ERP selection biases run rampant, even evading the experts’ radar unless they follow a quantitative framework. But beware, even frameworks can mislead without deep subject matter expertise and an intimate familiarity with “political forces.” What’s worse? They nudge you to feel confident in your decisions, only to face disappointment in the business results later.
So, are all ERP selection biases created equal? Kickbacks take the crown as the most common bias, often highlighted by “unbiased” ERP consultants. Also, just because you hired an “unbiased” consultant, it does mean that they won’t have their own set of biases. They all do, and they all are equally dangerous. Sneaky, right? But hold on tight; there’s more! ERP selection biases like solution, preference, skillset, or prestige lurk in the shadows, masked as positivity, nudging you astray.
These ERP selection biases aren’t just minor headaches; they’re the top culprits behind digital transformation failures. They lead to selecting ill-fitting software and over-customization that sabotages the expected marathon post-live. They cloud executives’ judgment to a point where even genuine consultants struggle to deliver results. Fear not! Reviewing the following list will help clear the fog and spot warning signs in your ERP selection journey.
Bigger is not better. This bias assumes that large ERP systems can handle any level of complexity, smaller operations or larger. ERP sales reps swear you’ll never outgrow those big systems. But hold on a sec! Those mammoth systems, while comprehensive, can bring unnecessary complexity to mid-market organizations. Cue change management headaches and adoption struggles.
Several versions exist. ERP sales reps have a sneaky plan to boost their deal size: push those larger ERP systems! They know most people select based on functional checklists, so they aim for high scores on those lists. It’s like a game of ERP sales strategy—bigger is better, right? Well, not always! Don’t get caught in their bias trap, my friend. When evaluating ERP systems, ditch the “bigger is better” lens.
The bias is not just with ERP sales reps. Defining the “to-be” state is a struggle for most organizations. They harbor wild growth assumptions like the Cannabis industry expecting overnight riches or dreaming of hitting a billion in revenue within three years. But here’s the truth bomb: Growth doesn’t work that way. ERP systems aren’t magic wands with infinite elasticity. Companies opting for oversized systems hoping for infinite flexibility end up growing slower. Bloated processes without the operational synergies of a larger organization become roadblocks. In the world of ERP systems, bigger isn’t better.
The consultants are at fault too. Most consultants specializing in one ecosystem, such as SAP, Oracle, or Microsoft, have a tendency to default to bigger solutions when smaller solutions may be short of those features. This assumption overlooks other add-ons with the current solution than defaulting to the larger solution. Their tunnel vision in one ecosystem fuels the “bigger is better ” among top ERP selection biases.
9. Brand Bias
No one ever got fired for selecting SAP or Microsoft. Just like the “Bigger-the-better” bias, this bias is just to select the most popular brand. Two implementations, even on the same product, are likely to be different. So just because you were not fired in the last job for selecting this publisher, it does not mean that the ERP publisher would work for the current business as well. This bias mistakenly puts its money on more-popular-the-better.
ERP sales pitch wrapped in a shiny package called the “ERP publisher.” ERP selection biases such as this, sales reps focus on the credibility of the publisher than focusing on the specific capabilities and their efficiencies for the current business model and transactions. An example would be 90% of the Fortune 500 use SAP; Oracle has run the world for the last 40 years; or NetSuite has over 40K installations – what could go wrong with it? Literally, everything, in ways you won’t expect.
Not all products will be equally fit within ERP Publishers’ portfolio. Just because Infor M3 is a fit for your business doesn’t mean that Infor LN would be equally fit as well. This bias focuses on the publisher than on the capabilities and alignment of specific products.
Not all products will get the same attention from the ERP publishers. This bias assumes that all products in an ERP publisher’s portfolio get the same amount of attention. That’s not true at all. Focus on the product and look for the roadmap of the product as opposed to focusing on details from the ERP publisher.
8. Industry Bias
My competitor/industry uses this ERP software, so I should too. All of our competitors and the industry use this software, and they have had no problems with it. While following your competitors could be a great strategy, it might fire back too. What if your transactions and business model are different from theirs? If so, the ERP that worked for them might not work for you.
My competitor/industry uses this ERP software, so I should NOT. We can’t use the same software as our competitors; otherwise, what will be our differentiator? Let’s face it: the ERP itself is not your differentiator; it’s how you are going to implement it. Most ERP systems can support millions of business model variations. So by ignoring software just because your competitors use it, you are likely to have ERP selection biases in your approach.
I have never heard of this software in my industry. Let’s face it. Unless you practice in the ERP industry for a living, you might not know all the solutions out there. Also, just because you have not heard about it doesn’t mean it might not be a potential fit.
I have heard of failures of this software in my industry, so I would rather stay away. There are millions of reasons why an ERP implementation might fail. So ignoring it just because it failed for other companies may not be the wisest idea. What if it failed because they didn’t invest in change management or their data was a complete train wreck?
7. Knowledge bias
The team knows a solution(s). Let’s not worry about anything else. Don’t select solutions based purely on teams’ familiarity. For example, the team might be comfortable with Microsoft. What if Microsoft does not fit the current business model and transactions?
I don’t know any other solutions that could work for this business, so what choice do we have? Don’t pigeonhole yourself on some requirements. It could be proof of delivery or scheduling with a specific machine. Finding an ERP purely from the lenses of a few requirements might not be the best idea. Do they even belong to an ERP? What if these requirements might be better suited for add-ons?
Consultants select solutions based on their expertise on a solution. Hiring consultants with limited solution familiarity can result in biased selections. Review their background and affiliations, but best of all, their content strategy: Can they discuss each solution with equal depth? Or do they seem biased toward a few solutions?
Executives have used a solution in their previous company; what could go wrong with their stamp? Ah, the executives and their pre-meditated success stories! The more they stick to a few solutions, the cloudier their judgment becomes. Their bias grows stronger, fueled by their own triumphs and maybe a touch of ego.
Let’s pick one value stream, like O2C or P2P, to show “value.” ERP selection biases such as this are very common among lean or six sigma consultants just because they are coached to think in terms of value streams. While this could work great with physical processes, it’s a receipt for disaster for system architecture and master data governance.
6. Budget Bias
I only have this much budget; what choice do I have? If your pockets are tight, skip the ERP. It’s a budget-buster, often blowing expectations by 2-3 times, even if you follow the rulebook. Hold off until you can afford the whole package: the right system, implementation, and change management.
I have no shortage of budget, so why should I not buy the largest solution? Well, just because you can afford a solution doesn’t mean that it’s the best fit. Affordability should not be the only factor in finding a solution. Instead, cut down your urge to find the largest solution and invest more in solution selection, implementation, training, and change management.
I only have a budget to afford the software, so the only choice is DIY mode. Limited budget for implementation? Not ready for a real ERP. DIY mode risks lost investments and business disruptions.
I want the best deal, with as many features as possible. Don’t get caught up in the race for features and discounts! It can blind you to the lurking financial risks in ERP projects. Remember, it’s not a rat race of features.
I don’t have a budget to afford the license fee; we have to build it ourselves. Don’t fall into the trap of thinking you can build your own “drill” when you can’t afford one. Let’s be real: building something from scratch has never been cheaper, and it never will be. We rely on mass production for everything we consume. Software production follows the same principle.
5. Prestige Bias
What would our customers think if we used anything less than SAP? While a great addition, choosing an ERP just to strengthen your pitch is a disaster waiting to happen. Let your choice be driven by what truly suits your needs, not just for the sales pitch.
How will I get the next job if I don’t have SAP printed on my resume? Sure, you can brag in your next job only if the current implementation is successful and the other company might care for a brand as much as you do. Building your resume is a good strategy, but not while choosing ERPs.
We have always been a Microsoft shop. What would people think if we changed? Sure, picking a political candidate based on how you see yourself might be OK. But unfortunately, implementing ERP is not a branding competition.
I have always dreamed of going to those SAP wild parties. Not settling for anything less. You will only be able to go to the parties if the implementation is successful. Remember, you might never be settled if you used wild parties as a factor for selection.
4. Preferential Bias
I have always been successful with Epicor; let’s go with Epicor. Just because you have been successful with a product in the past, it does not mean you will be successful with it again. What if the business model and transactions were different? Two implementations of the same product could feel like apples to oranges.
Selecting a solution familiar to the consulting company. What is more important, a consultant or a solution? Sure, you may have heard that consultants are more critical. But choosing a solution just because you found a really knowledgeable consultant with a specific solution is not smart either. They just don’t know what they don’t know.
Selecting an ERP based on a preferred technology or an operating system such as Java or Linux. The underlying technology is generally an enabler, and most tech or operating systems are likely to be fairly comparable in terms of business outcome. While technology might drive the overall user experience, don’t use tech buzzwords randomly as a selection criterion without understanding their business impact.
We have always failed on Infor, wouldn’t make too much sense to select them. A million variables could drive a failure. It’s very rarely just one factor. Rejecting a solution purely based on past failures might still lead to failure; it’s just that this time you might not be able to blame Infor.
3. Solution Bias
Pricing is always hosted in eCommerce, so we should keep pricing there. Just because you haven’t seen pricing hosted anywhere else, it doesn’t mean it’s always hosted in the eCommerce or ERP layer. Unnecessary constraints without rationale can lead to implementation failure.
ERP systems are notoriously difficult; who wants them? Easy or difficult is a design choice. Easy systems have fewer business rules and leaner data stores with limited constraints built at the database level. And it’s like a three-legged stool: if you lengthen one leg, it throws off the balance. Don’t choose systems based on ease vs difficulty. Understand their impact on business outcomes and each team instead.
Operational Systems + Accounting Software = ERP. Here’s the truth: An operational architecture integrated with an accounting system will only be able to report financials, not the immersive finance experience that ERPs offer. So don’t be fooled into thinking you can replicate that by calling a bunch of APIs. The immersive experience requires the integration of data hierarchies natively built as part of the data model. Replicating the same hierarchies with a collection of APIs will not only cost a fortune, but you might never get the same results and scalability.
Why do I need more software when buying an ERP? Most ERP systems are likely to be a collection of software. Going for one brand may never be the ultimate solution. In reality, you’ll likely deal with multiple companies and support contracts. So don’t pigeonhole yourself with just one brand or software. Sometimes, having multiple software might be a superior option depending upon the architectural needs.
2. Departmental Bias
No one made money with accounting; focus on the processes differentiator to our business. Great strategy from the business perspective, not so much from the technical architecture standpoint. Instead, review briefly and watch out for red flags. ERP projects require aligning most processes, departments, master data, and reconciliation flows.
Manufacturing was too complicated the last time we touched. Can we not touch manufacturing for this implementation? Unless having two ERPs in your architecture makes sense, given your business drivers, you can’t ignore processes as involved as manufacturing for ERP implementation. Anything that involves inventory should be thoroughly analyzed to ensure a successful implementation.
My people are busy. It’s very hard to get their time. Can we manage just with IT for the implementation phase? One department represented in the ERP projects means designing the system from their perspective. ERPs are similar to the way our heads are wired. Everyone thinks and works differently. So aligning departments and equal representation is key to the success of ERP implementation.
The last time we integrated APIs for eCommerce, it was very difficult. Can we not touch that and just implement the ERP for the rest of the functions? Ignoring architecture and reconciliation workflow is like designing an organ without knowing whose body it’ll be used in. Just as our bodies can reject foreign objects, enterprise architecture can be equally finicky. So take a holistic approach and analyze the entire enterprise architecture while shoving an “ERP” in your “company’s body.”
1. Alliance Bias
Asking a VAR or OEM to select an ERP. Value-added resellers generally represent only a few solutions, and even if they are completely genuine with their advice, they are likely to be biased, either unknowingly or because of conflicts of interest.
Employees receiving kickbacks. Offering kickbacks to customers’ employees as referral money isn’t as uncommon.
VARs gang up to come across as independent. They join forces together to offer demos and POCs on multiple solutions and a perception of being independent.
VARs Carrying multiple solutions claiming to be independent. Even though they are a VAR with multiple solutions in their portfolio, they might pretend to be independent.
Trusted accounting or tax firms claiming to be independent ERP consultants. Most large accounting firms have very similar business models as VARs. Their selection department might claim to be separate, but their true goal is to structure deals to favor their solutions.
An ISV offering free selection advice. ISVs offer free selection advice in the hope of getting business for one of their alliance partners.
Your current IT company running ERP selection for free. Most IT companies seek similar arrangements with ERP vendors as their referral relationship with their hardware OEMs when they offer free procurement help.
Private equity or buying groups pushing the same solution to their portfolio companies. Private equity and buying groups generally try to push specific solutions to unify their portfolio companies. Regardless of whether the bias is strategic or deliberate, it fires back equally.
My wife’s brother is the ERP sales rep. I have no choice but to buy from him. This is classic. You might need to decide between your marriage and ERP but remember, ERP might not be as forgiving as your wife.
These biases are no joke; they can lead to catastrophic transformation failures. So, keep an eye out for kickbacks, but don’t get too comfy just because an “unbiased” ERP consultant promises a refund clause. You need deep expertise to detect these ERP selection biases, both within consultants and your internal team.
Oh, and don’t forget to take a good look in the mirror! You’re likely biased, too, just like the consultants. Regardless of the source, biases have an equal impact on the outcome. Use this list as a handy checklist to sniff out any potential ERP selection biases. Stay vigilant!