When deciding on a new ERP system choosing a Value-Added Reseller (VAR) as an installation partner is as important as selecting the software itself. In addition to installation services, VARs are industry specialists that often develop industry-specific programming and assist in adapting key functions of the ERP to your business. They also work with the software manufacturer to add functionality to future releases, eliminating the need for customizations.
Across industries over 50% of these major systems are not installed on time and within budget. When the implementation process has problems, we often see clients fire the first VAR, contract with a second or choose, switch to an internal team or hire a contract programming firm experienced in the base system. In one case like this, a project original quoted at 12 months took 29 months. In another case, a nine-month project ended up taking 20 months.
From a financial perspective, the longer the implementation process, the higher the VAR’s services costs passed onto you.
In terms of choosing a system, our article, 9 Mistakes to Avoid in the ERP Selection Process, will assist you in that aspect of the process. As far as VARs are concerned, here are 4 key things to consider to ensure they meet your business needs:
1. Selecting the VAR and ERP at same time
Most companies select the VAR and the ERP system at the same time. The VARs are the companies selling and demonstrating the manufacturer’s software and their services. The VAR will be helping you determine your business requirements and the fit for your company. Selecting the VAR and the software at the same time is difficult but one companies have to navigate successfully.
ERPs are installed in many industry segments including manufacturing, wholesale distribution, omnichannel, brick-and-mortar retail, ecommerce and catalog sales, to name a few. Software companies often assign a VAR an industry segment as a specialty, but that doesn’t mean if a prospect contacts them, they can’t call on the company. This industry specialization helps the manufacturer gain major market penetration and development of functionality by VARs.
Does the VAR you’re talking to have many demonstrable, referenceable installations in your market, especially ones similar in scope and nature to yours? What is their longevity in this segment? Some VARs specializing in large-scale implementations may not be interested in midmarket projects, or even if so the installed cost is likely out of reach.
2. Reference check early
Ask to interview customers in your industry that are comparable in size, both newly installed companies and long-term clients. How did they come to their decision about the software and the VAR? How well does the VAR know your industry? Did they meet their ROI, implementation and timeframe goals? How about any changes in IT organization required to support the implementation?
What subsystems of the ERP system are they using? You may find that a VAR will list a large organization as a reference, but when you reference check you may find that they have other systems such as WMS from other vendors and don’t use the ERP for warehousing. Don’t assume that just because a company is listed as a customer they use the same functionality you will use. Often VARs don’t want to allow client interviews until they know you’ve selected their system. This is an essential step in picking the best partner.
3. VAR organization and capabilities
What is the makeup of their organization? How many total employees do they have in selling, installing and supporting this ERP? How many are in management, sales and marketing, project management, are developers or in technical or support roles? How much of their annual revenue is invested in R&D?
Of course the sales and marketing personnel are not the implementation team. This means starting over with a new group of people after contract signing. After implementation, the ongoing support and software development is most important in the long term.
4. Partnerships and alliances
What software and technical alliances does the VAR have? You may have functionality requirements that the vendor’s solution does not offer. These could include a more sophisticated warehouse management system (WMS), a transportation management system (TMS), address standardization, credit processors, automation and material handling equipment (voice picking, pick to light, put to light, etc.). Relationships with the VAR and other software partners will allow for a more robust implementation.
Selecting the right VAR to implement your ERP is a long-term partnership that extends way beyond the implementation. Your VAR therefore needs to support you on an ongoing basis, especially as you look to extend ERP functionality as your company and industry grows and changes.