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Reduce Risk of ERP Implementation Failure: Pre-Contract Business Needs Analysis

Contract Negotiations, ERP, Software Selection

You naturally want to minimize risks and avoid cost overruns before signing a long-term contract for a new ERP system. Your prospective vendor also wants to minimize risk, but is usually not in a position to do anything other than give an implementation estimate based on lots of assumptions about scope, roles and responsibilities. These assumptions could be fairly accurate, but could also be way off, which could lead to surprises and costly change orders during the implementation.  Neither you nor the vendor want this to happen.  Wrong assumptions that lead to change orders will create frustration, friction and could lead to you being an unhappy, non-referenceable client, or even worse, one who wants to abandon the project.

Everyone would prefer to avoid this.  So we encourage you to consider a pre-contract Business Needs Analysis (“BNA”).   A BNA provides the vendor with more detailed information about your environment that it can use to firm up its understanding and provide a fixed fee for the implementation. In the absence of a BNA, this work would normally be done by the vendor during the implementation, after the contract is signed.

The more analysis done in the BNA, the lower the risk. 180 Systems’ approach to the BNA is to identify the requirements that are the most challenging and/or unique and make sure they are clearly understood by the vendors so they can figure out how to handle them in detail before the contract is finalized. Although the vendors charge for their time to complete the BNA process, it is time they would be charging during the implementation anyway, and by doing the work upfront, the risky parts of the implementation can be built into the implementation contract and therefore reduce the likelihood of surprises.

A BNA should include

  • Implementation scope linked to requirements in the RFP
  • Conceptual design with agreed upon design decisions
  • Functional specifications for any requirement requiring customization
  • Statement of Work

The vendors may resist as they would rather just close the deal or are reluctant to assign resources to a client that may not sign a long-term contract. But if the risks are high, both the vendor and the client are protected using the BNA approach.

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