Case Study: What If Your ERP Can't Deliver?

Davis points out that to avoid scope creep, the AICPA "effectively created a fixed fee and put [in] a percentage for contingencies" in the contract it will use with its integrators.

"We have milestones and a payment schedule," he says. "You have to complete certain portions of the deliverable to get paid."

Thus, while the AICPA has spelled out its expectations clearly, it's left room for negotiation. That should help it avoid hassles with integrators.

Herman notes that a hazard in signing a fixed-fee contract with an ERP integrator is that "if something goes wrong, they can come back to you and say, `It's not in the scope, so we're not going to do it.'"

That, in turn, creates the potential for a standoff, leaving the project in jeopardy, the CFO notes.

Companies should interview integrators carefully "at the front edge" to make sure that "personalities don't clash," he adds.

In managing ERP risks, it's also important to ask integrators if they have what Herman calls the "band width"—adequate personnel—to deal with their projects over the many months they typically take.

If you find, in talking to a small firm, that it has, say, 100 projects in the pipeline, you might consider looking elsewhere, he advises.

Despite the precautions organizations like the AICPA are taking, however, Hershey's-like nightmares seem destined to trouble the sleep of their CFOs. These are, after all, multi-million-dollar projects that turn companies upside down before setting them aright.

Installing an ERP thus calls for a realistic attitude toward the hazards. As Herman says, while "you can mitigate some of it, you always have risk."

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