ERP projects have a long-standing reputation for being difficult. There are numerous statistics out there that say that 50% of ERP implementations can be listed as failures because they’ve gone over schedule or budget, or both. We’ll examine why this happens and how you can prevent it.
ERP implementation projects often go over budget & timeline because of three main factors:
1) Lack of Honest Communication
A common reason that ERP implementations go over budget or timeline is that software vendors often overpromise and underdeliver. To win your business, they might convince you that your project will not be as costly or quote a shorter timeline than their competitors.
Another common scenario is that after the discovery process, the implementation team realizes that some additional work needs to be done that wasn’t uncovered in the high-level overview, which would raise the budget. In this situation, the salesperson should go back to the client and inform them of this change before the project begins. However, the client is often not informed about the extra costs or time, and the project just begins.
2) Changes to Project Scope
Expanding your project scope will instantly raise your budget and increase your timeline. Scope creep occurs when new features or customizations are added on that are not on the plan. These additions can veer your ERP project off course and result in extra expenses and delays. If your project scope needs adjustments that are critical to your main business processes, there should be a solid process for proposing and approving changes.
3) Not Factoring in all the Costs
Sometimes companies forget to identify all the hidden costs associated with an ERP implementation project. Besides the costs of implementing the solution, licensing fees, and more, you should also think about costs around training your staff, support, hiring contract workers or consultants, etc.
What You Should Do to Stay on Track and Budget:
So how should you avoid budget overruns and delays to your timeline? Following these key steps is a good starting point.
Set Project Goals
Establishing clear project goals is key to implementation success. Your entire project team should be involved in this process, and implementation goals should be based on your organization’s current pain points and future plans.
Be Realistic
Develop a realistic implementation budget and timeline. You won’t know your actual costs until you develop an implementation plan. You can still develop a realistic budget by speaking to vendors, consultants and considering your unique project goals.
Evaluate Your ERP Vendor & Consultants
Take your time during the selection process to evaluate your ERP vendor and consultants thoroughly. Choose technology partners that align with your business and personal values. Make sure you ask for client testimonials or references during the evaluation process.
Constraining Costs & Timeline for Small Businesses
If you are a small business owner looking to upgrade your accounting software or considering your first ERP solution but are on a strict budget or timeline, consider lean, fixed-fee implementations. In those types of ERP implementation projects, you are given a fixed fee and timeline up-front for a set of pre-defined deliverables and modules. When considering you must ensure that your ERP partner gives you in-depth details of the deliverables. That way, you know exactly what you are getting for your fixed fee, and you avoid making change requests after the fact.
Final Thoughts
ERP implementations will have many moving parts, but that does not mean you can’t constrain your budget and avoid going overschedule with the right planning and ERP partner. Get in touch with , a Silver Microsoft Dynamics 365 Partner, to learn more about constraining the risks of your ERP implementation. Reach us at 1-604-256-5800 or drop us a line at info@kwixand.com
