,000? If we were to guess based on reports we’ve received from former NetSuite users, the answer is not much. Certainly not enough direction, training, and consulting to ensure they could begin generating a return on their investment. For reference, we advise prospects to budget around $20,000 for a typical full-service NetSuite implementation.
Preconfigured? What is that?
NetSuite claims it can do this because its solution is “preconfigured.” Preconfigured for whom? If it’s configured just for you, we’d call that implementation. So, the software must be preconfigured for the “typical” company. Are you typical? How would you know? Can you trust someone who presumes to tell you you’re typical?
It’s often difficult to understand what you’re buying. ERP vendors are well known for being mysterious about what you get for the price you’re paying. Often, they bundle features together and charge a premium for the bundle. You don’t need everything in that bundle, but to get the one function you want, the bundle is the only way to get it. Some ERP vendors have a reputation for radically discounting the software up front, only to win back that money through increased license and services fees down the road. In short, it’s often difficult to fully understand what’s included in the price the ERP vendor is charging—it sure was in the quote we reviewed.
There’s an exception to every rule, including this one. While every ERP requires implementation, not every company needs $20,000 worth of implementation and support services. We’ve worked with several clients who have team members who have previously gone through multiple ERP implementations. They are experienced project managers and tech-savvy do-it-yourselfers who have the time and resources to drive the project home and are successful. Other clients don’t have the team members to spare for a project and their time is better spent on their job.
Our philosophy is that one size does not fit all—that there is so “typical” company that benefits from being “preconfigured.” Experienced ERP partners ensure they understand prospects’ needs and internal resources before presenting a proposal. This helps ensure we’re recommending the products and services a company needs to be productive from the start while having room to grow and scale as their needs change.
The partner channel
If it feels like we’re doing a bit of the competition bashing we earlier accused NetSuite of, let me clarify. Both NetSuite and Sage Intacct are robust, flexible, cloud-based business management solutions, and either of them will make a good fit for most companies. Our point is that companies that rely on the software vendor to “implement” the application often end up with an installation, not an implementation, and they miss out on the short and long-term value these applications offer.
An ERP partner is a vital link between you and the ERP vendor. The partner is an ally that works to help your organization realize the long-term benefits modern cloud-based ERP can deliver. Think of the partner as your Smart TV user guide, making sure you don’t miss the good stuff.
Like your smart TV, modern cloud-based ERP applications have many bells and whistles, mysterious buttons, and multiple navigation layers. Sure, we can figure them out on our own, but in the case of your ERP, why risk it? I’d bet my Netflix password that had I hired an implementation partner when I bought that TV, I wouldn’t still spend 10 minutes every time I want to turn on and off the subtitles.