Avoid a Big Disappointment with Your ERP Upgrade

by Bob Green | Apr 25, 2014

I’m back with my monthly unbiased perspective on the business software environment. (See prior email content and thought leadership here).

This month’s theme: “Didn’t we already discuss this?”

Our approach: a longer-than-usual discussion, below – based on a troubling story.

Brief premise: It’s not unusual for us to meet a CFO who has nothing but horror stories about his current ERP software vendor. Sadly, these introductions and comments are shared mid-implementation. Communication deficiencies between client and software vendor are often the cause of their frustration. Results include costly scope creep, fee adjustments, nasty arguments and lawsuits. These can be avoided or at least significantly mitigated.

Picture this scenario, occurring during the software sales process. And, ask yourself how Harold’s dilemma could have been avoided…

  • Harold is the CFO of a rapidly-growing software-as-a-service business, experiencing dramatically increasing numbers of subscribers and complexity in tracking deferred subscription revenue.

  • They are running their business on spreadsheets and QuickBooks (OUCH). Harold is seeking a better solution to keep the wheels from falling off the wagon.

  • Harold explained quite clearly during the software sales process that they have 25,000 subscribers, growing to an estimated 200,000 subscribers one year from now, and that in their “next” software solution they will need to manage various accounting matters, including deferred revenue and related amortization as well as periodic subscription billings via credit card.

  • During the sales process, in between bites of chocolate croissants, fresh fruit and sips of Starbucks lattes brought in by the nice resellers of Whizbang software, Suzanne (the Whizbang reseller’s sales manager) listened intently, made notes, and nodded her head profusely during meetings with Harold.

  • After her team showed Harold’s team the wonders of Whizbang in an extended demonstration, Suzanne proclaimed “Whizbang is a GREAT fit for you, Harold! We’re ready to get started – please sign here.”

  • Harold signed, having felt that he conveyed things during these discussions and demonstrations that were vital to his success with Whizbang, and that Suzanne confirmed that Whizbang could handle his business needs quite nicely.

  • About 2 weeks into the implementation process, one of Suzanne’s firm’s implementation specialists approached Harold with a glum face. He told Harold that Whizbang is not capable of processing subscription management and deferred revenue management for more than 100,000 active customers, noting that this just became an issue when Harold’s controller informed the implementation team about the possible 200,000 customers by year end.

  • “REALLY?” says an astonished Harold. “Didn’t we already discuss this?”

Whizbang WON’T work for Harold’s company. Period.

Harold now looks like a fool to his CEO and board of directors. He also needs to pursue getting all his money back for software and implementation efforts, to date. And, he now has to start his selection process over. Ugh.

What happened? (this does occur…hence, this story)

Clearly – there was a very BIG disconnect between Suzanne’s notes and the instructions given to the implementation team.

Why did this occur?

Several possible explanations, all of which we’ve seen in practice in some form or another:

  1. Integrity lapse – Suzanne may have known all along about the pending misfit of functionality, but knowing that Harold didn’t have 100,000 subscribers yet, it would be problem that would be “deferred” and no one would know until a year or two down the line, and commissions would have been fully paid, and deposited.

  2. Knowledge deficiency by Suzanne and her sales team – should Suzanne and her team have known that Whizbang could not grow with the planned expansion of Harold’s company? One would argue, yes, indeed. But, this depends greatly on the acumen of the sales team.

  3. Inadequate knowledge transfer between Suzanne and her implementation team – This is most likely the case, at a minimum, and IS AMONG THE MOST FREQUENT CAUSES OF IRRITATION BETWEEN VENDOR AND CLIENT THAT WE KNOW OF.

Good software vendors ensure an effective transfer of knowledge from sales team to implementation team. Bad vendors don’t. There are more bad ones than good ones.

What kind of “knowledge” are we talking about? Topics and matters that otherwise alleviate the “Didn’t we discuss this?” phenomenon. Things like commitments about project timing, training, implementation processes and vendor performance, etc. – as well as confirmations by the vendor of certain functionality to satisfactorily handle client-specified requirements.

Mitigation advice:

  • Require evidence that your software vendor’s sales team has communicated key discussion topics, commitments, etc., to their implementation team well before you kick off the implementation project.

  • Keep record of things that are key to your success that were communicated and agreed upon by the sales team in the pre-sales process.

  • Take responsibility for documenting, and obtaining confirmation, about the matters that matter to you – such as, in Harold’s case, an email to Suzanne confirming key facts communicated such as the target number of subscribers.

  • Ask the implementation project leader to tell you how their team was informed about your requirements, and seek to learn specifically what was communicated to the implementation team.


If you’re considering an upgrade to your ERP or business software and want to have a helping hand that’s been through the trenches with the Suzanne’s of the world, feel free to ping us.

We’re here to help. Unbiased, independent, and experienced.We’ve got CFO, CPA, software and technology leadership skills that are uniquely positioned to help our clients in this area. My contact information is below.

PS – last quarter I engaged in a “Facebook Chat” sponsored by the AICPA, about pitfalls to avoid in ERP upgrades. Scroll through it, if you’re interested – click here!