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Can I use the slowdown to negotiate with my ERP software vendor

15th June 2020,  

There is no question the lockdown damaged businesses (except those sitting on large reserves of toilet paper and PPE) but reductions in turnover are only part of the problem. Many, if not most, will take a bigger hit from the overheads they cannot reduce, the outgoings they cannot postpone, and the commitments they cannot reschedule.

Government grants have helped smaller businesses keep up with their rent, but that’s about it. Bigger companies with bigger headaches need to be resourceful in rebalancing books and protecting long-term development. The time to act is now – before the “we are all in this together” spirit grows thinner. The fact is, modern business is deeply interwoven: despite the capitalist ethos of competition, what is good for one business is also good for their partners. That is a sound basis for negotiation.

Never shelve innovation in changing times

In hard times, the first instinct of many businesses is to shelve innovation and contract. But applying the logic of domestic budgeting to enterprise planning is a disaster: enterprises prosper by enterprising.

The other factor to remember is that this is not a natural economic recession. It has not fallen upon us because sterling is high, oil prices escalating or stock markets over-valued. Although some firms will be knocked from their market, it isn’t because their market disappeared, but because their resource planning broke down. That means the market is still there – and someone needs to supply it.

This is exactly why supermarket shelves went bare – because operations that should have scaled up scaled down. Enterprise Resource Planning is never so important as in times like these.

ERP software is the obvious place to start

If you don’t already have it, the benefits of ERP software should be clearer now than ever. Find a vendor who understands the importance of flexibility. If you were in the process of an ERP development plan, the flexibility of your vendor is even more important, because your requirements, and the timing, may be shifting significantly. If your vendor is inflexible you are probably with the wrong vendor. Find one who understands business, not just software.

Optimising your business processes and coordinating your process transitions is what ERP is all about. The slowdown is the ideal time to be considering new ways to operate, new markets to enter, and for recalibrating your ERP implementations accordingly.

On the basis of your new ERP schedules and resources, you can then look to all the other businesses with which you are co-dependent, giving and taking in the light of everyone’s differing circumstances. When you conduct those negotiations, what better way of approaching it than with reports and projections drawn from your ERP package? In some cases, you can offer customers data access, eliminating replicated labour, or real-time instead of batch processing. This often cuts costs for both sides.

Expertise will always be the key

Having access to precise process control and reservoirs of data is one thing, knowing how to use them is another. If ERP software has never been more useful, then ERP expertise has never been more valuable.

Turnover in ERP and other IT staff can leave companies with features they’ve forgotten to use or don’t know how to change. Locking down ERP development often has negative effects on corporate culture and IT efficiency generally. Other teams start to work around your ERP system instead of through it. The result is a gradual erosion of its efficiency and a convoluted IT landscape that gets ever harder to audit, repair or comprehend.

In fluctuating conditions, you do need to review your requirements. Over and under capacities are likely – don’t pay for features you no longer need, but invest now in those that will grab business for you when the markets bounce back!

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