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Focus Research Insight: The #1 reason ERP buyers eliminate vendors is because of a poor reputation.
In a recent study, data revealed that most buyers are eliminating ERP vendors on the basis of a bad reputation. For some, this is media-driven, or a result of headlines in the press. For others, this is a result of colleagues' testimonies against a certain company; and for even others, this the first-hand result of a painful experience in the past. How do you think vendors can handle this? When is the critical time to address reputation with prospects? As a buyer, is reputation a deal-breaker? If so, do you make up your mind before speaking with the vendor?
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5 Answers
Salespeople for each ERP vendor have to deal with their company's reputation at the beginning of the sales cycle. The reputation of the software package, however, gets built project by project and any negative momentum - such as lawsuits or stories of expensive and out-of-control implementations - serve to reinforce what buyers hear from their own personal network of sources. ERP vendors would do well to try to control these stories in the only way that is available to them, which is by providing a solution that can be implemented as promised. This is easier said than done, obviously.
The buyer, though, does not need to dig into the truth of a package's reputation, however, unless she has reason to believe that the software about which she has heard bad things is an ideal fit for her business. The real issue with a bad reputation is that these reputations all start somewhere - with a bad implementation or a series of bad projects. The question for the buyer of a package with a bad reputation is a tough one: do I want to dismiss all of these stories and choose this software knowing that my own reputation depends on the choice? Most buyers in that situation will look for an alternative that offers a good reputation, good references, and therefore some cover if the choice looks bad in hindsight.
Again, the solution for the software vendor is to attack these issues by selling to the right customers, delivering a product that works as advertised, and partnering with integration firms that can deliver the software's benefits.
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This is an interesting question. Even though the mass media doesn't follow ERP providers, more and more has come out regarding failed implementations and the tremendous effects it has had on giant corporations. This is powerful, and in a really basic sense: a red flag.
Personally, if I have suspicions or apprehensions about a provider, I try to leave some benefit of the doubt...but what I leave it to is research. I'll allow the research I do (reading articles, talking to colleauges, etc.) a chance to compel me, or exemplify otherwise.
However, if I myself have had a bad experience with a provider (this is across the board for me in terms of consumerism) it's pretty much over. Particularly if it's a support/ vendor issue (vs. a product issue), it's unlikely I'll be looking to them for continued partnership.
ERP is a particularly interesting case here though because more often than not, companies have to leverage certain components of their existing infrastructure because of (limited monetary) resources. Thus, in some cases, the vendors have your hands tied. So, if it's a matter of spending a boatload to totally exterminate the vendor you can't stand, vs. spending way less (relatively speaking) to upgrade or add on to what you already have, the cheaper option usually prevails.
Thanks for the great feedback! Jeff, that's an insightful point to have discretion between the reputation of the company and the reputation of the product itself. Perhaps they are not as interchangeable as buyers may think. I think on some level, one could argue that it's the customers (and prospects to some degree) who help dictate the reputation of the company. While it's the company itself that has more control over the reputation of its product as an appropriate and reliable deliverable, setting clear expectations for all parties involved.
In your own experience, do you find buyers have already made up their minds before they look at certain solutions? Or, do they only reach the 'reputation-evaluation' once the vendor becomes a contender or is on the shortlist?
I think that the typical ERP buyer has an idea about reputations but does not limit their field of consideration on reputation alone. I would certainly recommend that a potential buyer use more decision criteria before eliminating any vendors.
It is, however, frequent that someone in the organization has a preconceived notion about a certain solution. In these cases, the vendor has to make a strong argument about why that person's personal experience is not the norm. A person you know and trust that has had a bad experience is a powerful argument against a specific package. If one person is concerned purely based on reputation, though, the vendor still has a chance to convince the rest of the selection team.
Not to beat a dead horse, but the vendor has a much easier sales job if they focus on their reputation in the first place as has been covered above.
When an ERP vendor suffers a large project failure, we must expect the press to pick it up. In extreme cases, businesses have accused ERP vendors of causing severe economic damage as a result of failed projects.
When confronted with prospects who have heard these stories, ERP vendors should consider doing the following:
-- Explain the importance of business fit and engagement to the customer. Most ERP failures involve customer actions in addition to software vendor problems. Use the failure as an opportunity to educate the customer regarding success practices.
-- Point out that project issues can happen to any vendor and any customer. Therefore, success depends on the specifics of how vendors and customers work together. Use this as an opportunity to stress how you will engage with the customer to ensure success.
I have written almost 1000 blog posts precisely on issues related to IT project failure. You can see more at my blog at ZDNet: http://www.zdnet.com/blog/projectfailures
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