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9 Games ERP Consultants Play

January 14th, 2013 by

ERP Consultant Games

Most in the ERP industry agree that software consultants can play a major role in helping their clients successfully implement a new ERP package. While some consulting firms have more expertise than others do, at least most firms try to operate with their client’s best interest in mind.

However, there are many firms within the ERP industry that are outright thieves. They will not hesitate to take advantage of their clients in order to pad their own wallets. In fact, some firms are so good at this it has become part of their standard operating procedures.

Clients that are educated and aware of the games consulting firms play can save themselves a few headaches and a lot of money. Below are some of their tricks to watch out for.

1)      The “Bait and Switch” Routine

During the sales process, this is when certain consultants are brought in to display the expertise within the firm. They may know best practices and the software, but it might be the last time you ever see them.

2)      Resumes: Lies and Half-Truths  

Outright falsification of consultant resumes is more common than you think. In addition, many resumes presented by the firm are not really resumes, but vague “profiles” that lack detail and read like sales literature.

3)      “Lowballing” the Quote

This is the oldest trick in the book, yet surprisingly many clients continue to fall into this trap. For example, all consultants know that for time and material quotes the actual implementation costs are usually much higher.  Also, most fixed price quotes are only fixed until further notice.  When the client wants to make only minor changes in the project scope, they are hit with expensive change orders. The change order costs are usually 100% greater than the actual time for the consultants to perform the work.

4)      The “Best” Implementation Tools & Methods

Most firms claim to have the very best implementation methods and tools available. However, do not be surprised when their consultants run off and do something entirely different during the project. Maybe the tools are not so great; otherwise, their consultants would use them!

5)      The Less You Know – The More Money They Make

For some firms, a potential client that has ill-conceived project objectives, an undefined scope, or lacks basic knowledge of ERP; is considered a gold mine. The idea is to gloss over these “minor” details until after the client signs the contract.

6)      Marquee Accounts for Reference Checks

When a potential client asks for a list of the firm’s other clients for a reference check, many firms provide only their “marquee accounts”. These accounts are compensated by the firm in some form for being a reference. Therefore, do not expect these clients to mention anything bad about the firm.

7)      Not Enough Time and Talent

Most consulting firms would love to “camp out” on your ERP project. One way to do this is convince the client that the organization lacks the right employees for the project. Also, some firms too easily support the premise that the client’s best employees have other tasks to perform that are more important than an ERP project. That is, “No need to get your hands dirty. Our consultants will do the project for you.”  

8)      “Add-on” Services 

Once consultants get their foot in the door, many try to sell their clients additional services. These include more consultants for readiness assessments, change management programs, best practices, and other services you may not truly need. Also, do not be surprised when your consultants push for software functionality that was originally out-of-scope. 

9)      The Promise of Software Knowledge Transfer

Most firms state that one of their goals is to “work themselves off the project” by transferring software knowledge to the client. However, nine times out of ten, if it is going to happen, the client must force the issue. Considering their hourly rates, what incentives do consultants have to transfer software knowledge?

This guest post is by Steven Phillips, author of the Street Smart ERP blog and the new book Control Your ERP Destiny.




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Being an Expert Witness in an SAP System Integrator or Consultant Fraud Trial

May 29th, 2012 by
SAP Expert Witness

SAP Expert Witness

Those who have followed this site for any period of time are probably aware that one of my passions is to see the whole business application space “cleaned up.”

A recent group of comments and private messages I have received about consultants who knowingly commit fraud really got me aggravated.  I’ve actually received e-mails through my site from these “freshers” who would brag about having their fake resume ready and they were excited about actually conning their first customer.  Enough already, I decided to do a series on helping expert witnesses through the litigation process against some of these unscrupulous tactics.  

Although I am NOT, NOT, NOT, a fan of litigation I believe we have reached an unfortunate time in the business application consulting space where something must be done.  There are too many fraudulent consultants, too many staffing firms which facilitate and in some cases participate in this fraud, and too many system integrators who take advantage of clients who do not fully appreciate how SAP projects work.  Please understand this is not legal advice, for that you must consult an attorney. 

You Just Got Called to be an Expert Witness in an SAP, Oracle, or other Business Application Lawsuit

Being called upon or contacted to be an expert witness in a court case for your field of expertise can be an exciting and frightening proposition.  Over the years I’ve been contacted by lawyers and expert witness brokers to do exactly that.  I’ve never taken them up on the offer but have taken the time to understand the process.  If you want to be an “expert” witness in some multi-million dollar litigation about a failed SAP, Oracle, or other business software implementation you will want to prepare for…

What Can You Expect?

First, be prepared to have your writings, resume, personal life, and your past carefully scrutinized in tremendous detail.  Anything you’ve written online, in publications, or even in social media spaces is fair game for legal evaluation over your judgment as an expert witness.  Consider carefully whether you want past events that might be “colored” to affect your professional judgment raised in a court of law (and no, that is NOT why I haven’t accepted any expert witness assignments ;) . 

What are the Legal Requirements for Expert Witness Testimony

First of all expert testimony in the United States is generally governed by Federal Rule of Evidence 702.  That rule governs “technical or other specialized” testimony from experts and virtually every U.S. State has either the same rule or some equivalent.  However, each state can have different ideas of what that Rule actually means in their own state level courts so it is really important to understand what state a case is in, or whether it is in federal court.  In legal terms this is related to “venue” or what court the case will be tried in.  Is it is state or federal venue.

Standards for Admitting Expert Testimony

Two key U.S. Supreme Court cases govern the admissibility of expert testimony.  The two cases which either open the door, or close it, for expert testimony are often referred to as “Frye” and “Daubert.”  To be an expert witness you really should be familiar with these two cases and what they mean to you if you consider offering expert testimony. 

These legal cases use two different standards which are in use to some extent throughout the United States.  The Frye case comes from a Washington D.C. Circuit court case with the case style (or caption) of Frye v. US, 293 F. 1013, 34 A.L.R. 145 (D.C. Cir 1923).  That case established a “wide acceptance” standard meaning that something should not be admitted into evidence unless the subject matter being testified about covered something that was widely accepted.   This usually (although not always) meant that there was lots of published material that had been peer reviewed or scrutinized in other ways.   An expert under Frye addresses issues almost exclusively from the “wide acceptance” standpoint.  Keep in mind that the “wide acceptance” standard may have allowed the “flat earth” society to have prevailed in court in the Middle Ages.

As both science and technology continued to mature at a faster pace additional clarification was added in another U.S. Supreme Court legal case which is often cited as Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993).  That case established newer and more robust “scientific methods” which must be considered before accepting expert testimony.

While there is no complete checklist, and there are several additional factors to consider, one U.S. Federal Appeals Court has summarized a short list of a few key issues which should be considered for the Daubert standard.  These include:

  1. Whether the theory or technique of the expert can be tested.
  2. Whether there is a known, or potential, rate of error that can be determined with some level of assurance.
  3. Whether there has been any peer review and publication (think Frye here).
  4. Whether the theory or technique is generally accepted in the expert’s community (again, think Frye).  For us it would be in the SAP community.

The Gatekeeper Role to Prevent Unreliable Expert Testimony

The role of the judge in court cases involving expert witnesses is to act as a “gatekeeper” by letting in only those experts who at the most basic meet two key criteria: the testimony has some measure of reliability by fitting the criteria of either of the cases above, and the testimony directly relates to some set of facts or circumstances of the case that the expert will help everyone understand.  The expert’s testimony should help bring enough clarity that the judge and jury can more easily make an informed decision about some fact or issue in the case.

Which Expert Testimony Legal Standard to Use?

It is important to understand that if you end up litigating as an expert witness in a state court case in the United States rather than a federal case you may be subject to different standards and requirements as an expert witness.  Again, which venue is this, is it a state court case or a federal case?  For example, as of 2011, the following states use the following expert witness standards as defined in the legal cases above [FN1]:

[A]s many as 34 state jurisdictions have adopted the U.S. Supreme Court’s standards articulated in Daubert. Those states include Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Mississippi, Montana, Nebraska, New Hampshire, New Mexico, Ohio, Oklahoma, Oregon, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, West Virginia, and Wyoming – and most recently in 2011 Alabama and Wisconsin.

Currently 9 states and the District of Columbia follow the Frye rule – either specifically rejecting Daubert or choosing not to apply Daubert principles. These include California, the District of Columbia, Florida, Illinois, Kansas, Maryland, Minnesota, New York, Pennsylvania, and Washington.

Meanwhile, 7 states have their own unique approach and utilize neither Daubert nor Frye: Missouri, Nevada, New Jersey, North Carolina, North Dakota, South Carolina, and Virginia.

This is more than enough of an introduction to the legal standards. There are a few areas to focus on here.  There is the consulting fraud itself – fake skills, experience, and backgrounds.  There are considerations for how much affect the consulting fraud has had on a project (i.e. damages, etc.) and then there are potentially fraudulent system integrator tactics which are designed to maximize their profit while taking advantage of the client. 

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[FN1] Daubert, Frye … or Both? Tracking Florida’s Buy-In. http://www.ims-expertservices.com/blog/2012/daubert-frye-or-both/

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How the SAP Consulting Peter Principle Works

September 12th, 2011 by
SAP Peter Principle

SAP Peter Principle

Most of us working in business for any period of time have heard of the “Peter Principle.”  It was “formulated by Dr. Laurence J. Peter and Raymond Hull in their 1968 book The Peter Principle, a humorous treatise which also introduced the ‘salutary science of Hierarchiology’ …” [FN1]  While the exact quote is a little different, it has come to mean that people tend to rise to their level of incompetence in organizations built on hierarchies.

As an important caveat before getting into this topic, I have known many really hard working folks who have risen through the ranks the “old-fashioned” way –, through hard work and “paying their dues.”

My Experiences with the SAP Consulting Hierarchy

After over 20 years in IT, and over 20 SAP projects, I have seen the Peter Principle again and again.  It’s the nature of how the IT consulting world works.  It is frustrating, and it is enough to drive the competent, diligent, and most talented consultants absolutely crazy.

The “Peter Principle” happens in the consulting world because this is what organizations who implement SAP demand of their implementation vendors.  Sure, that sounds counter-intuitive and crazy, but unfortunately it is a sad reality.

You might be asking yourself right now, IS HE CRAZY?  Maybe a little, but on this point, let me assure you, it is quite true and in a moment you will see exactly how it happens and why.

Enter the Crazy World of Consulting – Why Consulting Incompetence is Rewarded

Once inexperienced, incompetent, or “less than optimal” consultants get onto your SAP, ERP, or other IT project, you are now set up for seeing the “Peter Principle” in effect.  On your implementation or upgrade project an inexperienced or incompetent consultant will ultimately make a mess, however it won’t be seen right away.  There may be signs along the way, but only deep experience will recognize this unless it is blatantly obvious.  There is always some reasonable sounding explanation, or some gibberish, or some babble that is pronounced with confidence but you don’t really understand it. Or, they have become polished and provide entirely rational and reasonable explanations, whether true or not.  After all, they are the “expert” you hired so they must know what they are talking about, right?  Nonsense!

First Sign of the SAP Peter Principle

“Blah, blah, blah”  I have no idea what you just said but just so I don’t look stupid I’m not going to challenge it.

As I’ve written on many occasions, part of the key skills and experience a good consultant or business analyst MUST possess is the ability to take the complex and make it simple.  ANYONE can take something complicated and keep it complicated, or worse still, make it more complicated, or, worst of all, make it a mess.  It takes experience and competence to take the complex and simplify it.  But all that “technical babble” and jargon sounds so convincing, so educated, so, foreign.  It’s a foreign language that you don’t completely understand and these incompetents know it.  Unscrupulous consultants know if they can make something up and sound as though they know what they are talking about you will believe them –, you hired them for their expertise.  They can game you to increase scope, or extending project timelines, or busting your budget and they do this because they are personable and manipulative.

How Can You Identify the SAP Con Artists?

Accountability, Responsibility, and Quality.  The cons avoid accountability or direct responsibility.  On a project where they are discovered they must be nearly forced to have clear accountability for delivery.  They must be pressed into doing what I call “due diligence” around a solution to make sure it will work correctly.

If you catch it early enough you can keep these incompetents from being rewarded for blowing your budget, causing project delays, and creating even MORE complicated and convoluted processes than you had BEFORE you did your SAP implementation.

How Customers Provide Perverse Rewards for Incompetence

The incompetent consultant’s area seems to have users who struggle with problems / issues / bugs that need the most fixing and the most attention.  By this time many companies have invested so much time and effort with the incompetent consultant that they don’t see any other options but to continue with this fraud.  The incompetent consultant is needed badly to support the mess they make for some time after you go live.

One way you can tell you have been manipulated or gamed during the project is by the quality, completeness, and accuracy of the solution the consultant delivers at go-live. 

From a consulting firm’s perspective, the incompetent consultant puts in lots of extra billable hours, helps them get extensions and budget increases, and needs to have lots of extra consulting support.  They are always behind, and no matter how hard “they try”, they always have another excuse for why the problems they cause really aren’t their fault–, it’s always someone else.

These consultants stay on long after go-live to ensure that their questionable solutions are supported by the same person who made the mess to begin with.  This is what customers insist on because by the time go-live happens they are “stuck” with the mess and “stuck” with the “con”sultant who made the mess.

Incompetent consultants tend to be VERY personable most of the time, and ingratiate themselves with the customer / client so that there is no question that they are working SO hard, and doing such a GREAT job.  It could never be their fault.

How SAP Consulting Vendors Reward and Promote the Peter Principle

For the consulting vendor, billing hours go up, staffing and utilization numbers are high, additional “backfill” support is needed and more people are staffed.  From their metrics and possible compensation incentives the incompetent consultant is doing a great job!  On the other hand the highly experienced, competent, and diligent consultants “work themselves out of a job.”  The competent consultants tend to have fewer go-live support issues, they usually have more engaged, involved, and knowledgeable users.  And they are just plain better prepared.  They are not “needed” as you go-live and you, as the customer, get rid of them to cut the blown budget wherever you can.

In a partner oriented firm the incompetent consultant is headed for being a manager, senior manager, managing partner, etc.  The incompetent consultant has great utilization, helps to get more staff on projects, and is always busy.

In the consulting companies incompetence is rewarded and incentivized by the consulting firms.  The most competent and diligent consultants are passed over for career enhancement precisely because of their competence – they may finish projects earlier than their incompetent peers and may be “on the bench” more frequently.

The more skilled the incompetent consultant is at being personable, at presenting a compelling case for why they are doing such a great job but you need more resources, the better positioned they are for higher level promotions.  After all, in consulting firms, senior level positions are focused on getting billable resources out and billing.  The more experienced and capable at this the better positioned you are for partner or senior management.

Stay tuned next week – details on how to spot them and then ferret them out…

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