Secrets to Budgeting a Successful ERP Implementation

A good ERP professional knowns that applying a little extra thought and elbow grease to your budgeting can take your ERP implementation a long way. In this article, read about ten secrets to budgeting your project effectively.

Many of our competitors will quote a project cost quickly, based on a bit of research on a potential customer’s estimated total sales revenue. This sort of top down approach is quick and easy, but not helpful.

The cost of an ERP implementation can vary significantly depending on a number of factors such as the size of the company, the complexity of the business processes, the number of users, and the type of industry. Therefore, it is important to carefully plan and budget for an ERP implementation in order to ensure that all necessary resources are available and that the project is completed on time and within budget.

To determine a budget for an ERP implementation, it is important to:

1. Identify the scope of the project: Determine the business processes that need to be integrated into the ERP system and the features and functionality that are required.

2. Determine the resources required: Estimate the time and resources needed to complete the project, including the number of employees who will be involved and the amount of training that will be required.

3. Work with a vendor to develop a detailed implementation plan and budget: Collaborate with a vendor to develop a plan and budget that includes the cost of the software, customization, implementation, and ongoing maintenance and support.

4. Review the total cost of ownership (TCO): Carefully review the TCO of the ERP system, including ongoing maintenance and support costs, to ensure that the system delivers long-term value for the business.

So, how do ERP projects go over budget? It turns out that the reasons are pretty predictable and avoidable.

1. Lack of proper planning: ERP projects are complex and require careful planning to ensure that all business processes are captured and integrated into the new system. If proper planning is not done, it can lead to delays, budget overruns, and ultimately project failure.

2. Insufficient training: Proper training is essential for the success of any ERP implementation. If employees are not properly trained on how to use the new system, it can lead to a lack of adoption and ultimately a failure to realize the expected benefits.

3. Resistance to change: Many ERP projects involve significant changes to business processes, which can be difficult for employees to accept. If there is resistance to change, it can lead to a lack of adoption and a failure to realize the expected benefits.

4. Poor vendor selection: It is important to choose a vendor that has a track record of successful ERP implementations and can provide the necessary support and resources. When seeking advice or selecting a partner, find the partner you can trust the most. You will be letting them into the inner workings of your business, and you need to feel trusted and listened to. If the wrong vendor is chosen, it can lead to project failure and a lack of realization of expected benefits.

5. Incomplete scope: ERP projects often involve the integration of multiple business processes, which can be complex. If the scope of the project is not properly defined or is incomplete, it can lead to misunderstandings and a failure to realize the expected benefits.

6. Unclear project goals: It is important to have clear, measurable project goals that are understood by all stakeholders. If these goals are not clearly defined or are not aligned with the overall business strategy, it is likely that your project will not deliver the benefits you are looking for.