9 ways to manage your SI relationship for ERP project Success
I have worked for large Systems Integrators (SIs) for most of my career and for much of that time I’ve been fortunate enough to work with wonderful customers and have achieved amazing things.
I’m not anti-SI. There are lots of good reasons to bring in a Systems Integrator on a major project. They will bring knowledge, experience, skills that you don't have, relationships with other service providers that you can benefit from, and above all they will probably give you a better chance of succeeding with your plans than if you try and go it alone.
Select a partner that brings all these benefits to the table and they will help you to accelerate your plans, reduce many of the risks typically associated with major projects, and allow you to do things that you can’t do on your own.
What’s the cost of working with a systems integrator on your next ERP, SAP or S/4HANA project?
SIs are not cheap. They are providing a premium service to customers who need their help. The last time I looked, none of them are registered charities. They are in business to make a profit.
The trick to a successful partnership with an SI is to build a relationship that delivers mutual benefit. If things are weighted too far in one party's favour, no one will benefit long term. Understand that your supplier is entitled to make a reasonable profit just as you are entitled to expect value for money. Don’t see your job as beating down your supplier on cost or beating them up about delivery. Your job is to deliver a successful outcome for your business and that is as much about you being a good customer as them being a good supplier.
Treat your suppliers as partners. Be clear and transparent in what you are trying to achieve and work together. A good customer should understand their contract and be clear on their own deliverables and obligations and be just as strict in holding their own organisation to account.
Of course, you should also hold your supplier to account and be wise to sharp practices. An SI with revenue and profit targets may be tempted to behave in certain ways. Be aware of this but recognise that a contract with the right amount of tension between parties — one that allows the supplier to make a reasonable profit — will be one where they are less tempted to try and exploit you.
One of the biggest compliments someone ever gave me was that I wasn’t typical of the type of person that they normally met from my company. What I think they meant by this, or at least what I took from it, was that I was showing a genuine interest in the success of their business rather than looking solely at ways that I or my employer could profit. This didn’t always deliver the best outcome for my employer in the short term, but it did help to build a trusted relationship with the customer and deliver mutual benefit in the long term.
Whether you are new to working with SIs or have worked with them in the past, you will come across areas where they look to gain in the short term or protect themselves at your expense. Here are 9 areas to watch that may help to ensure you are not paying more than you need to.
1. Make sure that your Systems Integrator has the Niche ERP skills they’re promising
Will your SI be learning on the job?
If you are paying a premium for someone’s knowledge and experience, make sure they possess it. This applies equally to individual resources and to the supplier themselves. - you should not be paying for either of them to be learning on the job. Check that the supplier has experience with similar projects. Ask to be taken through their approach, request reference sites and talk to previous customers. Similarly, check that resources have the required skills and experience. If you are paying for a senior project manager, make sure they are suitably qualified, find out what they have done before and ask to speak to them before they start.
2. Tie your Systems Integrators to clearly measurable project deliverables and milestones
Watch out for contract traps.
This is easier said than done, but there are some areas you can check such as the commercial model, If you enter into a simple time and materials, services to assist-type contract, this can relieve the supplier of any responsibility for the outcome of the project. Ideally, you want your supplier to have ‘skin in the game’ to help to ensure they are working as hard to succeed as you are. Consider alternatives, link payment to milestones and deliverables and remove incentives for poor behaviours. It's amazing how many projects pay the same people to find and fix defects and wonder why things don't stay fixed! Take time to read and understand the contract and analyse how it will work in different situations.
3. Don’t give your Systems Integrator an excuse for late delivery
Keep yourself clean.
Talking of deliverables, it is essential that you understand what yours are. If the contract says you are responsible for something - make sure you can do it. Very often key activities such as data migration, training or testing remain the responsibility of the customer. If these are running late or not completed they can have an impact on partners activities and will be used as the reason for their late delivery - valid or not. Once a contract is signed, analyse it thoroughly, pull out all deliverables and obligations and track their progress through the project. This is an area where an effective PMO can earn their stripes.
4. Be agile and decisive when it comes to making important ERP project decisions
Learn to make decisions quickly.
A partner may expect you to make decisions, approve contract changes or accept deliverables quickly in order to protect the schedule. Many companies are simply not set up to do this. The organisation may not be set up to drive consensus across different functions, approval processes may be time-consuming or people may be worried about the impact that making a mistake will have on their career. The enemy in this situation is perfection. Quite often perfect solutions do not exist and waiting for them can often reduce your options or force you into making poor decisions. We need to be brave, willing to make a mistake and agile enough to react to what is happening around us.
5. Make Systems Integrators responsible for knowledge transfer within their own ERP project team
Replacing Key Resources.
It is common for a contract with a supplier to include a key personnel clause. This will mean that the supplier will need to let you know if certain people are leaving, and possibly give you a say in their replacement. One thing you should watch for when this happens is that any knowledge transfer is on the suppliers time. Key Personnel are quite often the more senior, and expensive resources and you should not be paying for both during a handover.
6. Be wary of changing rates from your Systems Integrator’s employees
Promotion of Resources.
Like any other company, the employees of a Systems Integrator are likely to have a regular review of their salary and possibly their job role or grade. If people working on your project are promoted or receive a pay rise, this may mean that they cost your supplier more to employ but that should not mean that they cost you more - unless they move into a more senior role. Your contract is likely to include an inflation clause that should cover items like this.
7. Make sure you aren’t being overcharged for easily available SAP, S/4HANA or ERP skills
Does the Rate Card pass the ‘Sniff Test’?
If you enter into a contract with a systems integrator where you are paying for resources on a rate card, it is worth satisfying yourself that you are getting value for money. You may be able to compare between two suppliers and get a like-for-like comparison, you can use online sources such as IT Jobs Watch to check what skills cost on the open market or you can do a simple ‘sniff test’. A resource costing £1000 per day equates to around £220k a year. Remember that an SI is bringing more than a 'warm body' to the table and that will attract a premium but it is worth asking yourself if the cost is reasonable for the role? Especially for a common, easy to source skill that you plan to use for a sustained period.
8. Track resources time against key ERP project activities
Too much or too little detail on timesheets.
It can be difficult to know if you are getting value for money from resources if you don't know what they are doing. Timesheets can help - if they contain the right level of detail. Timesheets containing too little or meaningless information won't be of much use. Insist that your partner provide timesheets for staff with time allocated to activities within the plan. If time cannot be reconciled then you have every right to question what you are paying for.
9. Challenge the allocation of resources with no clear requirements
Are resources flexible?
One of the reasons for working with a systems integrator is to benefit from flexible resources - to have a range of skills available when you need them. If you have a resource plan with people allocated to the project even when they have nothing to do, then you do not have flexible resources. Look for simple examples in the plan such as allocation of test resources when no test activities are going on, or the types of people assigned during initiation or close down activities ‘just in case’. If you think the numbers are unreasonable, challenge them.
Getting the help you need to manage your Systems Integrator on ERP, SAP or S/4HANA projects
One other approach is to Get someone in your corner to help with all of this. The SIs skills and experience extend to understanding how to ensure that the contract is profitable and works for them. If this is new to you, you will be at a disadvantage. Consider working with a business-side partner, somebody who has done this before, who can help you identify the pitfalls early and provide the insight, expertise, and bandwidth to help you to be savvier.
If you are interested in having someone like this in your team, someone who can ask your supplier the difficult questions, someone who can raise issues without upsetting the relationship, speak to us - it’s what we do best.
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