If Hancox had to do it all over again, she would have hired many more in-house staffers than Andersen recommended. "I would have tripled it up front. Just overstaff," she says. "When you're spending $14 million, don't begrudge another six months of a DBA."
AMR Research analyst Jim Shepherd suggests building in performance clauses that reward the vendor and integrator when certain performance thresholds are met. "The important point is that software vendors and consultants do this every day," he says. "They are so much better at this than the buying organizations who do this every decade or two. It's a battle with an unarmed man."
But Rob Leavitt, research director at the Information Technology Services Marketing Association, a company that helps IT consulting firms market their services, warns that consultants will want a premium in exchange for these performance guarantees. "You probably need to be willing to share the upside," he says. He thinks IT shops should set aside 10 percent of the project costs to perform due diligence on the vendor, the consultant and the ROI figures.
When embarking on an ERP project, pick the consultant first and then the vendor, Leavitt says. It'll help you avoid losing leverage like Children's did. Sure, certain consultants may push you toward using their preferred vendors, but you're not locked into doing so, he says. Also, if you're a marquee customer like Children's, offer to be a vocal and supportive reference account from the outset. All the big vendors are battling for these accounts, and the offer could save you money.
Shepherd and Leavitt agree that Children's should have waited much longer to award the contract to PeopleSoft. As it happens, Hancox and the IT staff favored Lawson Software over PeopleSoft. The final decision was made by former CIO Lac Tran, who had experience rolling out PeopleSoft at Stony Brook University on Long Island and is now CIO of Methodist Health Care System in Houston. Tran did not return phone calls.