When choosing enterprise software, do you hire independent selection consultants?

The need to hire independent selection consultants is important is scenarios where your requirements on the surface can be satisfied by any/all vendors but require a more nuanced view to filter out vendors who cannot align on the details.

As someone who has sat on both sides of the table (as a CFO selecting and implementing, and an advisor to clients on selecting and implementing) I have to say that the pro's of utilizing an external consultant (one that has a proven process and track record and comes from a business background, not purely consulting) outway the con's.

Here are some benefits to consider: 1) an external set of eyes with a business background will be able to bring value in identifying opportunities regardless of the selection 2) an external resource can act as a gate keeper to prevent the business resources being inundated with sales calls that are purely focused on selling and add little value 3) an external person with a structured approach will be focused on the best possible solution and not the best sales team.

Bottom line, a small investment in an external resource to oversee the selection process can pay large dividends by getting the selection right the first time. Unfortunately many companies don't realize this until they are having to go through the process for a second time.

Being an ERP vendor, I have no problem with an unbiased 3rd party consultant as long as they are really unbiased. There have been instances where the playing field is not level. For instance, we experienced a situation where the consultant sent me an e-mail acknowledging our RFP submission only to be told by the CFO 2 weeks later that the consultant told him we did not respond.

Everyone has preferences, including consultants.Given that, I suggest that you ask for references on the last few ERP selections (in a similar type of business; i.e. manufacturing, software, service and industry vertical; i.e. med tech, telecommunications, green tech) performed by the consultant and see if the same ERP solution recommended was the same. Granted the particular ERP recommended may in fact be the best fit for that particular company, but having knowledge of a potential preference would be nice to have and consider.

Interesting question. My experience is that it depends on the size of the business. Larger organizations tend to take a more disciplined approach to acquiring software. Their needs are more complex, their purchases much larger, and the process takes longer.

Small and medium businesses often do not have the time, interest, or desire to make the process more difficult than it has to be. Often, they have dealt with one or two local resellers for their hardware and network elements and will turn to them for help whenever new software is needed.

It will be interesting to see how this area evolves in the future. The emergence of cloud computing is changing how IT products are purchased. Since there isn’t as much equipment on the customer site, the need for local resellers diminishes. However, these companies will still need guidance when making a new application purchase. Where will that help come from?

I am SAP biased.

Now that I have gotten that out of the way, here is my opinion:

Any company considering an ERP application purchase should absolutely consider hiring outside help from a TRULY independent source when they do not have the in house evaluation skills.

Even though I am in the SAP space I have tried to help a couple of companies make an honest and independent decision using a particular methodology called AHP (Analytical Hierarchy Protocol). It is a well structured methodology that is as close to objective as you could ever get.

In the past I have steered one company away from SAP because it was just not the right fit for them. However I don't try to do this type of consulting effort anymore.

One of my future series of posts will focus on using the AHP protocol for software or vendor selection.

I have no doubt there are lots of system integrators who are not too happy with my material but my goal is an educated customer who no longer gets RIPPED OFF!

Bill Wood
http://www.r3now.com

One of the common items in these responses is that the consultant should be independent. I agree with that position. The problem is identifying a truly independent consultant. Here are some conflicts anyone considering a consultant should verify.

1) Does the consulting firm have a systems implementation business? If yes, there may be a temptation to steer you to product(s) that they have lots of experience with or to products that they have excess trained staff who need a client gig. Integrators will often confess that they make no money on selections/evaluations while implementations are where they clean up. They'll give away the selection to get the implementation. Just make sure the product you get with that implementation is one that benefits your firm and not just the consultancy.

2) Does the consultant own stock in any of the vendors under consideration? Some integrators actually have equity stakes in the companies whose products they implement. That's a conflict of interest and one that should be criminal if not fully disclosed beforehand.

3) Some consultants are actually resellers. They get a commission for every unit of software they sell to you. This 'consultant' is actually a salesperson. They cannot be independent as they will likely only sell or recommend the product that benefits them.

4) Some consultants receive co-operative marketing monies from vendors. This scenario often has the vendor and the consultant putting some of their money into a co-operative marketing fund that both firms use for things like putting on seminars, conducting webinars, developing joint advertising, etc. No matter how well the two firms keep the money separate, there is a connection between the two firms and it is not an 'independent' relationship.

5) Specific people within a a consultancy have their own biases. They recommend one solution over others a disproportionate amount of the time. Even if no economic relationship exists between the vendor and the consultancy or consultant. This consultant is definitely biased.

6) Individual consultants may own stock in specific firms. For a truly independent consultant, find one with no equity or financial ties to any vendor.

The gold standard in an independent consultant should include:

1) Does this consultant or consultancy avoid even the appearance of impropriety? If no, drop them.

2) Does the consultant put the client's interests above their own personal interests? Do they put the client's interests above their own firm's interests? If no on either matter, drop them.

3) Would the consultant permit a third party to review their work and would the third party reach the same conclusion? If no to either, drop this consultant.