Finding a good implementer is often a major challenge. An economic theory concept known as the "Market for Lemons" helps us understand why this process can be so complicated.
What is the "Market for Lemons"?
The "Market for Lemons" concept, introduced by economist George Akerlof in 1970, explains how information asymmetry can degrade the quality of products or services in a market. Essentially, when buyers cannot easily distinguish between high-quality and low-quality products or services, they tend to offer lower prices. This discourages high-quality sellers from participating in the market. As a result, the market becomes flooded with low-quality products, leading to poor selection.
How does this apply to finding implementers?
When a company looks for an Odoo implementer to deploy its ERP, it faces a market where technical expertise, experience, and service quality vary greatly among providers. However, it’s not always easy for buyers to assess the quality of an implementer before hiring them. This information imbalance stems from:
- Difficulty in evaluating quality: Many service providers may claim to have experience in Odoo implementation, but their actual competence levels vary widely. If a company lacks deep technical knowledge of Odoo, it may struggle to differentiate between highly qualified implementers and those with less experience or capability.
- Rankings not focused on quality: The rankings suggested by Odoo are based on the number of annual new subscriptions sold. While this provides some indication of an implementer's future potential, it doesn’t necessarily mean they possess deep knowledge.
Since buyers cannot easily distinguish between good and bad implementers, they tend to offer lower prices or choose the cheapest provider. This can lead to high-quality implementers, who charge more due to their greater experience, being excluded from the market or choosing not to compete in that segment. As a result, the market gets saturated with lower-quality implementers offering cheaper prices, but whose work may not meet expectations.
Practical Example
Imagine a company is undergoing digital transformation and decides to implement Odoo to improve its operations management. After receiving several proposals from implementers, it opts for the most affordable option, as all proposals seem similar at first glance and they don't have a specialized team to thoroughly evaluate the technical capabilities of each provider.
As the project progresses, the company begins to notice issues: the implementer has underestimated the system's complexity and lacks the necessary experience to implement certain critical modules. This leads to significant delays and poor configurations, which start to affect the company's workflow.
Midway through the project, the company finds itself in a difficult situation: it has already invested time and money, but the system is not functioning as expected. Now, it is forced to spend even more to fix the errors or, in the worst case, find another implementer to take over the work from scratch.
How to Avoid a "Market for Lemons" When Searching for Odoo Implementers
Fortunately, there are strategies companies can use to reduce the risk of falling into a "Market for Lemons" when selecting an Odoo implementer:
- References and success stories: It's crucial for companies to investigate the implementer's references and request examples of previous successful projects. Quality implementers will be happy to share success stories that demonstrate their capabilities.
- Technical audit: Unfortunately, this part is the hardest to verify. Fortunately, there are indicators that can demonstrate quality. The most important is to check if the company collaborates with the Odoo Community Association. If they do, it’s a good sign that they meet high standards of quality. If not, they may still be technically excellent, but it’s necessary to review their code.
- Certifications: Odoo certifications ensure that the implementers understand how the software works on a functional level. However, there is currently no technical certification from Odoo itself.
Conclusion
We can see the challenges companies face when choosing a provider in a setting with information asymmetry. It is important to take steps like the ones proposed to mitigate this situation and make the best possible decision.