Are you a tactical or strategic ERP buyer?

There are two common approaches to the acquisition of ERP software.  The approach can normally be defined as either Tactical or Strategic.

When a tactical buyer is asked what he needs, his response may be summed up in a statement such as: “all we want is”, followed by a list of pain points associated with the current solution or the lack of any solution at all.  The company’s goal will be to alleviate those pains.  The goal is frequently to have what they have now, but provide for a solution to the things they don’t like about what they have now.  Many times these immediate pains will be the impetus to start the evaluation and in the process the company realizes they have more strategic needs as well.   Many times its nothing more than a desire to fix some current problems.

For the tactical buyer he will be focused on current cost.  What will it cost to do this and what else could he spend that money on.  This buyer will be thinking in terms of defining an ROI and letting that drive his decision to go or not go with a new ERP system.

He is generally okay with the current system but wants to alleviate some pains he has now.  The majority of the cost and effort in implementing a new system for this buyer may be spent in just duplicating the ability to do in the new system, what they can currently do in the existing system that they are reasonably satisfied with.  Once that potentially large amount of money is spent to ensure the new system is doing what they can do currently, then the rest of the time and money can be spent on alleviating the pains the current approach is instilling on them.  Getting back to where they were already at will take a good deal of effort  Most companies don’t anticipate this, they are focused on getting what they don’t have now and think that will be the costly thing.  In this situation customers are frequently unhappy with what they spent to get that better system that alleviated “some” pain points.  The incremental benefit may not be viewed as justifying the overall cost.

Strategic is more long term business focused.  If the business plans to double its revenue in the next few years it may be asking what it can do to avoid doubling its cost?  Can it double its revenue without hiring twice the number of people?   If it can double its revenue and avoid hiring people by having well defined business processes supported by technology then it can save those salaries for many years going forward.  Looking at it in this light can create huge savings when you consider even just a few salaries avoided over the decade’s long life of a modern ERP system.

For the strategic buyer he is looking for how can he utilize this software to assist him in streamlining his business processes.   He wants to have the most efficient processes while providing people in the company with analytical information that will assist in business decision making.