ERP Support Model: Billable Hours, Broken Promises, and Lost Opportunities
The ERP support model has evolved over the years, with organizations outsourcing the management and maintenance of their systems to external partners. On paper this approach suggests that it allows organizations to focus on their core competencies while leaving the technology-related tasks to the experts. Unfortunately, this approach has created a dependency on partner resources, which has had unintended consequences, many of which are hidden under the disguise of lower cost to the untrained and uninformed CFO or CIO.
One of the most significant issues with the ERP support model is that it has led to a lack of creativity and innovation within organizations. Instead of developing internal expertise, many organizations have become reliant on partner resources to manage their systems. This approach has led to a situation where organizations are unable to identify and implement new solutions that could help them achieve their objectives more effectively.
Moreover, the focus on billable hours and contract renewals has also meant that partners are less interested in finding creative solutions to problems. Instead, they are motivated to provide the most straightforward solutions that will generate the most billable hours. This approach has led to a situation where organizations are paying for services that do not meet their needs or provide any real value.
The unfortunate result of this new status quo of providing ERP support is that it has led to a situation where partners have become the gatekeepers of knowledge. Many organizations have relinquished control of their systems to partners, who are the only ones with access to the necessary expertise and resources. This approach has created a situation where organizations are unable to develop internal expertise or knowledge, which leaves them vulnerable to partner exploitation.
Furthermore, the focus on contract renewals has led to a situation where partners are incentivized to maintain the status quo rather than make any changes that could impact the contract's renewal. This approach has created a situation where organizations are unable to make necessary changes to their systems, which can result in sub-optimal performance and increased costs.
The ERP support model that many organizations have adopted is fundamentally broken. It has created a situation where organizations have abandoned all creativity and innovation, and they have surrendered their well-being to partner resources who are motivated by creating billable hours and getting the contract renewed instead of the organization's best interest. To address this issue, organizations need to focus on developing internal expertise and knowledge, rethinking their contract structures, and holding partners accountable for providing value rather than just billable hours. By doing so, organizations can ensure that they are getting the support they need to achieve their objectives and remain competitive in an ever-changing business landscape.
The Billable Hours Boondoggle: When Partner Interests Override Client Needs
One of the consequences of the ERP support model is that the solutions designed by ERP partners are often focused more on maximizing billable hours and less on the quality or maintainability of the solution. Partners have a vested interest in providing solutions that require a significant amount of time and resources to implement and maintain, as this allows them to bill more hours to the client.
This approach can result in solutions that are inefficient, cumbersome, and difficult to maintain. The partner's focus on billable hours indicates they are less willing to invest time and resources into designing robust and scalable solutions that can grow and evolve with the organization's needs.
Moreover, the partner's focus on billable hours can also lead to a situation where they prioritize their own interests over the client's best interests. For example, the partner may suggest features or functionalities that are not necessary for the client's business requirements but will generate more billable hours for the partner.
Inevitably this situation arises where the client ends up paying for solutions that do not meet their needs or provide any real value. Additionally, the client has now become dependent on the partner for ongoing support and maintenance, which can further increase costs and reduce the organization's ability to innovate and evolve.
The ERP support model's focus on billable hours can have a significant impact on the quality and maintainability of the solutions provided by the partner. Organizations need to be aware of this issue and work with their partners to ensure that they are providing solutions that meet their business requirements and provide real value, rather than just maximizing billable hours. By doing so, organizations can ensure that they are getting the support they need to achieve their objectives and remain competitive in an ever-changing business landscape.
Beware the Wolf in Sheep's Clothing: The Dangers of Untrustworthy Partnerships
From time to time, organizations may have an opportunity to transition an ERP partner resource into a full-time employee. Obviously, this can be an attractive option for both the organization and the resource, as it allows the organization to retain valuable expertise and knowledge while providing the resource with more stability and opportunities for growth.
This just so happened to be the case of an ERP professional by the name of Raja, Raja was originally a partner resource who was on the project roster from implementation and throughout hypercare. Raja was the perfect techno-functional resource in that he was technically sharp, understood the business case behind every technical objective, and was an excellent communicator, thus it seemed only fitting that he be offered the opportunity to join the organization as a full-fledged employee and such he accepted with high amounts of enthusiasm.
As Raja became more comfortable with the organization, he began to divulge some of the patterns of behavior in his previous role with the partner, and what was divulged is an unfortunate sign of the times in today's world of corporate greed and/or untrustworthy partnerships that continue to plague the industry today.
Raja mentioned that it was common practice for the partner to not provide permanent fixes to reported problems, opting instead for minor temporary fixes. This was done intentionally to ensure the likelihood of future work and maximize billable hours. Raja's disclosure confirmed previous speculations of conflict of interest between the partner's business objectives and the organization's best interests.
While Raja continues to be a resource of significant value today, organizations must carefully evaluate their partners intent and their commitment to providing high-quality, long-term solutions that meet the organization's needs and not simply focused on maximizing billable hours.
Given the previous situation, one must immediately question whether having to question the integrity of a partner, double-checking their work, or invoking a system of "trust but verify" provides the intended cost-savings that the support model suggests.
Partner Dependency Syndrome: When Outsourcing Goes Wrong
Choosing to rely solely on partner resources or managed application services without any in-house ERP subject matter experts can put organizations at great risk of nefarious behavior. This risk is particularly high for public companies where there is no code review or oversight of partner-developed solutions. This practice represents a significant vulnerability, as partner developed code promoted to production without oversight could result in criminal behaviors that could be involved in the illegal use of computing resources or statements of no confidence from external auditors.
The absence of in-house ERP experts means that the organization is entirely dependent on the partner for support and maintenance of the system. This can lead to a situation where the partner may exploit the organization's lack of knowledge and technical expertise to maximize billable hours and take advantage of the situation. It can also lead to poor-quality code being promoted to production, which can lead to a host of security vulnerabilities and other issues.
Without proper oversight, the partner's resources could be tempted to use the organization's computing resources for purposes that are not in the organization's best interest. This can include unauthorized access to sensitive data, data theft, and other criminal activities that can have severe legal and financial consequences for the organization.
Organizations that choose to go with a lean organizational structure and rely solely on half-baked watered down partner resources in building proprietary solutions are at great risk of nefarious behavior. It is crucial that organizations have in-house ERP subject matter experts who can oversee the partner's work and ensure that developed code meets the organization's requirements and adheres to best practices. This is especially important for public companies where the consequences of poor oversight can be severe, in the cases where audits can reveal a lack of operational oversight that leads to the shear possibility of being suspected of not having the necessary controls to convince stakeholders that transaction integrity is firmly in place.
Back to Basics: Investing in People for Long-Term Intellectual Capital Gains
The ERP support model is fundamentally broken, with organizations relying too heavily on partner resources that prioritize billable hours and contract renewal over the best interests of the organization. This is compounded by the fact that some partners may prioritize short-term gains over long-term solutions, potentially leaving organizations at risk of nefarious behavior. It is therefore critical for organizations to re-evaluate this support model and realize that it is indeed fundamentally broken and in need of a return to back to basics of investing in people of high character and reap the rewards of letting smart people build things that result in high-quality, long-term solutions that meet the organization's needs.
In order to fix the broken ERP support model, organizations should consider stepping away from the large ERP partners and instead focus on hiring top-quality independent ERP consultants in niche areas as needed. This can provide several benefits, such as a more specialized expertise in the areas where the organization needs it, as well as more flexibility in terms of cost and resource allocation.
Furthermore, it is essential for organizations to mentor in-house talent to better manage and enhance the applications. This can involve training and development programs that build up the necessary skills and knowledge within the organization, allowing for greater usability of the ERP system and increasing return on investment. By investing in internal talent, organizations can become less reliant on external partners, while also ensuring that they have a deep understanding of their own systems and processes.
Overall, fixing the broken ERP support model requires a shift in mindset towards a more proactive and strategic approach. By focusing on niche consultants, mentoring in-house talent, and refining their strategy, organizations can become more self-sufficient, more secure, and better positioned for long-term organic success.
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