Selecting an ERP Support Vendor: A case study

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One of the critical questions that an Organization implementing ERP faces is about the post go live support. The question is, should they build their internal team or get the support from an Application support vendor? Both approaches have their pros and cons. There are no iron clad rules about choosing either. Many Organizations decide on a blended approach.

Like FreshFoods did. The company was in the business of Agri Food Production and Exports. It was a big company with more than 20 Factories spread across the country. Most of the container shipment were done from the ports in Western India including Mundra, Nava Sheva and JNPT.

FreshFoods had implemented Oracle Applications with niche applications like Oracle Transportation Management (OTM), Oracle Warehouse Management (WMS) and Oracle Process Management (OPM). These are applications for which skills are not available in the market.

Since these were mission critical applications, the company decided to build internal skill set for these applications. In addition, to handle the additional load, they also decided to go for an AMS (Application Maintenance and Support) vendor. CIO of the company was tasked with selecting the vendor. The contract with the selected vendor will be for 5 years.

CIO decided that this was not an IT decision since most of the stakeholders were from business. The first thing he did was to build an AMS Vendor Selection Committee comprising of senior management members from both Business and IT.

The next step was to scan the support tickets of the past 6 months to see the following. There were two reasons for this. One was to identify and baseline the number of tickets. They found that on an average the users in the company raised about 230 tickets of which about 100 were related to basic requirements like access. There were about 130 tickets related to operational issues.

The second reason for collecting the ticket information was to identify the functional area with the maximum tickets. While it was no surprise that OTM topped the list, the company was surprised to see that there were many finance related tickets as well.

The information was used as an input to RFP (Request for Proposal).

The next step was to scan the market for potential vendors with skill sets required to handle the complex application landscape. As mentioned above, the company was running niche applications like OTM and WMS. In addition they also had some business critical custom applications to handle procurement which were integrated with ERP. The committee decided that for the niche applications, they will require onsite resources from the vendor and for other applications they needed offshore support. They identified about 8 vendors in the first phase and shared the RFP with them.

After reviewing the responses from the vendors, the committee decided that five of them were serious bidders with ability to handle our complex application / customization landscape. Next step was for the committee to visit these bidders to see their competence.

It was a nice experience. All the five of them were reputed organizations in India with quality and caliber to support. the company. For evaluating them, they created criteria list as follows.

During the visits to the vendor, each member of the committee (there were nine members) were asked to rate each Vendor on a scale of 1-5 on each of the above criteria. Based on the results and opinion of the committee, they further short listed the vendors to two.

Next they gave weights to each criteria, in a scale of 1-5, and used the average score of the nine members as the team score each of the two vendors for each criteria.

The final evaluation sheet looked as follows. As you can see, the criteria list was also further refined as the process progressed. You can also see in the list below that some of the criteria was binary in nature. For these the values were either 5 / 0 for Yes / No as applicable.

As you can see the scores for both vendors were very close and after further discussion the committee choose Vendor 1. The companies signed a contract for five years.

Post Script: Despite this laborious exercise, the contract did not go beyond one year. The selected vendor was not able to scale up the resources as per the customer requirements in WMS and OTM. This demonstrates the limitations of this approach. There are some things one cannot control.