| By Karen D. Schwartz
Sometimes, A Two-Step Consulting Selection Process is Better Than One
It may seem counter intuitive to start your search for an ERP or CRM system by hiring a consultant to help choose the software, and then conduct a second search for a consultant to implement the chosen software.
Yet that's just what a number of consulting experts recommend. They claim that by avoiding this step, companies are setting themselves up to be coerced into software that's not necessarily the best fit, or that will cost them more time and money, simply because the software selection consultant has a financially vested interest in the recommended CRM or ERP system.
And it is tempting to skip this step; on average, it costs $20,000 to $40,000 for a mid-sized company to engage an independent software consultant for the software selection process, but if you think about it, that's probably only about 10% of what the entire business systems project will cost.
Scott Priestley, president of Lionshare Software Inc., says that by engaging an independent software consultant, most companies will end up saving much more than they spend. He estimates that companies typically save 30% to 40% from the initial sales quote, due to knowledge and understanding of the process, and leveraged negotiating. He gives this example:
A salesperson told Priestley's client that his company would use Microsoft FRx to handle the financial consolidations for their project. Priestley noted that Microsoft was going to discontinue the proposed FRx product, and called the salesperson on it. The salesperson acknowledged that such was the case, and that they would use Microsoft Management Reporter instead. The client accepted the switch at face value, but with a little digging, Priestley's team realized that Microsoft Management Reporter runs on SQL Server—but the solution the client was purchasing didn't. What's more, the client's company didn't have any SQL Server licenses or a server that ran SQL Server, and its IT staff didn't know much about SQL Server.
"When we added it all up, it was about a $15,000 hard cost proposition on the low end. So they just added $15k to a project that was only $200k to start with," he explains. The bigger investment was actually the additional time and skills required of the IT team to install, test, upgrade and support a piece of new technology for the life of the system. This begged the question of whether there were further omissions that needed to be flushed out.
That certainly sounds like a reason to spend some money up front to get independent knowledge and somebody with your best interests at heart. Yet despite these facts, Priestley says that on average, less than 40% of all ERP and CRM implementations use an independent selection consultant to help them with analysis, review, negotiations and final product selection.
If you're inclined to go with this model, choose your independent selection carefully. Make sure that they are completely unbiased and platform-agnostic. That means that they don't represent any software company, or receive any referrals or margin for ERP or CRM software sales.
At the same time, the consultant should have broad knowledge of the possible software products you might consider, as well as specific knowledge of your industry and how it works. For example, if your business is manufacturing plastic injectionable materials, the consultant doesn't have to have knowledge that granular, but should have experience in discrete manufacturing or engineering-to-order as well as the basic manufacturing processes your company uses. The consultant also should know enough to ask the right questions, such as "Are you experiencing bottlenecks in your quality reporting process as it relates to your operational reporting process?" If the answer is yes, the consultant will identify a pain point that should be addressed and likely factor into the software selection model.
The software selection consultant can be a great source to help create specific and measurable evaluation criteria to choose an implementation partner. They can also share guidelines and project estimates for cost and duration of the software implementation. And they should define a set of necessary skills and experience the implementation consultant should possess.
Finally, the consultant should have one ore more proven software implementation methodologies to discuss and evaluate – possibly an agile approach, a traditional phased approach or an accelerated methodology.
Advancing from one consultant to another does require the time and effort to perform two consultant selections. However, by separating the software selection consultants from the software implementation consultants, you are maximizing your opportunity to leverage the highest and best skills of both while maintaining integrity and objectivity in a project where the result will have long-term and deep implication on your company's IT investments and business processes.
Categories: CRM Consulting
Tags: CRM Consultant Selection
Author: Karen Schwartz