A chief information officer (CIO) is an increasingly important role in this technological age. Every company uses technology is one way or another, and CIOs are responsible for, among other things, the acquisition and implementation of new technology. ERP software is a major investment, and most CIOs will spend quite a bit of time dealing with vendors before making a purchasing decision. But in the world of ERP software, vendors still clearly have the upper hand.
There is no easy way to make a good purchasing decision when it comes to an investment as significant as enterprise resource planning (ERP) software. As such, a CIO must be aware of the hidden fees, unusual licensing models, and other shifty contract terms that some vendors may employ. According to the Wall Street Journal CIO Report, there are several ways in which vendors still outsmart CIOs.
Internal disunity
Think of going into an ERP purchase as going into battle. Then, imagine that half of your army is following one strategy, and the other half has adopted another. When all of your people are not on the same page, vendors can attack you from your weakest point, and before you realize it, you have overpaid for an ERP system that is not really what you want. You have to know what you want, and that requires a cohesive unit and a unified front.
Miscalculated assessment
Sometimes it is easy to forget the type of machine you are dealing with in ERP vendors. This is all they do, every day, all day. They are highly trained professionals who are in the business of making a sale at any cost. If you underestimate their ability to sell their products, even if they are substandard, you might find yourself on the bad end of a deal.
Extra costs
You are already going to pay a lot for your ERP system. Do not let the vendor rope you into outrageously high costs for support and maintenance. If it sounds unreasonable, it probably is. In that case, do not sign the dotted line if you cannot get the support you need for an affordable price.
Confusing licensing
Licensing models are rarely as straightforward as the vendor initially makes them seem. While an ERP system may be advertised as X amount of dollars per user or even at a flat fee, there are often numerous hidden costs and other expenses involved. Moreover, many of the new cloud models may differ dramatically from the types of licensing you have used in the past. Study your licensing options carefully and be suspicious of gray areas that are not clearly explained to you.
Not all ERP software vendors are evil, but all of them will do their best to try to sell you their product. That is their job. Your job as CIO is to look beyond the sales pitch and decide if the product the vendor is actually selling is the best fit for your organization. If you plan well and use your best judgment, you could end up saving your company thousands or even millions.
Looking for an ERP software platform? Download our free Top 20 ERP Software comparison report to learn about top ERP systems. If you want more tips on selecting and buying an ERP solution, browse the articles section of our enterprise resource planning research center page.