Lessons from Birmingham City Council Failed Payments/ERP Implementation: A Closer Look at Vendor Selection
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⇨ The process of vendor selection and management can be a challenging task, especially when it comes to implementing mission-critical financial systems.
⇨ Business leaders need to consider the critical questions and processes that finance teams can use to develop a comprehensive guide for choosing the right vendor.
⇨ By focusing on crucial questions and due diligence when engaging in technology implementation projects, finance teams can navigate the complexities and ensure the implementation of robust, tailored solutions.
Updating mission-critical financial systems is pivotal for organizations in a rapidly evolving technological and economic landscape. These systems form the backbone for tracking finances, processing payments, and ensuring regulatory compliance.
But modernizing is not without its challenges. Case in point: Birmingham City Council’s tumultuous payments process modernization effort amid transitioning to a modern ERP financial system. Budgeted initially at £19m, the project now risks ballooning to a staggering £100m and is already three years behind schedule. The project is now a significant point of contention for local politicians as the Birmingham City Council files for bankruptcy.
Unpacking the Birmingham City Council Dilemma
The Birmingham City Council case leaves many questions — how could this have happened? A closer examination by Birmingham Live reveals deviations from best practices in the software acquisition process and a gross underestimation of the project’s requirements by the vendor. This scenario underscores the criticality of choosing a vendor adept at delivering effectively configured solutions, regardless of the project’s scale.
Identifying the Right Vendor: Insights from Chanda Verma
Vendor selection and management can be challenging, especially when implementing mission-critical financial systems. Chanda Verma, a seasoned SAP Specialist at Perigee Solutions Inc., weighs in on this topic. She emphasizes challenging management decisions and ensuring a thorough vendor evaluation. “If your management is telling you to use this, try to challenge them a little. You may not have any power to get a different vendor right. You may not have any power because management made the decision. But try to challenge them and see this vendor’s demo before you accept them,” asserts Verma.
Verma’s insights highlight the need for due diligence in vendor selection, going beyond demos to assess alignment with organizational processes.
Often, the implementation of mission-critical financial systems requires a vendor capable of delivering customized and cutting-edge solutions, irrespective of the project size. While SAP is widely used by organizations globally, finance teams have a massive task in identifying vendors that will deliver successful projects. Therefore, business leaders must consider the critical questions and processes that finance teams can use to develop a comprehensive guide to choosing the right vendor.
- Understanding SAP Utilization: Vendors must grasp the client’s existing infrastructure before proposing a solution. How many are using SAP? How many aren’t? This insight aids in delivering a tailored solution that integrates perfectly.
- Certifications Matter: Clients should scrutinize a vendor’s SAP partner certifications. Knowing exactly what is certified, especially the product features that align with SAP, provides a trust foundation.
- Who’s Implementing? Will the vendor personally oversee the project, or will they delegate to external consultants? If it’s the latter, understanding their certification and expertise becomes essential.
- ROI as a KPI: One pragmatic way to gauge the potential success of a project is to calculate the projected ROI. Several tools can help organizations predict the savings an automation tool might generate.
Finance teams must also analyze how well the vendor’s solutions align with the organization’s processes; therefore, viewing a demo is insufficient. As Verma advises, “Don’t just say, ‘OK, I got the demo. I’m happy with it done and over.’ No, think about your processes. Is this company going to do it? Is this company going to work on your processes? How soon are they going to develop something?” These insights underscore the importance of due diligence in vendor selection.
Developing a Comprehensive Evaluation Guide
Crafting a detailed guide aids finance teams in asking the right questions and considering vital factors such as certification, consultant expertise, and ROI. This approach helps identify vendors who can deliver successful projects, implement customized technologies, and streamline operations to boost the bottom line.
The Birmingham City Council’s challenges remind us of the crucial question every organization must ask when embarking on a tech project: “Is this the right vendor for us?”
Making this decision with diligence can spell the difference between success and setbacks.
Modernizing financial systems, especially in SAP environments, is a formidable task. However, organizations can mitigate risks with a strategic approach to vendor selection. By focusing on crucial questions and due diligence when engaging in technology implementation projects, finance teams can navigate the complexities and ensure the implementation of robust, tailored solutions. Courtesy of Chanda Verma, we listed a few of her go-to questions below to share with the community.
Crucial Questions for Vendors
Integration with SAP:
- How many SAP customers do you have? Conversely, how many are not SAP users?
- Are you currently a certified SAP Partner? Please share details of what is certified.
Functionality & Accessibility:
- Which features of your product are accessible via an external web browser?
- Does your product offer document image archiving capabilities?
Workflow & Hardware:
- Is your system’s workflow seamlessly integrated with SAP’s workflow?
- Are the hardware requirements scalable?
- In general terms, what are the hardware prerequisites for your solution? This might encompass Application Servers, Database Servers, Operating Systems, Web Servers, Approved Scanners, and other relevant infrastructure.
Implementation & Support:
- Do you directly oversee the implementation or rely on external consultants?
- If you utilize external consultants, what certification process do they undergo?
- Is a vendor or supplier portal included in your offerings? Kindly describe its implementation.
Licensing, Pricing & Support:
- Provide insights into the licensing and pricing structure of your application (e.g., site licensed, per user, per invoice).
- Detail the pricing model for your maintenance and support contracts (e.g., percentage of total contract, per user, per invoice range).
- Describe your ongoing support structure.
- Share examples of customers comparable in size and industry who utilize the suite of products we are considering.
The lessons from Birmingham City’s challenges are a powerful reminder of the importance of due diligence. With these pivotal questions and a systematic ROI analysis, SAP finance teams can ensure a robust, compatible, and cost-effective solution tailored to their needs.