The public sector is popular right now with ERP vendors and system integrators. Large vendors like Oracle, SAP, Microsoft and Infor are boosting their R&D funding and smaller vendors are also jumping in.
But public sector projects offer a special set of challenges that shouldn’t be underestimated by these new vendors – or by the agencies who hire them.
ERP systems and implementers often over-promise and under-deliver. No surprise here: that happens in every industry. It’s easy to get ‘wowed’ by vendors who show off bells and whistles while overlooking the everyday processes that end-users go through. Requirements are typically under-defined by the system-searching entity. In the public sector, heavy regulations and compliance issues are common and do limit some of the ERP options from software vendors.
Vendors are also quick to talk about the big-name clients using their ERP systems, when often those clients are using only a small portion of that ERP system – perhaps just an unrelated reporting tool or database.
Yet the public sector is a different world. It takes a vast amount of experience to break the barriers of entry and launch an ERP system or be a system integrator for a federal agency or even a local utility. Public sector clients often require three or more references of similar size and scope to even be part of the RFP process. This fact alone makes it very hard for system integrators and software vendors to compete in this space.
Public sector procurements can be convoluted. Most public entities need to obtain bids from at least three different vendors and projects are typically granted to the lowest bidder. But all too often a local government or agency will award the project then quickly discover that the new vendor’s confident estimate was far lower than the actual costs needed to successfully implement an ERP system.
Meanwhile, a proper bid from an experienced system integrator (who really knows what they are doing) will often be ignored because it was the most expensive bid.
That is the heart of the public sector challenge and it puts the experienced systems integrator in a bit of a conundrum: Do they fully disclose the scope necessary for a successful implementation and risk losing the bid to a lower bidder? Or do they under-scope intentionally, knowing it will take more time and money in the long run for ERP success?
Public entities benefit, of course, when the bids they receive are both fair and accurate. They can help their own cause with a few basic steps:
- Define requirements fully and completely
- Dedicate specific resources, including project managers, for each job
- Identify areas where added help will be needed, such as in process improvements and organizational change management.
The last item is especially important. Vendors and system integrators typically do not have these skill sets and often don’t know how to properly scope and estimate all the aspects of a project. This is where we see large cost overruns and extended implementation delays.
Learn more by watching our on-demand webinar, ERP Selection Success: Ten Tips from the Public Sector Pros.
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