ERP implementations have a long and historied reputation for going over-budget and over schedule. That's why many small or mid-sized businesses who are purchasing ERP for the first time might have heard about fixed-fee and lean implementations as a way to mitigate some of those associated risks. But are they right for your company? To help you make the right decision, let's review these implementation strategies and the factors you need to consider when selecting the one that best suits your objectives.
You can think of lean implementations as a scaled-down version of your typical time and material implementation. After the discovery and requirements gathering is completed, the objective in this type of implementation is to keep the process as lean as possible. This is done by focusing on only the basic components of your selected ERP software, minimizing the consultants' time, and not involving as many departments during the process. Pro: The main advantage is reduced costs. If you're looking to mitigate the costs of an ERP implementation, a lean implementation is one way to go about that. Con: It does not take into account any of the specialized requirements of a company's business process. Very few large or complex businesses will get the full value of their ERP investment from executing a lean implementation.
Fixed Fee Implementation
With this type of implementation, you get a set scope of the implementation beforehand before the project begins with a fixed price. Typically, you'll get a specific list of what is included in that price, such as the functionalities, the processes that will be covered, what data will be imported, the types of reports and so on. Pro: As a business, you'll know the cost of your ERP implementation upfront. Since the scope is pre-defined, you also have a specific timeline. Con: It may not take into account any customization your company might need or specific compliance requirements unless pre-defined. If customization is absolutely required which is not in the scope, you will likely need to sign a change request to add time and cost to your project.
Consider a fixed-fee or lean implementation if:
Consider a fixed-fee or lean implementation if you are a small business – with up to $1 to $5 million in top-line revenue. If you're looking for your first ERP system or upgrading from your accounting software and have a low tolerance for changes to costs and timelines, implementations like these can help you constrain the risks and costs. The key to having a successful project here is to ensure your ERP implementation partner should provide you with a clear project plan and a scope of how they will address it. There should be no room for misunderstandings or miscommunication here.
Avoid a fixed-fee or lean implementation if:
If you are a larger organization with lots of complex processes or even a smaller business but with some very specific business processes or compliance requirements, you'll need some customization, which is not included in these types of implementations. Modern mid-market ERP solutions, like Dynamics 365 Business Central, for example, are complex systems with incredible potential. Keep in mind that lean and fixed-fee implementations typically do not allow for the exploration or implementation of all the value-added functionality that can be applied to the company's process.
Regardless of which implementation type fits your business best, one common factor for implementation project success is selecting the right Dynamics 365 Partner. It's always the people working on your project that make the biggest impact on evaluating the success of an ERP implementation. Make sure you find a partner whose values align with yours.
If you need help deciding which ERP implementation would work best for your business, get in touch with the Kwixand Solutions team. As a Silver Microsoft Dynamics 365 Partner, we have a wide range of implementation experience – from lean, fixed-fee implementations for small companies to large-scale implementation projects. We would be happy to answer any questions you may have. Reach us at 1-604-256-5800 or drop us a line at firstname.lastname@example.org
By Kwixand Solutions, www.kwixand.com
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