When dealing with a client who is selecting an ERP system, we at Ultra always incorporate the Five Factors in our discussion. These five factors are: Feature Function, Cost, Company, Technology and Implementation/Support. If the ERP software is being sold directly by the ERP company, the five factors are very straight-forward, but when looking at the selection process with the ERP reseller in the mix, the focus shifts towards implementation and support.
In order to have a successful selection or implementation with ERP resellers, it is still important to consider the five factors. In certain cases, notably with Microsoft and SAP, resellers create significant intellectual property that contribute directly to software viability within individual verticals.
Thoughts Around the Five Factors
One reason for fees like this is the fact that ERP resellers add to the risk and reward of customer choices. When looking at an ERP system being sold by an ERP reseller or partner, it would be good to consider these five factors:
- Feature Function: What are the capabilities the ERP reseller can bring that the ERP Company cannot? How large is their IP vs. that of the ERP vendor? Is it a simple add-on like forecasting and planning, or a more critical transaction process involving customer orders, purchase orders or work orders? What is their commitment to maintain the IP connection with the ERP software as new releases are introduced?
- Cost: How much is the additional intellectual property (IP) in relation to the cost of the software from the ERP Company? Will they negotiate? How much is maintenance and support of this IP? Who takes on IP support if they go out of business?
- Company: Who are they? Where are they located? How large is their company in terms of number of employees and annual revenues within the specific ERP product, not including any other ERP products a reseller could be representing? What is their ownership structure? What happens if they are sold or go out of business?
- Technology: If you are buying IP from the reseller, what tools is it written in? Is it written a “customer layer” so that upgrades with ERP are seamless? Does the IP look like the product from the ERP Company? What happens if the ERP Company moves their ERP software to the cloud, does the IP from the ERP reseller move with it? How much money are they spending annually to upgrade their IP?
- ERP Implementation and Support: How large is their team of consultants in your part of the world? Do they know your vertical? How experienced is their team? Who do you call for support, the ERP vendor, or the ERP reseller? If the ERP reseller is your first line of support, how do they escalate issues? Who do you pay support to?
To learn more about the Five Factors and how they apply to different facets of ERP, read a similar blog about international ERP.