accounting firms, in turn, coordinate a comprehensive collection of hardware, operating systems, and complementary software firms. Installation and related consulting for EIS typically cost between $100 and $200 million, with the ERPI software component accounting for only about 20 percent of the installed cost (the remaining 80 percent is spent on the actual installation, not counting the value of the customer's time). To incentivize the accounting firms to help sell its product (since, at least initially, the accounting firms had better reputations and controlled access to the target customers), ERPI told its partners that it will never enter the installations and consulting side of the business (aside from installation and consulting that ERPI does as part of its software support). Dangling such a large carrot in front of the accounting firms provided the continuing benefit of encouraging their continued support of ERPI with their customers. 137. (Refer to Case Scenario 2). Given that software systems like EIS are very complex, and quality is largely a function of the related installation and consulting processes, how can ERPI control quality and ultimately protect the reputation of its product (and its name) when it has ultimately outsourced installation to its partners? ANSWER: The best answers will include a menu of actions that ERPI can take, starting first with the observation that ERPI is being very generous to the accounting firms and that such firms stand to lose considerable revenues if they are not involved in EIS-related installations and consulting. From that base, students should begin talk about the challenge of building open communications, trust, competency, and accountability with the partners. The first step, a detailed operating contract, will set the groundwork for open communications. It should spell out the quality expectations of the partner as well as the conditions upon which ERPI has the right to terminate the partner's representation. On the trust side, ERPI can give its partners inside information on its technological breakthroughs so they can keep abreast and have a competitive advantage regarding innovations in the pipeline. They should also adhere to their promise that they will not encroach on the installation and consulting business side for the target firms (world's largest, global manufacturers, and consumer product companies). In terms of competency, ERPI can provide initial training and certification of partner consultants; they can then provide ongoing continuing education for both the consultants and the clients as a service (not a profit center). The accountability side is also well served by the certification, since noncertified consultants cannot represent ERPI software. A second control would be a quality audit function on each installation (feasible, since the installations are both huge and relatively few), and cancel the partners' right to install ERPI products if they fail the audits.
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