The promise of enterprise resource planning (ERP) software is that it should create greater efficiencies in your business operations, producing genuine cost savings and an attractive return on investment (ROI) within a reasonable timeframe.
Simply selecting the right software at the right price, however, is not enough to realize these business benefits. There are costs beyond software licensing and deployment that many IT buyers neglect to factor into their budgets – until it’s too late. These overlooked costs can delay and diminish your expected ROI, or worse, make the project a net loser altogether.
How do you protect yourself and your company from being blindsided by unexpected budget-busting costs?
Cover all your bases upfront. As you establish your budget and evaluate proposals from ERP vendors, include in your analysis, these often overlooked costs of ERP.
Your new system is up and running, but it’s worthless unless employees are comfortable using it. How much training time is required to equip your employees to maximize the system? Keep in mind that the more difficult the software is to use, the more expensive it will be to get your employees up to speed on it. Therefore, factor in
2. Data Migration/ Conversion
When you purchase new ERP software, you have the costs of moving vast amounts of important business data, often from disparate systems across your organization, into a new system. The data transfer may require weeks, even months, to complete, including time to scrub the data – to delete obsolete, unnecessary, and damaged data. How much will the data conversion cost? Will there be downtime associated with the data transfer and how much will that disruption cost?
3. Business Disruption
How long and when will your system be down during ERP deployment? What will that downtime cost the company in lost revenue and employee productivity? Have you planned ahead to minimize the impact – and cost – of the disruption to your operations?
4. Unexpected Customization
Even the most robust out-of-the-box ERP functionality might need to be customized to fit your business. What capabilities do you need added or tailored? Address these possibilities upfront, when you can plan for the costs and have better control over them, versus during mid-deployment.
5. Redefining Business Processes
An option to customization is to adjust business processes to fit the new ERP system. This, however, still has costs associated with it in terms of training (to acclimate employees to the new processes), productivity loss during the training period, and overall disruption to the business caused by implementing new processes.
AVOID BEING BLINDSIDED, PRESERVE ERP ROI
To learn more about how to avoid being blindsided by these and other factors that lead to unpleasant, unexpected cost overruns with your next ERP deployment,
Byline: Enterprise Resources Technology Group, Inc. (ERT Group) is a technology consulting firm that empowers companies to grow and succeed with business solutions that streamline processes, improve productivity, and squeeze more profit from operations. ERT Group is a
1 thought on “The 5 Most Often Overlooked Costs of ERP”
Great points. These are also major reasons why ERP implementations gets delayed and goes over budget. Many system integrators don't include some of these efforts in to the resource plan and hence gets started with these critical activities too late in the game. System integrator may be covered as their SOW clearly has this responsibility taken out but in the end the client ends up paying the bill for the delay.