How to Negotiate and Purchase Your ERP System

ERP Negotiations Explained

There are many sources of information on how to select and implement software, but there is little information on how to negotiate and make the purchase of the software. The uninformed can spend thousands of dollars more than they need too by walking into ERP negotiations unprepared. Those that know the “tricks” of the trade can save themselves enough to pay for several modules or a good chunk of the implementation costs.

The first thing in ERP Negotiations to keep in mind is timing. When you buy the system timing is key. As this article is being written, the clock is ticking down to the end of the year. This is an opportune time to purchase a system. Even more advantageous is making the purchase at the end of the software vendor’s fiscal year. Vendors are hungry for the deal. The need to make the numbers for the year. They want to do whatever it takes to boost their sales figures and show a successful quarter. Actually, any quarter end will do, but year end is the time when bonuses are given and certain sales incentives are taunting the software salesperson.

The next thing to do in ERP Negotiations is to keep your options open. Even if you find the best whizzbang system that does exactly what you need, there are probably several systems that will work for you. Keeping your options open and communicating that to the salesperson will only make them work harder for the deal. Even if you know you will buy their software, let them know how much better or cheaper the competition is. Give them a reason to work for the deal.

ERP Negotiations around software pricing

When negotiating software pricing, keep in mind that you may not need all of the licenses up front. You can delay purchasing the entire suite of user seats until you are ready to go live. Get enough to cover your testing and implementation phases and be sure to lock in the pricing for a year or for the planned duration of the implementation.

Don’t forget that the implementation and how it will occur is negotiable. The terms of payment are negotiable. Who will be on the project from the vendor’s side is also a point of discussion and can be changed. There are many things that you can plan out and ask of the software provider or reseller.

Considerations for ERP Negotiations

Remember that most everything is negotiable. Software price, implementation rates, duration, and sometimes even annual maintenance contracts (those these are usually the most difficult). Perhaps negotiating when the maintenance begins will be possible. If you are splitting the user seats, have the maintenance pro-rated during the implementation phase.

Unlike the year 2000 preparations, there usually isn’t an absolute deadline as to when you need to purchase, so if you must, hold off for a month or two, if it is to your advantage. Or, tell the salesperson that you plan on doing so, so what can he/she do now?

Properly planned, the negotiation will more than pay for the time spent doing it correctly. Following the vendor’s lead will lead you to an overpriced system. Keep the money in your company’s bank, not the software company’s. Some negotiation strategies will work and some will not. The key is to remember that you are driving the sale. Get what you want at the price and terms that is fair to you.

Additional resources:
http://www.managingautomation.com/maonline/channel/exclusive/read/4063236

http://dealarchitect.typepad.com/deal_architect/enterprise_software_negotiationsbest_practices/index.html

File as: ERP Negotiations

SugarCRM Boosts Workflow, Reporting Tools in 4.0 Edition

New workflow, reporting and customizable dashboards are among the new features that SugarCRM Inc. is adding to the version 4.0 of its open-source Sugar Suite customer relationship management product due for release on Dec. 16.

The new version will include a business rules-based workflow management system designed to ensure the sales personnel and sales managers follow up promptly on important opportunities, said John Roberts, SugarCRM CEO. SugarCRM Boosts Workflow, Reporting Tools in 4.0 Edition

New ERP Bookstore

In association with Amazon.com, ERPandmore.com now has a complete bookstore to assist you in finding ERP, CRM, PLM, or other software/process books. To access this new store, please click on “books” at the top right of the page. We hope you find this to be a valuable part of the site.

Managing Project Risks (Part 1): Don’t Be Snared by These 6 Common Traps

Copyright 2005 Adele Sommers

When your enterprise decides to undertake a new endeavor —
whether it’s designing a new training program, planning a
new service, or revamping an existing product — this
endeavor is called a project. It involves people, funding,
resources, schedules, requirements, testing, fine tuning,
and deployment, plus a host of other activities.

You may have seen this phenomenon by now: projects are risk
magnets. Why is that? Continue reading Managing Project Risks (Part 1): Don’t Be Snared by These 6 Common Traps

SSA Global’s™ – Users conference highlights future of ERP

VENDORS continue to disappear from the turbulent world of ERP software, but the message to manufacturers is not to fret, but take heart from the consolidation.

While manufacturers with ERP systems may feel uneasy about this unrest, SSA Global’s CEO Mike Greenough says it is exactly what the software market needed after a boom built on post-Y2K excesses.

Speaking at the company’s global client forum held in Florida earlier this year, he said there were so many ineffective software providers out there that it was a broken industry”.

SSA Global’™s – Users conference highlights future of ERP

Feature – Lean-Enabled ERP

The old equation of part cost plus profit equals selling price is no longer accurate. Rather, a fixed or decreasing price less part cost yields profit. If manufacturers want to increase profits under this equation, controlling cost is key.

Increasingly, discrete manufacturers with blanket annual volumes are turning to lean-enabled concepts in an attempt to reduce waste (thus costs) to improve profitability. Some, however, have missed an important point: Lean manufacturing is not limited to waste reduction within pure manufacturing processes. It should also include all supporting activities, such as supporting ERP software. The entire organization should focus on eliminating inefficiencies wherever they occur, while continually improving quality.

The Japanese call waste Muda, which is defined as the opposite of value. Training employees to recognize and eliminate Muda can lead to reduced costs and, thus, improved profits.

There are eight types of Muda, motions that contain no value: motion, waiting, conveyance, correction, over-processing, overproduction, inventory and knowledge. (See sidebar) The goal is to eliminate activities that do not add value.
Read more at:
Feature – Lean-Enabled ERP

Lean Manufacturing Through Factory Floor Innovation

Taking the concepts of the Toyota System and enhancing them with todays information systems technology has been the key to allow some manufacturers to unlock the door that leads to a short-cut in process improvement projects. They are rethinking the good ideas of lean manufacturing and are using todays factory floor information tools to quickly and easily improve factory floor performance, customer responsiveness and their bottom line.

Process improvement through a leaner approach and finite scheduling for the factory floor can be demonstrated in a number of ways: Continue reading Lean Manufacturing Through Factory Floor Innovation

The Skinny on RFID

by John Hanson

RFID is the abbreviation for Radio Frequency Identification. RFID is a method used to store and retrieve data using RFID transponders or tags. RFID tags have antennas that allow them to accept and respond to queries from the RFID transceiver. There are passive and active RFID tags. The difference between the two is that passive tags do not need an internal power source, but active tags do. RFID technology is already used in many technologies today. The future of RFID technology seems Continue reading The Skinny on RFID