Facing the new challenges in ERP procurements in the cloud 

February, 2022 - Nicolai Halbo

The word on the street is that everybody wants an ERP system, but no one wants to use it. Or rather, no one will use it the way it has been set up as a standard solution. People in general do not like changes. Therefore, the ERP system must first be adapted so that the organisation can work in the same way as it did before. Only then will the organisation be willing to use it.


Present ERP systems are better and more mature compared to the ERP systems only a few years ago. Normally there is nothing wrong with the systems as such; the processes function all the way, end to end. Accordingly, this is not where you should put your focus with regard to the procurement. Focus should be put on the solution’s ability to meet the Customer’s requirements. The solution must also meet the regulatory requirements for the sector in which the customer operates.


Today, the market offers multi-tenant SaaS ERP solutions (one specific software version with appurtenant Infrastructure delivered to a number of customers). This is what the Customers must and shall have. However, the customer will have less latitude and it requires more standardisation.


The challenge is that the customer must adapt to the ERP system, and not vice versa. This puts new demands on the customer with regard to successfully electing an ERP solution. The customer must study the systems and find the most appropriate alternative considering the sector in which the customer operates. Even more so, today EPR systems are business systems. ERP is no longer the domain of the IT department. It is decisive that the customer has given thorough thought to its present and future business opportunities and needs. The customer must know its goals, its strategies and level of ambition. Focus must be put on business development and not the «classical» ERP development.


Therefore, it is decisive that the customer spends some time on electing technology. The customer must be open to listen and spend time when it comes to the election of a solution until they have sufficient knowledge of the relevant solutions and can determine which solution is most appropriate for their sector and their needs. In this process it will be important that the customer does not commit itself with implementation partners or technology providers too early. The customer must be transparent and communicate that they do not know what they need or are looking for, and that they need help from the market in understanding what would be the right choice. This transparency is also important in order to avoid conflicts and misunderstandings with market operators. The customer should focus on having the market operators demonstrating what they have and how it is fit for the customers sector and needs, rather than spending time on describing their «as-is» situation.


Technology providers of multi-tenant SaaS ERP solutions will normally require a lock-in period of at least three years, without any opportunity of scaling down the volume. This, in addition to own efforts, makes choosing the wrong technology a costly business.


Concerning election of the implementation partner, it is important to include mechanisms in the agreement that gives the customer the necessary time and flexibility required to learn to understand the solution, and to change the way of working. The customer must spend time on studying the mechanisms to be used for the implementation of the solution, so that he can keep up with the pace of the provider. It is easy to underestimate the time required from receipt of information until the understanding of consequences has gained a foothold.


 


This article was first published in the Norwegian Business paper Finansavisen. 


 



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