In the last 12 months, it has become harder and harder to engage ERP vendors. This may be an indication that ERP is in “short supply”. You ask how can this be? An ERP vendor can produce unlimited copies of its software! Yes, technically, but not practically. A software vendor is limited by its resources, both sales and implementation. Buyers beware!
In the economic downturn of the last three years, the ERP vendors have done what every other company has done, they have downsized their organization. As a result they are operating with smaller staff sizes in all parts of their business including sales and implementation. The supply of ERP software is based on the supply of sales and implementation resources in the market.
In the last year, more potential buyers have been coming into the market. This is creating a greater demand on the limited supply of resources in sales and implementation of ERP systems.
What Does this Do to the ERP Market?
Can you still buy a new system? Yes you can, but understand that the seller is now in a stronger position because they can pick and choose their opportunities. Here are some examples how this may occur:
- The sales rep from Vendor X will not return your calls! This can occur when the sales rep has so many “good” opportunities that he/she starts to ignore prospects.
- The sales rep meets with you, qualifies you, and tries to inform you that you are not a good fit! Again, the sales rep has so many other “good” opportunities that he/she can prioritize and eliminate prospects. We see this often when the buyer has a long list of vendors they are investigating and the list includes a wide range of vendors. If I am an SAP sales rep from an SAP re-seller, I have to ask if I can win this opportunity against the lower tier vendors. I have many other opportunities that have higher probability of winning.
- You have a schedule to get this vendor selection project completed, but some of the vendors cannot visit you for a demonstration for over a month. Why? The vendors have limited staff that can successfully demonstrate their product and they are in short supply. Their calendars are already booked on other opportunities.
- You have selected your vendor, signed contracts and want to get started on the implementation. You have just met the vendor’s manager of implementation services, and he/she informs you that the earliest he/she can deliver an implementation consultant for the first visit is four weeks. Then, four weeks later, the consultant is on site doing the first day’s work and he/she informs you he/she has limited availability for the next four weeks. You have just had your implementation plan impacted by two months! Why? The vendor’s implementation resource is in short supply and high demand.
All of the above are supply and demand situations. The ERP vendor will not ignore you or disappoint you on purpose. Believe me when I say they all really do want you as a client, but their ERP resources are in short supply.
What Does this All Mean for ERP buyers?
Here are some points you need to consider:
- The ERP vendors can cause the greatest delay in your project. Do not underestimate this fact in your plan that you communicate to management
- Get expert advice on which vendors you should consider. Make your long list realistic for your company size and your company’s vertical industry. Attend Ultra’s webinar on the top ERP vendors to discuss which vendors are best for your company. Do not waste your time on that are on vendors that are on the fringe.
- Keep your vendor list reasonable. How many vendors are too many? See our blog How Big is Your ERP Long List and Short List?.
- Get your independent ERP consultant involved sooner than later. This guide will help you craft an efficient ERP selection project and will help communicate it to the vendors to get their buy-in.
Once the company has committed to finding new software, everyone wants to go fast. Realize that resources from vendors are in short supply and take that into consideration in your planning.