Good Contracts Can Help Avoid ERP Disasters

03 December 2013 Internet, IT & e-Discovery Blog Blog
Authors: Peter Vogel

The best way to avoid ERP disasters and avoid litigation is to spend adequate time to work out complete and detailed ERP implementation contracts.  It is also essential that the right individuals participate in the contract negotiations, including the business decision makers, financial leaders, IT leaders, and lawyers who are experienced in ERP negotiations.

Providing adequate time with the right individuals to create the best ERP implementation contract possible is essential since about 65% of all ERP implementations contracts are not completed as signed, and as a result there have been dozens of lawsuits and arbitrations.

Ziff-Davis published its 2013 Beginner’s Guide to ERP which includes important information for management to consider before starting down the road to acquire an ERP system.  Of course understanding what ERP encompasses is the first step. 

Wikipedia defines ERP as Enterprise resource planning which “is business management software—usually a suite of integrated applications—that a company can use to store and manage data from every stage of business, including”:

Product planning, cost and development

Manufacturing

Marketing and sales

Inventory management

Shipping and payment

The Beginner’s Guide to ERP identifies what users want:

  • Better control of inventory such as parts, materials, supplies and equipment
  • Reduced time spent on routine administrative tasks
  • Better control of spending
  • Shortened order-to-delivery time
  • More-efficient customer support
  • Better control of inventory such as parts, materials, supplies and equipment
  • Reduced time spent on routine administrative tasks
  • Better control of spending
  • Shortened order-to-delivery time
  • More-efficient customer support
  • Better overall visibility and control
  • Increased accountability
  • Enhanced competitive advantage

20 ERP vendors are ranked in the Beginner’s Guide by tiers:

Tier I vendors target the largest customer companies, with solutions that have the highest complexity and cost of ownership

Tier II vendors target mid-sized companies with solutions that are less complex and expensive, and easier to support

Tier III vendors target the smallest companies with solutions that are cheaper and less complex, and may be suitable for single-site installations

Cloud providers offer ERP solutions running on their own servers, not on yours. They offer the usual advantages of cloud services, such as lower upfront cost, greater flexibility, and a lower burden on the customer to keep the software up-to-date technically

Ultimately for a successful ERP implementation there has to be a collaborative team effort between ERP purchaser, ERP vendor, ERP implementer, consultants, and lawyers is critical from vendor selection through contract negotiations, and implementation.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Authors

Related Services

Insights