Analyst Brian Sommer’s new Whitepaper warns against choosing a cloud ERP partner with predatory behaviors. In a conversation with Acumatica’s CEO, he explains why businesses must distinguish between the good guys and the not-so-good guys.
Do you know analyst Brian Sommer? If not, he’s the founder of Vital Analysis, the publishing, research, and analytical arm of his other company, TechVentive, Inc. He has been providing market insights via speaking engagements, as an advisor, and in his prolific writings for decades to top executives in firms that buy or sell technology/services around the world. I had the chance for a one-on-one with him about his latest Whitepaper, ERP Vendor Selection: Find a Partner, Not a Predator.
If you do know Brian, then you know you’ll enjoy reading what he has to say on the importance of choosing a true cloud ERP partner.
Predator vs. partner
Brian has helped hundreds of clients select software and negotiate contracts with software and implementation firms. He has seen firsthand the unscrupulous practices many cloud ERP vendors have subjected their customers to, including what he calls “wallet fracking.”
Like hydraulic fracking where water and sand are forced under high pressure to crack rocks and free up the oil to float to the surface, Brian says “wallet fracking” is when “vendors put incredible pressure on the corporate bank accounts of their own customers in the hope that dollar bills are going to float up and into the bank accounts of the vendors.”
Instead of being a good ERP partner, these vendors are preying on their own customers. According to Brian’s new Whitepaper, this behavior stems from technology firms with cultures that are not, shall we say, customer friendly. “Great cultures can be found in yogurt, acidophilus milk and some firms. Unfortunately, great cultures don’t always exist in technology firms that you’ve come to rely upon. And, if you do business with a technology firm with a bad culture, it could be a very expensive, frustrating, long-term decision. Can your organization afford being stuck with a bad choice for a decade or more?”
The obvious answer is ‘no.’ Brian decided to take up the banner for businesses trying to make a wise ERP selection by writing the Whitepaper. In it, he explains why it is critical that you include a “cultural assessment” within your ERP selection criteria and provides comprehensive guidelines for distinguishing between partner vs. predator vendors.
There are, according to the Whitepaper, eight defining factors of a predator. Here are four of them:
- Can’t exist without prey
- Is short-term focused
- Wants a deep, permanent relationship with your checkbook
- Likes to confuse or disorient its victims by using confusing language, ambiguous wording, and voluminous contracts
The other four are just as concerning, as are the 19 predator characteristics, including vendor pricing that changes frequently, aggressively auditing customers’ usage, and contract documents that run into the dozens or even hundreds of pages. Brian writes in the Whitepaper, “Predatory behavior is often institutionalized within a vendor. It shows up in its organization structure, processes, and even the software it provides you.”
If you’re feeling a sense of dread because you’re realizing you’re in a relationship with a predator, then Brian has some advice, “At some point, you’ve just got to suck it up and realize that you made a bad life partner choice, and in the words of Dear Abby, you need to seek true love elsewhere.”
Seeking true cloud ERP love in a pandemic
Because of the COVID-19 crisis, businesses in every industry (though some more than others) are forced to embrace a new way of working. The need to be a connected business—one that synchronizes all records, data sources, and systems under a single pane of glass and that enables every employee access from wherever, whenever—is critical. Choosing a cloud-based ERP solution is what makes it possible.
When I spoke with Brian, he noted how relevant picking the right vendor is right now. The pandemic has left companies, especially hotels, restaurants, and airlines, “eviscerated”. But even so, they still have subscription contracts or maintenance agreements with predator ERP vendors.
“They go to some of these vendors, and they’re basically given the cold shoulder,” he says. “Moreover, even if these customers have permanent reductions in head count—maybe it’s a restaurant that’s no longer going to offer indoor dining or airlines that may drop a huge amount of their international routes because there’s no demand—and asks, ‘Can I get some price relief?’, the vendor is quick to point out that the contract stays in effect…the price you’re going to pay is still going to be the same. Most of these contracts are written so that they only scale one way, and that’s up.”
Thankfully, there are cloud ERP vendors out there that are true partners. According to Brian, they’re the ones that are on the phones every day asking their customers if they’re using all of the software they’ve subscribed to and if they are getting value out of it.
“If they find customers with acute pain, they’re trying to help come up with creative ways to get around it,” he says. “Some have offered different kinds of contractual amendments. They are doing things like deferring some payments (maybe altogether), or they’re coming up with some short and long-term plans where it’s warranted. They’re spending time with customers.”
Unfortunately, Brian says that most ERP software products remain installed longer than many people’s marriages last. If you’ve chosen poorly, then trying to extricate yourself from a bad vendor’s clutches may result in them planting what he calls “FUD”—fear, uncertainty, and doubt—in your mind, or in the minds of board members.
“Just like an abusive spouse, they’ll beg for forgiveness and promise they’ll never beat you up again. And then they’ll give you another contract that is pretty much as bad as what you had before,” Brian says.
Essentially, customers looking for a solid, reliable, and long-term ERP relationship must find true cloud ERP partners and run from predators seeking to devour them.
Acumatica: true cloud ERP partner
My conversation with Brian confirmed what I already knew: Acumatica is a true cloud ERP partner.
Acumatica’s goal from day one has been to put customers and innovation first, and in July of 2019, I clearly stated that customers deserve better vendor practices from cloud business app providers, and we created the Acumatica Customer Bill of Rights to clearly define what our customers deserve.
We put it out there for everybody to see, and as Brian says, “That takes some guts.” He understands that we believe in “doing right” by our channel partners, through whom we sell our cloud ERP software. “The channel is key to [Acumatica’s] success and having the right channel partners doing right by customers is absolutely imperative.”
I and the Acumatica team have made it our mission to spend time with our customers and to reinforce who we are as a cloud ERP company, which, in turn, is being reinforced by our end users. Brian says, “[Acumatica] gets really nice reviews. I’ve also double-checked that against some of my colleagues and other industry analysts, and frankly, I haven’t heard anybody really have a cross word to say about them. Kudos!”
Closing thoughts on cloud ERP partners
Near the end of our conversation, Brian discussed his new book, “The (Right) Deal: Technology Deal Making in the 2020s”, which became available in January—before the pandemic showed its full impact. Though he had been through other related issues, he didn’t realize to what extent COVID-19 would impact the economy and software, customers, and vendors.
“This question of partner or predator becomes very topical and salient in light of the current times. We’re seeing the true colors of vendors really coming out. I saw the CFO of one of Acumatica’s biggest competitors say at an investor’s conference that their earnings are “recession-proof”. It shows that some vendors will do anything to keep Wall Street happy, even if that comes at the expense of the customer,” he says.
His advice? “Look at how vendors interact with Wall Street. That will give you tons of insight as to who is more important: shareholders and institutional investors, or the customer. You’re never going to have a partner or a relationship with a vendor who is kowtowing to Wall Street.”
Ultimately, you’re responsible for assessing your ERP options, and including Brian’s “cultural assessment” is essential before making your final decision. His Whitepaper, a free download to you, can help you differentiate between a predator and a partner. You can also listen to his 30-minute webinar, “Partner or Predator”, which is available on demand.
Whether you’re trying to free yourself from a predator vendor or you’re just looking for an ERP that cares about you and your business, the Acumatica team is here for you. Contact us today with any questions and to schedule a demonstration. We offer our customers a true partnership.