During the ERP software selection process, many organizations struggle to understand and compare vendors’ statements of work. Some of these organizations hire ERP consultants to help them navigate the cost variables and negotiate favorable terms.
However, choosing the right ERP consultant can be just as confusing as selecting an ERP system. Any ERP consultant can claim to deliver vendor negotiation services, but not all consultants have an effective methodology. When evaluating an ERP consultant’s vendor negotiation methodology, consider whether it includes these four activities and deliverables:
1. Strategy Development
An ERP consultant should collaborate with you to develop an ERP negotiation strategy. Ideally, they’ll ask you about your goals and priorities. For example, is it more important for you to reduce operational expenses or reduce capital expenditures?
They’ll also help you determine which contract terms are most important to you. These may include terms, such as:
Licensing payments should be spread over deliverables.
Organization will spend x amount per year.
Subscription costs will not be increased for x years.
2. In-depth Price Comparisons
The most valuable deliverable an ERP consultant can provide is a negotiation workbook showing apples-to-apples comparisons of your top contenders. You may have found that vendors’ quotes are not easy to compare. Vendors’ statements of work make various assumptions, such as:
You’ll use all software functionality right away
You’ll use x amount of out-of-the-box functionality
You’ll need x amount of customization
You’ll take x implementation approach
You’ll use mostly internal resources
A negotiation workbook helps you understand statements of work based on your unique requirements instead of vendors’ assumptions. Your ERP consultant should help you understand your requirements by facilitating activities, such as:
Determining an ideal level of software customization, and ensuring you’re only customizing when absolutely necessary (i.e., to improve your competitive advantage)
Understanding how many internal full-time resources you can reasonably dedicate to the project and how many vendor resources you’ll need
Understanding how long it takes to automate workflows in the system and how complicated it is, as well as who will be configuring workflows
Determining which activities should be included in each project phase