Question: Will Booz Allen Hamilton Tell You Who Has the Best Forecasting Software?
The Advice that Booz Allen Hamilton Gives
Enterprise software buyers go to Booz Allen Hamilton because they are supposedly “experts” in many topics, including enterprise software and supply chain planning. It is true that Booz Allen Hamilton has many consultants with many years of experience in these topics. However, when we evaluate the forecasting software that Booz Allen Hamilton recommends to its clients, it is uniformly the software from the large and expensive software vendors like SAP and Oracle. However, these applications (neither the forecasting functionality in SAP ECC/R/3 or Oracle JD Edwards Enterprise One, nor in the specialized forecasting applications of SAP DP, and Oracle Demantra) scores well in our tests. In fact in our view, one of these applications could not even exist as an independent product and perpetually leaves clients unable to perform what we consider basic forecasting functions – much less the advanced functions that we consider necessary to achieve the forecast accuracy that buyers desire. These functions are covered in the book Supply Chain Forecasting Software.
In fact, our research shows that buyers are seriously hamstrung in improving forecast accuracy because of the predominance of low quality forecasting applications. However, excellent forecasting applications do exist.
Where Can You Find These Applications?
Unfortunately, the best forecasting software resides primarily with software vendors that do not offer the major consulting companies their consulting business to Booz Allen Hamilton in return for Booz Allen Hamilton recommending their software to their clients. If you want to evaluate or purchase these superior and lower TCO applications, you should expect resistance from your consulting partner. This is because they only want you to purchase software that they have resources trained up on and ready to bill hours – regardless of whether this is either the right software for you, or even good software.
Being Cognizant of Reasons Booz Allen Hamilton will Give You
Common reasons Booz Allen Hamilton will give is that this software is not “integrated to SAP or Oracle,” when our research shows that integration is a small portion of the overall TCO of any enterprise software implementation. Far more important is the functionality of the application, its usability, how difficult is to implement and its maintenance costs. As the graphic below shows, our research over many applications reveals where the costs are incurred, and maintenance costs are preeminent.
The costs above are truly “total.” We include the internal as well as the external costs for both implementation and support. For details on our TCO method, see the book Enterprise Software TCO: Calculating and Using Total Cost of Ownership for Decision Making.
Our Analysis Results
Selecting an application because it is integrated (which in fact most SAP and Oracle applications are not much more integrated than non-SAP and Oracle applications, as they almost all have adapters.), is simply poor decision-making.
Understanding Booz Allen Hamilton’s Institutional Structure
However, Booz Allen Hamilton is not working off of any research orientation, but is simply attempting to steer it’s clients into purchasing the application that makes Booz Allen Hamilton the most money, and they will come up with any argument necessary in order to achieve this objective, including providing misinformation about the applications they are “recommending.”
Controlling for Bias
It is not necessary to accept such biased advice. However biased advice is quite standard in enterprise software. In fact, it is the identical issue to financial information, where the advisers are incentivized to lead their clients to investments that make the most money for the financial advisor.
It is reasonable to expect better, but before selecting a source of information, it is essential to set the criteria which control for bias and results in the selection of sources that have their client’s interests as a primary concern — and few entities that offer enterprise software advice do. We propose the following criteria:
- Controlling for Bias: The source must be financially unbiased. That is the source must not financially benefit from their client’s decisions. Consulting companies break this rule when they perform both software selection as well as software implementation — as most of the money resides in the software implementation. If their clients choose the software, they have consultants ready to bill in they make substantially more money than if the client goes in a different direction. IT analyst break this rule when they market services to software vendors while selling research to buyers. Both are seriously financially biased — casting considerable doubt on their recommendations.
- Transparency: Major consulting companies receive the consulting business in return for their recommendation to specific vendors, but hide this from their clients. IT analysts are quiet about the services they sell to vendors that they then rate. Clients are never told this explicitly by these entities, and these entities prefer not to divulge their conflicts of interest. They should not have these conflicts in the first place, but at the very least they must list these conflicts prominently on their websites.
- Independence of Though: The source must have the confidence to recommend not merely large brands, but must be able to recommend the right application and vendor based upon their merits.
- The Importance of a Research Basis to Support Contentions: The source must produce or at least reference actual research. Anecdotes are easy to come by and are primarily what the major consulting companies offer. However, they perform no analysis to support their anecdotes. Many of the anecdotes presented by major consulting companies turned out to be false when scrutinized and compared with research. This was shown conclusively for the topic of ERP in the book The Real Story Behind ERP: Separating Fact from Fiction. The research follows specific and rigorous rules, and if these rules are not adhered to than it is not valid research. These rules, and how one enterprise software entity which claims to perform research are explained in detail in the book by Gartner and the Magic Quadrant: A Guide for Buyers, Vendors, Investors. In this book, they are compared against university research, The RAND Corporation, and Consumer Reports.
- No Focus on Profit Maximization: If the only dedication of an information source is making money, the advice provided will be biased and of poor quality. The financial advisory area also demonstrates this irrefutably. This is why most of the research in the US and internationally come out of universities which are non-profit.
How to Improve Outcomes
Enterprise software decision making is in a poor state. Implementation failure rates continue to be high, and the major advisory firms continue to dispense exceedingly poor advice. The relationship between the business users and the business with IT is strained at the vast majority of companies, and companies are not able to come anywhere close to leveraging the potential of enterprise software. In areas ranging from forecasting to finance & accounting, companies pay far too much for underperforming software. The most prominent enterprise software advisers are the most to blame for this state of affairs — and it primarily comes down to their financial bias. They make more money when their clients make bad decision. They have no financial incentive to help them make good decisions.
One cannot expect to receive intelligently selected software, an effective planned implementation, risk-appropriate software or a low maintenance solution relying upon biased sources of information that place their interests ahead of your own – and who approach every question from the perspective of “how can we make more money from their decision?”
Getting The Real Story
You get the real story about vendors, and information technology trends per software category, without any connection to some line of business. There is no one manipulating the data to steer you into a decision that maximizes their some organizational incentive program. That is called getting the real story.
Research is Our Only Business
We perform serious research, and research is our only business. We provide both written explanations, but many calculators and estimators to empower you to come to your own conclusions (see below).
Enterprise Software Estimation Database
We maintain the largest and most accurate enterprise software estimation database in the world. Unlike companies that provide research only to begin a consulting relationship, our calculators are self-service. We have 0% financial bias and are not focused on profit maximization. Therefore, we can afford to perform actual research. Our research offerings can be reviewed from the menu above or from the table below.
If you have any questions, contact us with the contact form to the right.
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