Go to Top

Replacing a Working ERP without knowing Why — A Costly Lesson in Wasteful Expenditure.

I was told of a strange story by a friend a day back. Let me share it with my readers. Purpose of sharing this is to caution clients and vendors both to put in a little more effort in purchase/sale of a software that can have huge impact on the operations of a client.

A client had been using an ERP for nearly 5-6 years. The ERP had been customized to take care of all the critical issues very well and running smoothly.  Then, one day, the top management team realized that it had grown very big during the intervening years and also had commenced playing at global level. It couldn’t be seen using an Indian ERP.

So, it decided to change the ERP, egged on by a new addition in mid management who had worked on a Big MNC ERP. Search and mapping for a new ERP began in right earnest. When the estimates were presented, the cost was found to be very high and not to the company’s taste.

What next? The Company decided to go for a good BI tool that could integrate its data from three sources – smaller software in overseas branch, some data from a local accounting software in smaller branches, some data on xls and main data from legacy ERP. Again it found that cost was prohibitive, considering its user numbers. This idea was abandoned too.

And finally, the organization went for a mid-segment MNC ERP, since top management had decided that ERP would change, rather than talk to the original vendor to see if it could offer the desired results for global data integration.  This was done probably as top management thought they couldn’t spend time on such a minor investment, overlooking the investment in human resources, time and MIS controls built assiduously earlier.

Vendor of this mid-segment ERP seemed to have somehow convinced the management that it could be provided all the data – to be mined and integrated by client team itself – in xls format. This would be imported into the new ERP and key financial reports like receivable/payable/IFRS reporting etc. could be generated. Viola! Right Sir!!

Nobody explained the management team that integrating disparate data from disparate sources, with different data structures and softwares won’t exactly be a cake walk. Thus, success of millions of Rupees of investment would depend on the user team which earlier depended on legacy ERP vendor to provide reports; not on the new vendor who had convinced them of this idea. I am quite sure that this vendor would be sure that client team would not have right skills to achieve this manual integration. Being in the industry for over 3 decades, my guess is that the sales team had bet high that they could convince the client later to move into the new ERP fully; discounting the turmoil that the user teams would go through, in the process.

It is already a month and nobody knows how this dream integration and MIS will be delivered.

I feel sad for the client who has invested millions on an untested idea without anyProof of Concept; without taking legacy ERP vendor into confidence. I feel upset with the new ERP vendor because it is a typical example of sales over integrity. This is the reason why software and other IT vendors score poorly on client perception on assurance in pre-sales meetings vs delivery.

While one can take a sympathetic view of the customer who wishes to upgrade and slipped up a bit under false notion of confidentiality, once cannot absolve the new vendor of guilt of selling a client something different from what the client understood.

I wish, clients, especially those who can afford and those who don’t have time to do technical evaluations choose a consultant for their organization who can guide them through their ideas. Spending millions on a hunch or hope is not the right strategy.

About the Author:

Ratan Sharda is Chief Consultant with Eastern Software Systems (ESS) and has been associated with ESS for 10+ years. He has a rich industry experience of 33+ years of which 21+ years have been in IT. He is a Post Graduate Alumini of St. Xavier’s College, Mumbai and has written and edited several books on social and management topics. To check his LinkedIn Profile, please click here and to connect with him on Facebook, please click here