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 able to do more than give an implementation estimate based on 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. Neither you nor the vendor wants this to happen. For the vendor, you could turn into an unhappy client who cannot be referenced, or even worse, one who wants to abandon the project.
That’s why it’s worth considering a pre-contract business needs analysis. A BNA provides the vendor with more detailed information about your environment, information 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 thorough the BNA, the lower the risk. One approach is to identify the requirements that are the most challenging and/or unique and make sure the vendors understand them 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, they would be charging for this time during the implementation anyway, and by doing the work upfront, they can integrate the risky parts into the implementation contract and 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, which includes costs, scope, roles and responsibilities of vendor and customer and timelines.
The vendors might resist – they might want to just close the deal or might be reluctant to assign resources to a client that may not sign a long-term contract. But if the risks are high, both vendor and client are protected using the BNA approach.