A story out yesterday describes an Epicor customer who is suing over a $70,000 software purchase.

Although I do not know the circumstances of this particular case – my bet is that most of these types of ERP problems start off with a free demo and free analysis.

Who is ultimately to blame if a customer purchases ERP software and subsequently (as the story infers) refuses professional implementation services.

As professional service providers do we not have a duty to first diagnose before prescribing. To coin Ed Kless’s phrase – “prescription before diagnosis is malpractice”.

In the “I can get this cheaper on the net” world this type of customer is very common and typical.

Here are their common characteristics:

- has already self diagnosed
- wants your best price based on a list they provide youi
- typically the evaluation is led by IT (biggest red flag in my experience)
- 100% your fault when ERP doesn’t run identically to MS Office

I blame whoever sells the software into these situations without requiring an advance paid analysis. Paid analysis, in my experience, is an ideal way to separate the tire kicking problem customer who may not ever be successful with an implementation. My experience says that problem customers never see a need to pay for advice.

Red flag #1, 2, 3. Three strikes you’re out.

In my opinion, those who sell into red flag problem accounts  deserve whatever they get.

Here’s Ed Kless’s observation on the need for diagnosis before prescription.

Just try going to most doctors today and self-diagnosing any ailment and asking for a prescription without being seen.

Years ago this might have worked in some instances.

Today it almost never works – except in ERP implementations.

I am not saying customers are never dysfunctional (and at least partly to blame) – just the sales process of free demo/free analysis/free price quote is.

Full Disclosure: Ed Kless works for Sage. I represent Sage products (primarily consulting). Epicor is a competitor to Sage in the ERP space. Certainly we are not independent with respect to our opinions in this space though the comments above are meant to reflect my overall observation of the state of the ERP market and not any one particular ERP vendor.

 
Group Manufacturing Services wants its money back, but Epicor says the customer erred by attempting the project on its own

There seems to be a steady stream of news related to ERP vendor Epicor (Full disclosure – I work exclusively as an independent consultant with a competitive ERP product). The latest lawsuit from Major Brands claims that Epicor over-promised and under-delivered on a $1,000,000+ software and services ERP engagement.

According to the lawsuit the initial cost of $500,000 in software licenses and $ 670,000 in services (to be provided by Epicor directly because “there’s only one throat to choke”) not only ran past the initial go-live date of  ”mid 2011″ but also doubled in price and according to the suit Epicor eventually admitted the software they’d recommended was ” not suitable for Major Brands’ needs and that it would not perform as previously represented”.

By the time Major Brands filed suit Epicor was indicating that their net version, ICE 3.0, would fix everything – but not until it was available in mid 2012.

 During the testing, the V9 software was so ill-suited for Major Brands’ needs, no invoicing or shipments were able to occur.

Two questions

1. What type of due diligence happens before a company spends $1 million on a software project? In this case it would seem as if the most that was done was some type of free demo and followup — “the company gave Epicor a detailed accounting of its business processes and transaction volumes, according to the complaint. The company also allowed Epicor personnel to “visually observe all aspects of its order entry process [so] it would understand Major Brands’ needs and requirements and the processed involved.”
2. Is the software publisher really best suited to deliver implementation services in this mid-market space? Here, according to the suit, Epicor represented that they were the best resource because there would be only “one throat to choke” if things went wrong. Ultimately for Major Brands it may turn out that Epicor was most favorable not because of a throat chokehold but deep pockets when the system doesn’t activate as they claim.

In an environment where software publishers are desperate for new sources of revenue it’s tempting to think that taking on the role of implementer is an easy road to high margin profits. And in some cases where the implementations are cut and dry that may be true. Increasingly the bulk of implementations , such as Major Brands which was replacing a 20 year old system, have some type of quirk that requires more than a free demonstration and conference room meeting to uncover.

Current best practices include a paid conference room pilot – or at least rolling out the software in test phases prior to jumping in with both feet. Companies who have stayed on software for 20 years (though Year 2000 scares, upgrades to Windows) almost always have some type of special needs inherent in their old software which make a migration challenging. Most experienced VARs recognize this. It doesn’t sound like in this case Epicor did.

The message for software publishers – be careful what you wish for (one throat choke) – because you may get it.

Epicor said they could do it in seven weeks. We gave them seven months, and we got zero .. I couldn’t even look at a profit-and-loss statement. We couldn’t process orders. We were saying, ‘QuickBooks is so much better than this’ and we were paying $3,500 a year for it.

I can’t help but wonder whether prior to purchasing software (or in the case of Epicor – selling) was there any type of paid analysis that reviewed the fit and created a list of the functionality that was missing?

Moving from QuickBooks to a full ERP system is undoubtedly going to produce a lot of process changes. It’s also going to stress the limits of the typical accounting department who may have been accustomed to the QuickBooks method of data entry which is well suited to smaller operation workflows.

It’s impossible to tell from the details of this lawsuit – however my guess is that there might not have been enough due diligence (also called a paid proof of concept by my friend John Shaver).

Buyers who purchase software without a paid proof of concept could risk facing situations similar to this where missing features are unknown until implementation day when suddenly the true cost of the solution can exponentially increase past the initial hoped for amount – and many many times the cost of a paid proof of concept.

Friends don’t let friends buy ERP without a proof of concept.

Customer Sues Epicor After ERP Software Project Attempt Ends in ‘big Mess’

The original content contained a description of how he assisted a client with the purchase of MAS200 in a sale that he ultimately won against both Epicor and Great Plains Dynamics.

His sales tactics? To listen and understand the client’s problem. He spent 18 hours and 3 weeks doing so. No tricks. No dirt. Just good old fashioned consulting.

I can only speculate on the reasons behind his request.

Usually these requests happen because the losing publisher – either Epicor or Dynamics in this example – read the post (or  the losing VAR sent a link) and are able to exert pressure. This pressure’s usually not directly on the site (nobody other than the VAR who wrote the original post contacted me). Rather the losers search for some other avenue to exert pressure.

At this moment you may be thinking – whoa Wayne –  doesn’t the first amendment protect speech?

The answer is absolutely.

But what the first amendment doesn’t do is protect against a losing competitor who calls an end user to complain about the article and how it portrayed the losing competitor in a poor light.

Given that the original post described how MAS 200 was selected over Epicor or Microsoft Great Plains Dynamics DESPITE both of those packages being discounted considerably  (the words “name your price” were in the original post), despite teams from each competitor putting on a considerable dog and pony show.

There were probably a lot of expensive resources deployed to beat a Sage competitor who won primarily based on old fashioned listening skills.

I think the competition was probably ashamed and don’t want you to read about their experience.

I would have been too.