Why Do So Many ERP Projects Go Over Budget?

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The most common reason accounting software implementation projects go over budget is because the Partner is spending time working on things not included in the original quote.  This work is called "out of scope".  Here are a few examples of how this can happen:

1) You see all the cool things the new system can do and find yourself a kid in a candy store saying, "wow, can we get it to do this too?" The answer is yes, but this request is beyond the scope of the original proposal.

2) You were quoted 8 hours of training for the AP clerk. This AP clerk is slow to learn, or is replaced by a new person halfway thru the project. The Partner must spend additional training time that was not included in the original quote.

3) You have a report you require from the new system, but you didn't show it to the Partner in advance because you just assumed it would be included. It needs to be designed from scratch and this time wasn't included in the original quote.

A good Partner will tell you in advance if work needs to be done that was not included in the original quote, and get your approval before moving forward.

But hey, it is not always your fault! At times, going over budget could be the Partner's fault if they underestimated the amount of time required. If this is truly the only cause, an honest Partner may take the time as a loss and quote more efficiently the next time. 

Budget overruns can also happen if you are working with a less-than-honest Partner that has intentionally low-balled the initial quote in order to win your business.   Some companies take advantage of the fact that many prospects do not ask enough questions. These prospects find out later that work they assumed was included in the proposal are now considered "out of scope." (This is why we wrote the white paper "30 Questions Every CFO Needs to Ask About the Cost of Accounting Software". I definitely recommend you read this before you sign a quote.)

Remember, price is only one piece of the puzzle, and you should not always choose a Partner based on the lowest quote. A higher services quote could simply mean that you are dealing with a more honest Partner. 

Take the time to make sure you know what is included in the quote and what is not. If you want a Microsoft Dynamics GP accounting software Partner that will treat you fairly, contact CAL Business Solutions.

by CAL Business Solutions - a Connecticut Microsoft Dynamics GP Partner

2 thoughts on “Why Do So Many ERP Projects Go Over Budget?”

  1. So True ~ creeping vision and excitement often move the scope of a project. That is not necessarily a bad thing, it may just mean longer implementation costs associated with setup and training. As long as the change orders make their way into the budget, then we can keep sight on the real 'over/under budget numbers'.
    However, we have found that if we look at how long some of implementation times took just a few years ago compared to today's numbers, they are shorter because of tools, shortcuts, and window modifications Microsoft has made to make the processes both more intuitive and more streamlined. That is exciting for both customer and partners as we realize we can fit MORE of those 'out of scope' type items into the time we've saved with the new features.

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