Top 5 Reasons to Hire an ERP Consultant

Updated: May 05, 2009

Issue Summary

With budget cuts sweeping across many of the nation's IT departments, the thought of adding a high-priced ERP consultant to your payroll is a daunting prospect for most businesses today. What many companies fail to realize, however, is that the right ERP consultant can minimize ERP risk, accelerate the deployment process and increase the success and value of your ERP undertakings.

That's because ERP consultants are more than just highly skilled third-party providers. They also have an in-depth understanding of how to structure, upgrade and monitor a company's ERP system to ensure that it runs smoothly and reliably.

Still not convinced? Here are the top five reasons you should consider hiring an ERP consultant to help with the ERP selection and implementation process.

Considerations

1. Making sense of the complex: With its complex interfaces, layers of configuration and robust capabilities, an ERP system can be a beast to implement. Just ask trash-disposal heavyweight Waste Management who, last year, filed a lawsuit against ERP provider SAP for $100 million to cover the cost of its failed ERP implementation. And then there's the case of consumer goods giant Nestlé who committed six long years and $200 million to its ERP implementation.

"ERP systems are pretty complicated, especially the high-end ones," warned Paul Hamerman, a research analyst with Forrester Research. "Companies need the expertise of people that have done it before to really help accelerate a project and get the system up and running sooner."

2. High-speed deployments: Unfortunately, multiyear deployments aren't exactly unheard of when it comes to ERP technology. However, Hamerman said that, "By bringing in outside resources that have experience with ERP software, the job can get done quicker."

What's more, there are a number of distinct skills that are required to properly implement an ERP system. As a result, not only can a highly skilled consultant get the ball rolling faster but he or she can save a company the time and energy needed to locate those specific skills in-house.

3. Spending money to cut costs: An ERP vendor may try to convince you to retain its IT consulting services, but think twice before signing on the dotted line. For starters, warned Hamerman, "The vendor has the brand name of the product and tends to command higher rates, but that doesn't necessarily mean it has better skills to implement the system. Sure, the vendor will argue that it has an advantage, but I don't really see it. Companies are just as well off with third-party firms."

According to Eric Kimberling, president of Panorama Consulting Group in Denver, an ERP consultant can also help you save money in ways a vendor can't. That's because outside consultants are often able to negotiate a lower product rate for their clients during the software selection process. "We will generally save our clients four to five times our fees just in negotiating with the vendor," said Kimberling. "It's all about knowing what levers to pull, how they make their money and knowing what other clients are paying for the system."

4. An objective opinion: The vendor's account rep and your IT people may be singing the praises of an ERP system, but it never hurts to hear an objective opinion. "Having an independent set of eyes that knows the industry well and specializes in the ERP space can be very valuable," said Kimberling.

But not any old consultant will do. Warned Kimberling, "It's important to have someone who's not in bed with any of the software vendors, because you want to find the software that's right for you — not the one that the consultant is getting the kickback on."

5. No more blame game: You're bound to encounter a few bumps along the road to a complete ERP implementation — hiccups that can lead to vicious finger-pointing among IT leaders, techies and C-level executives. Handing an ERP implementation over to a third-party provider, however, reduces the risk of blame-game theatrics.

The Bottom Line

Hiring an ERP consultant may seem like an expensive decision, but it might help you keep costs down in the long-run. Consultants can help your business implement an ERP efficiently and successfully. Moreover, your IT staff and other employees can focus on their primary responsibilities.

Before hiring a consultant, however, make sure you find someone that can best meet your company's unique needs. Ask the right questions when interviewing candidates, and check up on their references. You don't want to be stuck with someone that can't deliver on their promises.

For more on the ERP selection an implementation process, consult Focus' Market Primer: ERP Systems, Buyer's Guide: ERP Systems and Comparison Guide: Midmarket ERP Solutions; pose a question to an ERP expert in the Operations Group; or read a piece of community research.

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