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Seven Things to Think About When Buying Cloud ERP (Part 1)

19 December 2012
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Buying enterprise software solutions, ERP, “on demand” is a whole new ballgame compared to traditional IT procurement. Don’t worry if it seems a bit foreign to you.

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Seven Things to Think About When Buying Cloud ERP (Part 1)

Everyone is still learning the rules, too, so there are few established guidelines you can trust. To help you out, here are seven top success tips to keep in mind when closing the deal on Cloud ERP.

 1. Buying a service is not like buying a product. There’s a raft of different strategies that all of us draw on when we buy services that we wouldn’t necessarily use when buying a product. It’s exactly the same with on-demand ERP. You need to think beyond the functions and feature set of the product and examine how exactly it’s being delivered. That means taking a long, hard look at the contract and thinking about what it covers and – often more important – what it doesn’t mention. You’ll especially want to understand what your exit options are (if any) and how you’ll be able to ensure the provider sticks to what it’s promised to do. Naturally, you’ll be comparing two or three finalists; just studying what points they all emphasize, or points that two mention and a third doesn’t, will teach you a lot about what to insist on.

 2. Don’t expect a custom contract . On-demand services, if they’re done right, are shared services that are delivered to many other customers at the same time. (In fact, if the service isn’t multi-tenant, it’s not a true cloud offering, just a hosted service.) Cloud ERP is rapid and economical precisely because everyone gets the same core service. Therefore, you shouldn’t expect to negotiate a custom contract that delivers service levels tailored to your precise requirements – indeed, if you can, that’s a warning sign you’re not buying a true on-demand solution. Instead, look to negotiate other concessions such as free consulting, integration services, or prioritizing early development of product features you’d like added to the product. Most cloud vendors know it is important for them to have a mechanism to learn from their early clients. Explore a relationship that will give you a say if their future development plans.

3. Look to cut deals. On-demand is an emerging field. The vendors are looking to validate what they offer and expand their footprint in the market. They are almost all trying to achieve that elusive “critical mass.” This means they’re ready to cut deals for customers who want to achieve cutting-edge innovation and business results on their platforms. Of course, you have to go beyond just buying the service online with a credit card to get that kind of relationship. But there are opportunities to enter into strategic partnerships that will help vendors prove new capabilities, penetrate new markets, or simply act as a showcase for what they can do. Ask about training, for example. The better trained your people are at using the system, the better the results. And the better your Cloud vendor looks in the process. Do they provide feedback to you, for example, benchmarking your use of the system? You should also find out what arrangements are in place for you to download or offload your data both during the relationship or when it ends.

Continued in Part 2

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