Disclaimer: This article contains quotes from multiple sources, which we have not cited for confidentiality purposes. Third Stage Consulting is an independent, technology-agnostic firm that is not affiliated with any of the ERP software vendors or systems integrators mentioned in this article.
After the French Revolutions in the 1800s, a famous French writer once wrote: “the more things change, the more they stay the same.”
This is certainly true today – especially in the digital transformation and ERP implementation space. More than ever, it seems that corruption and greed among the big system integrators overshadows what really matters: client success. This is challenge for Deloitte, Accenture, Capgemini, and other big system integrators.
The problem: are things really changing for the better?
Having started my career as a recovering Big 5 SAP consultant, I can’t say that much has really changed in my 20 years in the industry. For example, in the early 2000s you had well publicized failures at Hershey’s, Waste Management, and others. In the last few years, we have seen ERP failures at Lidl, National Grid, Haribo, and others. So, while technology has seen quantum improvements, the end results are largely the same.
A decade ago, big consulting firms were forced to split themselves up because of indiscretions and biases that contributed to the Enron failure and other corporate debacles. This forced them to split their audit and consulting practices at the time, yet here we are today with those big incumbents once again contributing to large ERP failures.
So, what is the problem? For one, there is no accountability – and things are not getting better. My colleague Brian Potts recently wrote an article about getting “Accentured,” along with what to do to mitigate those risks. Some may say that no one has ever gotten fired for hiring one of the well-known big guys, but many organizations have certainly been sued as a result of doing so.
Feedback from industry peers regarding the big ERP system integrators
Based on how others have responded on various social media posts over the years, it is clear that it is not just me that sees this as a problem. Others and of the roughly 100+ comments I have received on the topic, not a single person came to the defense of the big systems integrators.
This alone doesn’t necessarily make the other comments true, but I find it interesting that none of my thousands of contacts within the big systems integrator firms defended themselves. I even tried baiting anyone from the big firms to challenge me otherwise, but none took the bait. I did, however, receive comments from people within these big consulting firms that were critical of their own firms.
Below are some of the themes from the interactions I have had with various colleagues and peers on social media. Some of these comments were publicly posted, but many were sent via private message or email requesting anonymity. The quotes below intentionally do not cite the sources for this reason.
Problem of the big ERP system integrators: Competency gaps
One of the most common themes I heard from people is that the big system integrators have significant knowledge gaps that harm their clients’ chances of ERP success. I have also written an article about what your ERP system integrator can’t do and what to do about it, so I was interested to see these comments.
Below are some of the excerpts of quotes I received from various people:
- “Most of the issues arise when it comes to staffing – customer should control this through overall control and day-to-day running of the project.”
- “Things will not change till Organizations take ownership and control of any IT investment. But while that happens (which remains to be seen) for IT providers (SAP HANA, Oracle, MS, ETC.) business will be as usual…..Isn’t it?”
- “The problem is not just confined to the really big firms. There is a constant information disparity. The client never quite knows who to trust.”
- “I think when we read about large scale IT failures, we are often seeing organisations make large IT investment decisions when they were not fit to understand those dependencies. Therefore, they are left with the very large risk of failure because they outsource the decision making to a party who may be taking a fairly narrow view that ignores many of those dependencies.”
- “At firms like Deloitte, you really cannot even get a straight answer internally -ask 10 managers the same question, get 10 different answers. “
- “With something like SAP, the problem always goes back to hiring functional “experts” with no program management abilities, and that is why they are weak in business needs like readiness, data migration, etc.”
- “Problem: Most business/IT organizations or vendors do not have the skills to identify/implement the organizational and process changes required for success.”
These comments suggest that the big system integrators often aren’t doing enough to provide the knowledge, direction, and leadership to make their clients successful. This could be a key reason why digital transformation failures are on the rise.
Conflict of interest and bias among the big ERP system integrators
A second theme I saw in the comments I received is that the big system integrators are biased. They represent SAP or Oracle or another ERP vendor, so they tend to go into clients with an S/4HANA or Oracle Cloud-first mentality. Economic incentives bias digital transformations, yet these biases are not necessarily beneficial for clients.
Another bias involves staffing. The big system integrators have hundreds of thousands of consultants that they need to keep staffed, so they probably “need” to staff 100 or 200 on your project to make it worth their while – and they need to do so now.
But you don’t need an army of consultants that will ultimately steamroll your business into compliance with “best practices” and other myths created by ERP incumbents. There is a lot you need to do to prepare for your SAP implementation (or any other ERP implementation), but you don’t need the meter running on the army of consultants while you do so.
Here are some of the comments I received, along with examples of the impact on the clients of system integrators:
- “You can simply solve this by having staffing delivered by expert third parties other than external parties responsible for delivery, and have it overseen by the customer.”
- “Such procurement and subsequent integrations need internal, technical oversight. Organisations small and large need someone in their team who can call BS when they see it and then navigate successfully around it.”
- “Most Big ones in the It/Business consulting field come from Accounting/Audit background even Accenture (Arthur Andersen). Remember Enron? SAP deployment failures involving the Big 5 have exposed some flaws in their MO.”
- “I wouldn’t say it’s just the big integrators who have this inherent conflict of interest, but I see mid and small sized consultancies too – once they get a sniff of having opportunities to staff they rapidly become conflicted just like the big SIs. I should also add that I think it would be unfair to say every Partner / SI leader is the same.”
Remember that you own your digital transformation or ERP implementation – not your system integrator. So, act accordingly and get your big ERP system integrator under control.
Client ownership of their digital transformation vs. putting all their eggs in one basket with one system integrator
Another theme was around putting all your eggs in one basket by outsourcing to a single, big ERP systems integrator. In these cases, clients assume (or are told by the SI) that the system integrator can handle all of their needs. They are also often told that they don’t need any additional involvement from outside third-parties. In other words, they are convinced that it is okay to have the fox guarding the henhouse.
Here are some of the comments related to that theme:
- “When a vendor ‘owns’ everything, you gain nothing but risk and the costs associated with that risk. Whether multiple vendors, or a mix of SI, internal governance, and a TPA, putting all of your eggs in one basket will end badly.”
- “Agree the client needs to govern all teams on the project and lower silo barriers.”
- “The difference is whether they do it “to” you as opposed to “with” you. One leaves a legacy/capability while with the other approach, everything falls apart once they are gone.”
- “Consulting Cartels have always been around.”
Below is a video that summarizes the risks of getting “Accentured” (or Deloitted, Capgeminied, etc.).
The negative impact big ERP system integrators can have on their clients
Perhaps the most concerning part of all this is how it can so negatively affect their clients. While they are making millions of dollars (sometimes tens of millions or hundreds of millions) off of their clients, the end customers are the ones left holding the bag when things don’t go well. For example, just look at the recent SAP failure at Haribo or National Grid’s SAP lawsuit against Wipro.
Here are some of the comments I received along these lines:
- “I found your post about “Accenturization” interesting. I joined Accenture 3 years ago, but I agree with your article. Most of my co-workers are “lifers” and the only thing they know is the Accenture way.”
- “Their primary value proposition is cheap offshore staff and replacing people with automation.”
You may think to outsource IT support or offshore software development, but be aware that outsourcing your entire digital transformation to a single big ERP system integrator can have catastrophic results.
The value of smaller alternatives to the big system integrators
Fortunately, I didn’t just receive complaints and negative comments from people – I also received some helpful suggestions. This included options outside the big ERP system integrators. Here are a few sample quotes:
- “I think this is starting to shift slightly. Companies want more bang for their buck these days and will look to more specialized/boutique companies for solutions. Bigger companies are less likely to go the “extra mile” and don’t or won’t offer the flexibility as others.”
- “Smaller companies are hungry and so they are willing to go the extra mile! Losing a client can make or break them so they work hard.”
Conclusion: take control of your ERP system integrator and overall project
It may not quite be time to fire your ERP system integrator, but just recognize that you do have options outside the big incumbents. And, it’s not an either / or proposition: you can get the best of the system integrator and augment with the more strategic and specialized skills sets of others.
Contact me if you are looking for help finding the right system integrator or trying to figure out how to mitigate some of their risks. I am happy to be a sounding board as you continue your ERP transformation journey!