Gulp. You want to charge us how much for a new ERP?

In going through the ERP purchase process, with a selection of ERP partners and vendors responding to your RFP (request for proposal), you can expect that the prices will range from 'Actually, that's far better than we thought' to 'Oh my goodness, are they answering the same RFP as everyone else, and do they think we're made of money?'

So, how do you compare proposal responses? Why do they often vary so wildly? Are they genuinely comparing apples with apples, or are there a few avocados lobbed in there, too? Is the old saying 'you get what you pay for' true with an ERP? Is the vendor/partner delivering more than you'll ever need and charging a premium? Or are they understating the 'real' price, only to raise change requests and surprise invoices at the end?

And these are all valid questions.

“From a financial perspective, for every $1 not spent on requirements analysis: $10 is spent on extra implementation cost and delayed ROI, $100 is spent in business disruption costs on going live, $1k is spent in hidden costs of not meeting expectations over the life of the software.”

Chris Doig – Author of ‘Rethinking Enterprise Software Selections’

At a recent vendor event, we bumped into a prospect (let's call them X) that we'd provided with an ERP proposal. We had lost the project to another ERP partner whose price was a staggering 60% less than ours and thought we'd never see X again. But in meeting with them again, we had a great chat and parted on good terms, with the CTO promising to reach out and talk business sooner rather than later.

So, why did they want to reconnect?

Interestingly, after X chose their new ERP partner, an independent advisor of theirs recommended that they rethink their decision. While their chosen ERP partner appeared to offer a cheaper option, the advisor suggested it was highly likely that Fusion5's price was more accurate and comprehensive. Already a little way down the implementation track, X told us they regretted not taking that advice on board. They could see more change request invoices coming in for 'extras' as the ERP implementation progressed and that the final price would end up higher than what Fusion5 quoted from the outset.

In our experience, accepting a 'cheap' quote will almost invariably end in tears of frustration and disappointment, and in the worst-case scenario, job insecurity. But why was our proposal so much more comprehensive than X's chosen ERP partner? What do we know that X doesn't when it comes to comparing proposals?

They are good questions. So, we've written this blog to explain our approach and perspective.

We all know the saying, 'The devil is in the details.' And when it comes to an ERP proposal, details are everything.

Most RFPs are set up with yes/no tables, so you can tick items off your requirements list and collate the data to compare one vendor's proposed solution against the next. In an ideal scenario, the ERP will fit nicely with minimal configuration or development, which will control costs, reflect industry best practices, and make life easier going forward.

Outside of the software licenses for the ERP solution, the main costs are for the professional services people needed to deliver your project and of course, anything 'unknown' or 'overlooked' at the time of preparing an RFP (which frequently includes the necessary integrations to other line-of-business applications). The people costs can be a grey area in many proposals which can make it difficult to tell if the partner is undercooking the costs. Yet, it's also the area that significantly differentiates one partner from another, reduces implementation risk, ensures your ERP project is successful, and will transform your business in the ways that you expect.

While you will doubtless take the time to compare implementation prices, you may not know how to dive into the details of who will work on your project, their skills and capabilities – and real-world experience, how you will work together, who 'owns' what, how much of the project will you need to resource, and where the buck stops.

Companies that experienced very successful ERP implementations noted internal organisational elements like support from management, good change management programs, strong project governance, and due diligence as primary reasons for success.

Data suggests that effective change management significantly boosts project success, with a sevenfold increase in the likelihood of meeting objectives and timely, on-budget completion.

Source: https://www.prosci.com/resources/articles/enterprise-change-management-business-case

The old adage 'you get what you pay for' is often very accurate when it comes to digital transformation projects. In our case, we believe you are paying for quality, collaboration, confidence, expertise, experience, low-risk outcomes, and getting it done right the first time. But, of course, we would say that, wouldn't we?

So, let's look at 10 of the most critical questions you should ask a potential ERP implementation partner to compare apples with apples. We've also put our answers out there for you to use as a benchmark.

Fusion5's approach: To minimise risk and ensure continuity, our projects are always effectively resourced throughout the project lifecycle. We have at least two key team members: a lead senior consultant and a consultant, both with relevant, up-to-date product certifications. So, you're not left in limbo if one consultant is ill or is on leave, and your project also benefits from diverse viewpoints, expertise, and joint planning capabilities. We encourage as many onsite/face-to-face discussions as possible for better collaboration and engagement.

🚩 What are the red flags? If your ERP quote says there will only be a single consultant working on the project – then buyer beware. With just one consultant, you are far more likely to experience delays, inefficiencies, and increased stress as your team shoulders more of the workload. And if that consultant doesn't have exactly the right breadth and depth of experience or peer support and feedback, the quality of work delivered can be at risk. Then, there's continuity. Should the consultant become unwell or suddenly unavailable, who will pick up the project so there's no loss of momentum, and will they be up to date and ready to run with the project, or is it back to square one?

Fusion5's approach: To maintain a high delivery standard, our projects are overseen by dedicated, professionally trained Project Managers (PMs) with skills and experience distinct from our consultants. All PMs CVs are available for review and will include their PRINCE2 certifications, so you can be confident that your project is managed efficiently. They handle timelines, budgets, scope management, and quality criteria, leaving our consultants free to focus on their core expertise. Our PMs are focused on risks and mitigation techniques, which are reviewed at every meeting to ensure project delivery is on time, on budget and against project expectations.

🚩 What are the red flags? If your ERP quote doesn't include a dedicated project manager specialist, or the one put forward doesn't have the required experience or qualifications, you should be concerned. Without a qualified PM, there is a higher risk of mismanagement leading to delays and a lack of oversight – meaning your project's outcome could be compromised.

Fusion5's approach: To ensure we work to budget, timeline, scope, and customer satisfaction, we have a Project Management Office (PMO). Our PMO team participate in steering meetings, conduct audits, and issue weekly status reports (Red, Amber, Green) to enable early issue identification and intervention if any part of the project starts to go off track. Our PMO team measures and reports on all aspects of the project so we can guarantee accountability, deliver what's promised, and adhere to the agreed project methodology.

🚩 What are the red flags? If your potential partner doesn't have a PMO or suggests that either they (or you) provide a single project manager for the project duration, you face the same risk as having a single consultant for the implementation. With only one person, and no backup or formal management, review, reporting and risk mitigation processes, or senior overview, your project has a far higher likelihood of exceeding budget, veering off the timeline, and failing to address issues before they become much larger and expensive problems.

Fusion5's approach: For everything within our control, the buck stops with us. Our project team always includes a Senior Supplier (often part of our Executive or Senior Leadership team) to maintain executive relationships and contribute extensive project management experience. Essentially, they own the project and our business relationship, and they are dedicated to securing successful outcomes for your business. Our Senior Suppliers are very hands-on, attend all Steering Committee meetings, and actively review risks. This important additional level of accountability, reassurance and communication greatly contributes to a project's success when it comes to budgeting and meeting deadlines.

🚩 What are the red flags? If an ERP quote doesn't have this oversight and doesn't involve a senior member of the vendor's organisation in your implementation, who will you turn to? If there are issues to resolve, will you have the comfort of talking to senior staff who have the authority and experience to make decisions that benefit the project?

Fusion5's approach: We believe in shared responsibility through cooperative collaboration. Customers play an important role in project success, so we guide you through your responsibilities, providing complete clarity of who does what and when – and how long they need to commit to the project. Although our customers are accountable for testing, data migration, UAT, and end-user training, we provide active support for all these important aspects of the project. We typically have dedicated testers, data migration consultants and certified end-user trainers on the project. These extra resources, above and beyond the core consulting team, provide the support needed to ensure the project is completed on time and within the budget outlined.

🚩 What are the red flags? Watch out for proposals that don't outline your project responsibilities. A lack of transparency and clarity about the time and effort required from your own team can lead to misunderstandings, delays, and unclear expectations and acrimony – on both sides. A successful project hinges on collaboration – and a detailed 'guide to who does what, and how many hours should you allow' – is imperative to make this happen.

The other critical factor is support. How do they plan to assist and guide you through the aspects of the project where your contribution is essential? Have they adequately considered the support you'll require for tasks such as data migration, testing, and project readiness? Clarifying these aspects is vital for a smooth and successful collaboration.

Fusion5's approach: To make sure that the proposed solution reflects your requirements and meets expectations, our Solution Architects continuously validate design and requirements via structured workshops to ensure alignment between discussions had at the sales stage, and to capture any requirement changes that come up during the project. So, there are no surprises and no disappointments.

🚩 What are the red flags? A Gartner study shows that up to 25% of ERP initiatives are considered failures, and another 55-60% result in considerable gaps between user expectations and the actual delivery. So why is there such a gap? ERP quotes are based on the initial requirements received. Before starting the project, any grey areas in the RFP should be clarified carefully by the partner to identify where their solution falls short or requires modifications (and therefore more budget) to meet your requirements. Suppose your partner hasn't delved into the details or lacks experienced resources who can align their solution with your needs. In that case, there will be a shortfall in performance vs requirements vs. the budget and effort needed to deliver what's expected.

Fusion5's approach: Our engagement yields comprehensive, highly detailed Statements of Work (SOWs), clearly outlining what you can expect from us and your ERP, written in plain, easy-to-understand language. We also deliver solution design documents, prototypes, provide clarity around a Risk Management Plan, and regular updates to the change management progress. These allow you to understand what's going on and how the implementation will deliver the project to scope while meeting your business objectives. We always provide explicit project assumptions that our quotes are based on – e.g., availability of your resources, internal project management resources, managing your User Acceptance Testing (UAT) process, extracting your source data, etc. These assumptions – and your answers to each - directly impact the investment proposal.

🚩 What are the red flags? Without a detailed SOW, it's your word against your partner's should the project progress or outcome disappoint. If the SOW is only a few pages long, it's likely missing key details that make the project's success more subjective, leaving room for ambiguity and making it challenging to hold your partner accountable for deliverables.

Fusion5's approach: We have tangible proof of our ability to implement ERPs successfully with a wealth of case studies and the highest industry awards. With thousands of projects under our belt, our customers can be confident that we're not learning on the job at their expense. We're always happy for you to talk to our current customers and review our case studies so you can validate your expectations of our approach and abilities.

🚩 What are the red flags? If your ERP quote doesn't contain customer references or offer referees to talk to, beware. This can reflect either a lack of experience or a poor history of successful deliveries. Without the ability to validate your prospective partner's claims, it raises concerns about their ability to meet expectations and deliver a successful ERP project.

Fusion5’s approach: No two businesses are the same, so we use the ISO 9001-certified FOCUS methodology. FOCUS fully supports Waterfall and Iterative (Agile) project management practices, which have been formalised as our best practice hybrid approach for our implementations.

Our approach provides the assurance that you will have the right resources for your project, all with clear roles and responsibilities. It provides a good governance structure for the effective management of the project, risks, approvals and escalations. With Stage Gates signoff, you will always have the opportunity to validate progress to ensure the stage meets the acceptance criteria.

We also facilitate business readiness check-ins including change management support and assistance, and weekly project status reports which provide an accurate status of your budget, timeline, tasks and priorities. With a regular cadence of meetings, you’ll clearly understand project progress and identify where there are risks to be mitigated.

In addition, our Senior Supplier is allocated to work with the project manager to ensure your business objectives and key deliverables are met and we establish great working relationships with the sponsors and stakeholders. Fusion5 provides executive leadership to the Steering Committee meetings to ensure appropriate accountability and support to you throughout this engagement.

🚩 What are the red flags? If the partner’s implementation methodology doesn’t make you (and your project, people, and investment) feel as though you’re in good hands, then it’s time to step back and be objective. Ask the hard questions. Does their proposed methodology support 100% visibility throughout the entire implementation? Does it include good governance practices, project management oversight, and balance risks and issues with an iterative design approach?

The choice of methodology matters. If you embrace an agile (design-as-you-go) approach, the lack of stage gates to provide project discipline and control can very easily lead to project time and budget blowouts. Whereas if it’s entirely waterfall, rigidly designing and documenting everything to the final degree means you don’t have the flexibility to offer and accept new insights that are really worth taking advantage of.

And without project governance and the ability to offer iterative and organic input, you introduce more risks still.

Fusion5's approach: When it comes to project success, our people are our be-all and end-all. To enable our consultants to contribute to delivering exceptional client value and success, they undergo rigorous vetting, ongoing training, and certification. We invest significantly in and commit to growing our consultants' technical, interpersonal, and client interaction capabilities through internal courses and training sessions.

🚩 What are the red flags? To be effective, consultants need to be trained and certified. A partner without a PMO or a program to assess and deliver technical and soft skill training to its consultants will struggle to provide you with well-rounded, knowledgeable resources when needed. If the partner does not have an ongoing commitment to training, the consultants may struggle to keep pace with the latest business best practices, which raises concerns about their ability to meet project requirements effectively.

Preparation is everything, and failing to adequately invest in the partner, people, processes, and skills to implement an ERP successfully can spiral out of control.

Undercutting or cutting implementation corners is a commercial decision that some ERP partners make (either deliberately or through inexperience) to secure work and income in a competitive environment. But it's you who will inevitably pay the price to bridge the gap between what you thought you were getting vs the outcome.

If you're faced with an RFP response that quotes a significantly higher price than the others, don't assume they're trying to rip you off. Instead, use it as a red flag to double down on your due diligence and ask more questions. If an experienced, established, and highly decorated ERP delivery partner is saying your implementation project will cost more than you expected, don't you owe it to yourself (and the budget report you'll eventually have to provide at the end of the project) to find out why?

Andy Pratico (How to select your ERP without losing your mind) advises: "You can have a cheap, fast or quality implementation, but you only get two." And we agree, which is why our proposals may not be 'cheap' but are always comprehensive, accurate, transparent, low-risk, and thorough.