When tendering for complex ERP projects, the journey from conception to a successful, fit-for-purpose implementation is often complex. For strategic suppliers or systems integrators (SIs), implementation success is often determined by their ability to effectively communicate their understanding of the nuances of this journey to potential clients.
Within these nuances, there exists a realm of critical information residing with the client that is crucial for the precise estimation and successful execution of the project. Our experience with nearly 600 complex projects, which include those involving the procurement of ERP solutions and systems integration services, has yielded many insights. For context, our intervention is often required ‘post-contract’ to rapidly diagnose and rectify poorly performing projects, to help get them back on track.
In a previously published article – Complex ERP Implementations: 6 Flashpoint Areas and How to Avoid the Disputes They Can Create – we outlined prevalent issues faced by clients during a complex ERP implementation. Those areas include disputes and misunderstandings over (1) functional requirements, (2) management reporting needs, (3) integration with third-party legacy solutions, (4) data migration, (5) articulation of business benefits and adverse impacts, and (6) discrepancies in resource allocation.
The lessons learned from our ERP project remediation work highlight the importance of ‘honest’ conversations between an SI and its potential client. These dialogues, especially during pre-contractual and due diligence phases, are essential for revealing critical, yet often elusive, insights.
We have summarised the considerations from the perspective of a potential SI being better informed about your expectations in five sections below, followed by a more detailed breakdown.
Section 1:
Prelude to Procurement of Complex ERP Projects
The stages leading up to formal procurement and the procurement phase itself set the stage for the unfolding project. Here, we delve into the initial steps an SI needs to navigate to align with a client’s vision and expectations. From an SI reviewing requests for proposals (RFPs) to engaging in preliminary discussions, this section reveals the importance of a thorough understanding of your business outcomes, objectives and expectations, along with industry-specific compliance requirements and existing systems.
Section 2:
Bridging the Understanding Gap
A pivotal phase where the SI (should) dive deep into the project’s intricacies. This section explores the importance of ‘due diligence’, covering an SI conducting requirements and resourcing workshops, stakeholder interviews and an in-depth examination of existing operational processes, systems and data quality, as much as is practically feasible at the pre-contractual stage. It highlights how an insightful understanding of these aspects significantly influences the project’s trajectory, costs and timescales.
Section 3:
The Configuration (and/or Customisation) Conundrum
SIs regularly hear their potential clients talk about ‘adopt’ rather than ‘adapt’. However, the configuration and/or customisation of an ERP solution to meet a client’s needs is often a double-edged sword. While SI’s can often configure (and/or customise) the ERP system to meet the client’s unique needs, it also brings forth challenges in integration, cost estimation and ongoing solution maintenance implications. This section examines the extent of ‘adopt’, ‘adapt’ and ‘customisation’ and their impact on resource allocation and project timelines.
Section 4:
Accurate Cost Estimation – The Linchpin
Accurate cost estimation is the linchpin to determine the project’s feasibility. This needs to delve into aspects like the client’s business outcomes to be achieved, existing operational processes and technology landscape, the client’s internal resource availability, the SI’s resource availability, future business plans of the client and the mechanism for managing scope changes. This section shines a light on how these insights are paramount for an SI to provide an appropriate cost for fit-for-purpose project delivery.
Section 5:
Practicalities of Implementation
The implementation phase is where the rubber meets the road. This section outlines the SI’s perspective from project initiation to deployment, stressing the importance of clearly defined acceptance criteria, user acceptance testing, post-deployment support and a structured approach to data migration and testing.
The journey of ERP implementation, while a collaborative venture between the client and the SI, often entails greater client reliance on the SI’s extensive industry experience, analysis of the client’s operational processes and deep technical understanding of its own ERP solution than the SI itself may realise. The narrative of this conversation sheds light on the essence of understanding the often unspoken yet critical insights that significantly influence project success. As a strategic supplier, a deep dive into these realms of understanding aligns both client and SI expectations and sets the stage for a successful, harmonious project journey.
A Closer Look:
Navigating Through the 5 Project Phases
The journey from conceptualisation to implementation of an ERP project often follows a defined structure, but if poorly planned at the outset, it can entail complex, multifaceted processes. Better early planning of each phase, as outlined in the preceding sections, encapsulates critical activities and decision points. In the subsequent segments, we detail the key considerations that SI’s should address in each of these phases. This in-depth exploration aims to provide their potential clients with a comprehensive understanding of the tasks and considerations an SI must manage to successfully navigate through the various stages, from a project’s inception to the implementation of the ERP solution.
Section 1:
Prelude to Procurement
In the early stages of a potential enterprise resource planning (ERP) project, SIs often find themselves at the cusp of myriad possibilities. The stages leading up to procurement are where the groundwork is laid for a successful engagement. The narrative between SIs and their potential clients begins to unfold here, amidst a plethora of documents, meetings and analyses.
- Delving into Documentation
The initial endeavour of the SI is to meticulously review the request for proposal (RFP) or invitation to tender (ITT) forwarded by the client. These documents are a window into the client’s expectations, outlining the scope of the project and the desired business outcomes the ERP solution should help the client support. It aims to provide the SI with a clearer and more holistic understanding of the task at hand. One of the pertinent aspects that requires the SI’s keen attention is compliance with industry-specific regulations. For instance, while engaging with a healthcare sector client, understanding the stringent compliance with the Health Insurance Portability and Accountability Act (HIPAA) regulations is paramount. Legal and industry compliance not only shapes the technical architecture of the solution but also dictates the data management and security protocols that need to be adhered to. - The Preliminary Engagement
Bidders’ meetings and preliminary discussions with the client are the communication mechanisms to explore mutual understanding of expectations and the degree to which they are clearly articulated. These engagements are crucial as they provide SIs with a real-world insight into the client’s operational environment, the challenges they face and the objectives they aim to achieve with the ERP solution. The SI’s endeavour here is to listen, understand and ask. The right questions, asked at the right time, can unveil a plethora of valuable information which is often not explicitly documented, or where it is available, key nuances are frequently missing in the RFP. Clients often assume that the new solution will support current operations (even if they are moving into a new target operating model) and introduce additional capabilities, so the SI asking the ‘right questions’ to uncover these client assumptions is really critical. This dialogue also sets the stage for a transparent and open communication channel with the client, which is imperative for the success of the project. - Market Analysis and Risk Identification
Simultaneously, if an SI discovers from the client, or other sources, about competing SIs being considered for the tender, they will often conduct a thorough market analysis to understand the competitive landscape. It’s not just about who the SI’s competitors are, but also about the prevailing pricing models, the latest technological advancements in the ERP domain and the general market trends. This understanding aids the SI in positioning its proposal competitively while ensuring it is technologically sound and perceived as future-proof. Indeed, the concept of ‘future-proofing’ remains a critical consideration. Identifying potential risks and challenges associated with the project at this stage is crucial. It aids the SI in understanding the magnitude and complexity of the project. Every project has its unique set of challenges, be it an unusual operational process, incisive management reporting, integration with legacy systems, data migration or user training, which in itself, may unexpectedly identify potential user resistance to business change. Early identification of these challenges provides the SI with a clear picture of the internal technical and stakeholder/facilitation resources and expertise required, thus enabling a more accurate estimation of costs and timelines.
In the prelude to the procurement phase, laying a solid foundation is essential for the project’s success. As a strategic supplier, the SI’s objective is to align their understanding, resources and strategies meticulously with the client’s vision, ensuring that the roadmap to a successful ERP implementation is well-charted.
Section 2:
Bridging the Understanding Gap
For an SI leading this type of project, to move from a basic understanding (gained in the steps leading up to the procurement stage) to a detailed knowledge of the project’s complexities, is like crossing a chasm. This shift is only made possible by carefully planning and carrying out activities that deeply explore what the project needs and expects.
- Initiating Client Engagements
The initiation of this phase is marked by establishing a dedicated team tasked with unravelling the intricacies of the project. The first step is to engage with the client’s stakeholders through workshops and interviews. These engagements serve as critical forums for refining and honing an understanding of the client’s requirements. The dialogue fostered during these interactions is invaluable. It provides a glimpse into the existing operational workflows, the pain points experienced by the client, the expectations from the new ERP solution and how it will support the client teams using it to operate much more effectively. The observations and insights garnered here help to inform the design and development of a solution aligned to meet the client’s needs. - Review of Existing Systems
A significant part of this stage is to delve into the existing systems and processes. The existing technological landscape within the client’s organisation is critical to understand and navigate. The (potential) interoperability between the new ERP solution and the existing systems, the data migration requirements, and the potential need for custom-developed interfaces are aspects that significantly influence the project’s scope and cost. For instance, a manufacturing client with legacy systems (such as a product design CAD solution) that they need to retain to support complex design and product build solutions, might present a complex integration scenario. Understanding the architecture, data structures and operational nuances of these systems is imperative to achieve a seamless integration with the new ERP solution. - Data Quality Assessment
The quality of historical data that requires both migration and potential ongoing integration to the new ERP system is a critical aspect. Poor data quality often leads to inaccurate operational processing, along with poor reporting and misinformed decision-making, post-implementation. For example, a retail client with years of sales data scattered across disparate systems will often require a significant effort in data cleaning and transformation. Understanding the extent of this requirement early on is crucial for accurate cost estimation and planning the data migration strategy. - Aligning with Success Factors
Establishing a clear understanding of the project’s key success factors and critical performance indicators is pivotal. The SI’s approach and strategy must align with the client’s vision of success. Whether it’s improving operational efficiency, ensuring regulatory compliance or enhancing customer satisfaction, having a clear vision of the desired outcomes guides the solution configuration process.
Section 3:
The Configuration (and potentially, Customisation) Conundrum
Embarking upon the design and configuration phase of the solution, the SI encounters the consideration of ‘adopt’ versus ‘adapt’. And with ‘adapt’, whether it becomes ‘configuration’ (altering existing parameters within the solution to help align it to work more effectively for the client) or ‘customisation’ (changing the actual coding of the solution which creates a ‘unique’ aspect of the product).
This stage is where the theoretical understanding cultivated during previous engagements begins to morph into tangible solutions. The spectrum of configuration stretches from minor adjustments of existing templates of ERP modules to customisation (the creation of entirely bespoke solutions), each point on this spectrum laden with its unique set of considerations and implications.
- Unveiling Configuration or Customisation Needs
The SIs begin this phase by determining the necessary scope of configuration and/or customisation required to meet the client’s unique operational needs and industry-specific compliance requirements. This exploration is often a collaborative venture with the client, where workshops and iterative discussions play a pivotal role in refining the SI’s understanding of the configuration or customisation extent. For instance and at a simpler level, when engaging with a financial sector client, the requirement for customised financial reporting and analytics modules may emerge. The technical, functional and regulatory considerations surrounding such custom developments necessitate a thorough examination to ensure alignment with the client’s expectations and compliance standards. - Estimating the Configuration or Customisation Extent
This process involves progressively uncovering the project’s complexities layer by layer, each contributing to a greater understanding of the project scope, cost and timeline. The SI’s objective is to delve into the details, examining the data structures, workflows, user interfaces and integration points that would determine the degree of configuration and/or customisation. The complexity here often stretches beyond the technical realm, entering the domain of user experience, business process analysis, training and change management. A meticulous examination of these aspects by the SI is essential to ensure that the configured and/or customised solution is not only technically sound but also user-friendly, easily adoptable and conducive to the client’s operational environment. - Addressing Integration Complexity
Customisation (as opposed to ‘configuration’) introduces additional integration complexities. The more the bespoke system deviates from the standard ERP solution, the more intricate the integration landscape and the ongoing maintenance of that integration landscape becomes. The SI’s strategy here ‘should’ be to envisage the integration scenario holistically, understanding the interoperability between the customised ERP solution and the existing systems, third-party applications and data repositories. For instance, an e-commerce client requiring integration with multiple existing platforms and payment gateways presents a scenario replete with complex integration challenges. Each integration point is a potential source of data silos, operational bottlenecks and technical glitches, necessitating a well-architected integration strategy. - Balancing Configuration and/or Customisation with Cost Efficiency
Striking a balance between configuration or customisation and cost-efficiency is crucial to the SI being able to deliver tangible value and enhance operational efficiency without exceeding the client’s budgetary constraints.
Section 4:
Accurate Cost Estimation – The Linchpin
Accurate cost estimation is pivotal. It is the linchpin that holds the fabric of trust between the SI and the client. The journey towards providing a precise cost estimation is interspersed with meticulous analysis, dialogue and a deep understanding of both visible and concealed project facets.
- Resource Availability and Cost
The cornerstone of accurate cost estimation is a comprehensive understanding of both the SI and internal client resources required. This encompasses not just the technical resources but also the human capital necessary to steer the project towards success. It’s important for the SI to have clear visibility and understanding of the level of expertise the client expects to depend on throughout the project. One of the simpler examples of this is a project requiring specialised SI skills in a particular ERP module. It will mandate a thorough analysis of the availability and cost of such expertise. The cost dynamics of engaging experts from an SI, training existing personnel or hiring new talent are aspects that need to be meticulously evaluated. The objective here is to ensure that the requisite skills are available at the right time, without exorbitantly escalating the project’s cost. - Client’s Future Plans
When estimating costs, the SI should look not just at the project’s immediate requirements, but also at the client’s future plans and how they may impact the ERP solution, such as scaling operations, entering new markets or adopting new business models. For instance, a client planning to expand operations to new geographical locations, or perhaps a merger or acquisition of another organisation, presents a scenario where the ERP system needs to be scalable and adaptable to potentially diverse regulatory and operational landscapes. Understanding these future plans early on enables the SI to both evaluate and design a solution that’s not just fit for the present but also adaptable to the future, thus providing a longer-term value proposition. - Mechanism for Managing Changes in Scope
Given the dynamic nature of ERP implementations, SIs must establish robust mechanisms to manage and adapt to inevitable scope changes while maintaining project integrity and budgetary control. A structured approach towards managing scope changes, with clear protocols for cost estimation, approval and implementation of such changes, ensures that the project remains on track both financially and operationally. It also fosters a transparent dialogue with the client regarding the financial implications of those scope changes, thus maintaining a harmonious client–SI relationship. Note that if the SI is formally contracted to complete a detailed due diligence exercise, pre-implementation, the resulting configuration/customisation blueprint delivered should identify in advance, the scope, risk and costs, thus facilitating clear transparency over the implementation resourcing (from both an SI and client perspective), costs and time frame. It also allows the SI to more appropriately discharge its ‘expert responsibilities’ and its ‘duty to warn’ obligations as it will be better informed as to your expectations.
- Liability and Risk Sharing
The dialogue regarding liability and risk-sharing is a crucial aspect of cost estimation. Understanding the client’s stance on liability, risk-sharing and how unforeseen expenses will be handled is imperative. It provides a clear picture of the financial boundaries within which the project needs to operate, thus avoiding any future disputes and ensuring a smooth financial workflow throughout the project’s lifecycle.
Section 5:
The Implementation Considerations
At the implementation stage, the SI often faces a situation full of potential, yet strewn with challenges. The blueprint, meticulously crafted during the earlier phases, now seeks manifestation into a tangible, operational ERP solution. The path is laden with technical intricacies, operational considerations and the ever-evolving dynamics of client expectations.
- Project Initiation and Setting up
The inception of the implementation phase is marked by an effective project initiation. Aligning the resources, setting up the development and testing environments and establishing clear communication channels with the client should be the SI’s initial endeavours. This setting up phase is crucial as it sets the tone for the implementation journey, ensuring that all elements of the project are aligned correctly. - Data Migration
The migration of historical data into the new ERP system is often a Herculean task. The quality and consistency of data, the mapping of data fields and the transformation required to align the data with the new system’s requirements are aspects that demand meticulous attention. These factors should all have ideally been identified during pre-implementation scoping/blueprinting. For instance, the challenge of migrating years of disorganised sales data for a retail client necessitates a robust data cleaning and transformation strategy. The objective is to ensure that the data migrated is accurate, consistent and conducive to insightful reporting and analysis in the new system. - Configuration, Customisation and Integration
The foundation of the implementation phase is the configuration, customisation (where the alternative cannot be avoided) and integration of the ERP system to align with the client’s unique operational landscape. Again, the key elements of configuration and/or customisation should all have ideally been identified during pre-implementation scoping/blueprinting. For instance, the integration complexity for an e-commerce client, requiring seamless interoperability between the ERP system and multiple existing e-commerce platforms is a key foundation of both technical capability and meticulous testing to ensure a smooth flow of data and operations. - User Testing and Quality Assurance
While the SI is responsible for testing for configuration and/or customisation bugs and defects, the user testing phase is where the ERP solution is assessed against real-world client scenarios. The SI’s approach here should be to design an appropriate user testing process that meets the operational objectives of the client. While the SI will usually solicit client input into the user testing approach, it should be for the SI to advise the client on how the testing process will be designed to correctly validate the degree to which the solution is meeting their requirements. In turn, the SI should provide ‘on the shoulder’ support to sit with the client while engaging in rigorous user testing, encompassing functional, performance and operational process testing. As the SI is the specialist in its own solution, while it should seek input from the client, it should only be the SI that can realistically establish clear acceptance criteria and success metrics in its role as a strategic partner to the client. This is pivotal to ensuring that the testing phase is objective, thorough and aligned with the client’s expectations. - Deployment and Go-Live
Going live is a testament to the months (sometimes years, subject to the scale of the project) of meticulous planning, development and testing. The SI’s objective is to ensure a smooth transition with minimal disruption to the client’s operations. - Post-Deployment Support
The echo of the ‘go-live’ milestone resonates through the post-deployment support phase. The SI’s engagement here encompasses addressing any teething issues, providing training and support to the users and ensuring the system is optimised for performance. For instance, extended support for a client requiring system optimisation and user training ensures that the ERP system is not just operational, but is delivering the envisaged value, thus fostering a long-term relationship with the client.
Conclusion:
Harnessing Strategic Insights for ERP Tendering Success
ERP tendering unveils a complex yet structured journey, highlighting the necessity for deeper dialogue between SIs and potential clients both leading up to and including the procurement phase, but also into the pre-implementation phase during the SI’s due diligence process. Success in ERP projects hinges not merely on technical acumen but on a well-nurtured understanding between the client and the SI, particularly in grasping nuances through dialogue that can inadvertently go unchecked.
A key takeaway is the imperative for SIs to transition from merely responding to explicit requirements to actively delving deeper, unveiling layers of critical information that can significantly influence the project’s trajectory. This extends beyond mere solution delivery, positioning the SI as a strategic partner thoroughly vested in the client’s success, thus fostering a clear alignment that propels the project towards not just meeting, but surpassing expectations. It is about the SI appropriately discharging its expert responsibilities and its duty to warn as an ERP specialist in its field.
The discussion also sheds light on the delicate balance between configuration and customisation, illuminating the importance of ensuring the ERP solution is tailored to meet the unique operational landscape of the client without escalating costs or complexities.
The journey through ERP tendering and implementation isn’t merely a transactional engagement but a strategic venture. It opens up the opportunity for long-term partnerships, where each engagement is meticulously crafted to ensure a seamless alignment with the client’s vision, operational needs and future growth. This narrative offers a robust framework for SIs and clients, promoting a culture of open communication, mutual understanding and strategic partnership, vital for navigating the intricacies of ERP implementations successfully.
