The bigger the contract, the bigger the risk

Sami Rintala gives some tips to avoid the pitfalls in large system renewal plans.

Renewing a major system like an ERP is a huge project. When it goes wrong, it can go really wrong. Sami Rintala, partner at the Lexia, gives his philosophy on how to avoid problems and make sure your new system renewal project is a success.

Get started right

“You need to be careful right from the initial planning stages,” Rintala says. “You need to properly define your vision, strategy and concrete objectives for the project.”

He stresses the importance of stakeholder alignment. All the key persons in management need to understand the project and be engaged in it.

Rintala counsels his clients to make precise definitions of what they want and what they are about to buy. Use as many out-of-the-box functionalities as you can, and only customise when there is a clear business benefit.

To avoid subsequent disputes, it is recommended that you specify any system or component that you are buying in as much detail as possible. You must also be aware of – and state in the related agreement – how integration between existing systems and components, and any new element to be bought, will be performed and who is responsible for such integration.

If you want a turnkey delivery, be sure to include this in the agreement. It is always better to clearly include all key issues concerning both parties in the agreement.

“Large projects easily become too extensive, so consider using Agile or SAFe-project methodology for developing and rolling out the system in increments,” he points out.

Quality > Price

“Test carefully and for as long as necessary,” says Rintala. “Testing costs, but so do delivery problems and delays. When it is time for the roll-out, do it in stages, starting with part of the system that has the smallest adverse impact on your business should the roll-out not be a success.”

He recommends his clients make their choices based on quality, technical and functional fit, not solely the price. They should clarify unclear issues in the contract and spend the time necessary to get it right. In Rintala’s view contractual terms and conditions must be adapted to the needs and requirements of business enterprises – not the other way around.

“Also, remember there is a time after delivery as well,” Rintala continues. “Errors should be fixed under warranty and the systems need to be maintained and supported as well.”

Too important to delegate

One of Rintala’s clients is the insurance company LocalTapiola, who he has consulted in regards to major agreements.

“Large projects are difficult not only to run, but also to buy and make an agreement,” says Mikko Vastela, CIO of LocalTapiola Group. “Although our vision and goal are clear, the sheer size of a project makes it impossible to agree on every detail. That leads to an agile and incremental approach where decisions and definitions are made in short cycles. That, in turn, makes it difficult to construct an agreement that is clear and transparent to all parties. There are always many different paths to the goal, and it is essential to build a trust between partners on how to work together and how different challenges are to be overcome.”

“Those involved need to understand what is at stake – your company and your job – so it is too important to delegate,” Rintala concludes. “A new ERP is like open heart surgery, and the company is the patient.”

(This article has also been published in Business Class Magazine April-June 2018)