ERP Service Contracts – Do’s and Dont’s

The Situation

Over the last couple of years, companies hit with down revenues and have a ERP or CRM system version that is old enough that it’s not longer supported, have made the decision to cancel maintenance and support until they are ready to upgrade.

I mean if your software is no longer being supported and your not going to upgrade anytime soon WHY IN THE WORLD  would you be paying thousands of dollars a year. If that’s your situation – CANCEL IT now…

The ONLY caveat I will make is that some ERP and CRM companies will threaten you.. “OK Mr or Mrs Customer, if you cancel, WHEN you renew your maintenance and support, we are going to not only hit you with a penalty, but will charge you ALL support fees that were unpaid!!!

I only have one thing to say about this… Bull S__t!.

Don’t take it…

I didn’t.  I negotiated a deal where I would cancel for one year and then renew without any penalties or back charges.

Then, dig this… I am just re upping tomorrow and it’s been 20 months (it took me a while to get the OK) AND they are more than happy to give me the SAME DEAL.

You know why?

I think you do… A lot of people have canceled and M and S revenues are WAY down!

Any here’s a little tip on when you do re up. They might tell you that they are going to give you a GREAT deal and not charge you in arrears BUT you are going to have to agree to stay on contract for 3 years and pay the first year UP FRONT.

DON’T AGREE to this. I didn’t. I negotiated and am paying quarterly. There’s a 2% surcharge, but that’s well worth it.

So in summary, don’t pay when there is not value, start paying when there is and negotiate from the beginning to the end…

Until next time ….

Rick
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ERP Upgrade – Getting the Green Light

Hi There…

So you have brainstormed with the team and agreed on your areas of weakness, where the threats are and as a result have strong agreement that to move forward with an upgrade would be a REALLY good idea…

However, the guy that signs the check is not in the room…

The next step for me was to write a detailed – Problem – Solution and Financial Impact document.

This document will provide you with a couple of things…

  • First – It really provides you with clarity and an assurance that you are doing the right thing…
  • Second – It documents in detail those critical business and systems issues for future reference.

One problem – the document was for me and other geeks… What executive would read 10 pages of techno goop – other than me and maybe you?… therein lies the problem… sometimes the boss wants the gory detail but usually he / she wants the “Executive Overview”.

Consequently you have to be prepared to provide BOTH.

So you have the gory details – Now write an Executive Overview – same format as the detail doc EXCEPT  that it’s on ONE PAGE. Also – Include a rough cut timeline – phase plan – Top level, but gives readers an idea of what comes first, second and third and a general idea of how long the project is going to take. BE conservative here. we know how these projects go, right?

If you think it will take you 2 months – it will probably take 4….

Oh, and on the financial impact part, be sure to state monthly costs (leases / financed equipment), length of commitment and total cost.

So

  • State your problem(s)
  • Your solution(s)
  • A statement of financial impact
  • And a time line

Next, I would plan to discuss the Implementation Plan Executive Overview at a regularly scheduled managers meeting, board meeting, whatever, HOWEVER,  send it out a day early, give people time to digest it. If you have “planted seeds” early, and team members have a chance to review, there might not be a lot to discuss.

That’s how it usually works for me…

As a matter of fact, I sent out the Executive Overview the night before our meeting, and on the way out of the office I stopped by the Bosses office to say goodnight. The first thing he said to me was, “Well it looks like we have put off the ERP upgrade long enough, go ahead and buy the hardware” – first phase of my plan!

Wow – that was almost effortless… Except that it had taken months of discussion with VARs and teammates, drafting and redrafting the plan, feedback and just thinking it through.

Anyway – it has worked for me on many occasions – hope it provides you with some ideas.

Please be advised that I just updated this site and I will continue to work on it. I MIGHT have lost you as a feed reader subscriber, so if you feel so inclined

Let me know what you think – drop a comment below…

Please re subscribe – spread the word about ERP Roadmap.

Happy Trails – Until next time.

Rick

WSJ – Companies Are Spending On Software (ERP)

Hi there

This article in the WSJ today highlights that companies are starting to spend on equipment and software – Firms Spend More –  Carefully…
Sorry it’s just a summary (Subscription to read the whole thing)

This is good news for those of us that need to upgrade our aging systems. It appears that organizations are realizing that their equipment and systems are aging and now is the time to make some changes.

This is BAD news for those that get the go ahead due to the fact that vendors are not as motivated to give you the deal of the decade… that was two years ago… It told you so…

At any rate, if you can get the “green light”, do it while you can and ASK FOR THE MOON… If you don’t ask for more for less – you definitely WILL NOT get it. My #### 1 rule in negotiation…

Until next time…

Rick