Don't Play Russian Roulette with Your System Implementation!

Would you go to Las Vegas and bet $100,000 or more on one throw of the dice? Of course not. Yet that is exactly what's done everyday by companies trying to acquire and implement a major software system, whether it be Cloud-based SaaS or On-Premise software. Companies around the world are literally playing a very high-stakes game of chance when they sign on the dotted line, write a check for five or six figures, then wait for the "Go Live" date, hoping for the best. At that point all the requirements research, vendor references, and system demonstrations becomes academic. The decision has been made. System success or failure is now locked in to one vendor's system and implementation procedures, with no way of obtaining project status information other than what the vendor tells you.

Wouldn't it be nice if there was a way to mitigate the risk by obtaining verifiable system status information early in the system implementation process? A process that required you to pay money only after key milestones and deliverables have actually been reached and delivered? This type of implementation plan does exist, and is what we discuss in the next few paragraphs. First, we will quickly review what is done traditionally, for comparative purposes.

Problems with Traditional Implementation

The typical payment plan model used by most vendors is designed to put as much money in the vendor's pocket as possible, in the shortest amount of time. Typically this would be 50% down at contract signing, with the remaining 50% due in 30 days. A frequently used variant is 50% down, followed by 40% paid when the system is installed and made ready for use, with 10% performance "retainer" held for thirty - sixty days, Either way, the vendor receives the majority of the revenue without doing much more than making the system ready for use, with "use" being defined as "ready to start user system setup training". Essentially, this is designed to "train the trainer", where one person can now train others on how to set the system up, and how to convert the data. This is a long way away from "daily operational use".

The traditional payment model has two glaring faults when it comes to implementing a system from the customer's perspective. First, why pay so much in advance? 50%, even one third (33%), is far too much money to pay in advance. If the vendor is truly finacially stable then why do they need so much money? There is nothing of any significance the vendor must buy to install the system. Second, why should you pay for something that has not yet been proven to be set up for your organization's needs? Today's "best-of-breed" have many setup and scripting options that must be performed before they can be useful, and that is where the vendor's expertise is required. Why pay for those functions until you see and approve them for your company's use? A payment plan based on milestones can be of significant help.

Benefits of Milestone-based Implementation

A "milestone based payment plan" will eliminate the above problems, and greatly reduce your exposure to the risk of system failure, by reducing your initial cash outly and providing you with ongoing system status information. Better yet, all payments are made to the vendor only when verifiable "milestones" are reached. These "milestones" are ones that you and the vendor agreed upon up-front, before a contract is even signed, and they can be about almost anything. A good example would be as follows:

20% at Contract Signing

(Milestone #1) - 20% Upon Installation & Operational Verification

(Milestone #2) - 10% Upon Completion/Acceptance of Implementation Plan

(Milestone #3) - 15% Upon Reaching a Project-specific goal

(Milestone #4) - 15% Upon Reaching another Project-specific goal

(Milestone #5) - 10% Upon "Go Live" or mm/dd/yyyy (which ever comes first)

10% 30 Days After "Go Live" or mm/dd/yyyy (which ever comes first)

In the above example, note that the amount due at contract signing is only 20%, as opposed to the traditional 50%. Then, after the system is installed, and you can see that it is functional and performance is adequate, another 20% becomes due. Then, unlike traditional payment plans, a complete Implementation Plan must be prepared and accepted by you and the vendor. Then and only then is another 10% due. As you can see, payments are made only after verifiable "milestones" are reached. The Implementation Plan milestone is important, because it is here that the details about the system implementation are listed. In the above example, another 15% is due when the CAD interface is operational, and another 15% is due when the first of two phases goes "Live". Going Live is a milestone worth noting! Another 10% is due when the second phas goes "Live". The last payment of 10% is due 30 days after the second "go live" date.

Using verifiable "milestones" similar to the above assures you at each step the system implementation is going well, and the small payments at each milestone significantly reduce your risk exposure. You know the system implementation is on-track before making the payment! There is no more wishful thinking, no more relying on what somebody else is telling you. You can see the system is working! No ifs, no excuses, no worry. The best way to implement any type of system.

Only a small number of vendors currently offer this type of payment plan, at this level of detail, as part of their implementation process, and the list changes frequently in today's ever changing market. Please call Infotivity at 865-397-1830 or Email Us Here to receive the current list for your target application area (please be sure to let us know what type of application you are looking for, such as ERP, CRM, etc.).

Milestone Payment Plan

Problems with Traditional Implementation

Benefits of Milestone-based Implementation