If you’ve ever been through an ERP project before, you know that one of the first steps is to set your budget. Without that number, your accounting and finance leadership is very unlikely to sign off on the project. But as some of you may have found out, it can be very difficult to stick to your initial budget, making it feel like the whole budgeting process was a needless exercise. However, don’t lose heart. If you are thinking of replacing an existing ERP or buying your first one, there are things you can do to help ensure the project stays on budget from the beginning. So today, I would like to discuss a few of our favorite with you.
Document your budget
This first ERP budgeting tip might seem simple. But it may surprise you how many people overlook it. When you don’t write your budget down somewhere or enter it into an electronic system, things can get out of hand quickly. By documenting your budget, you give you and your team a way to track how money is being spent. So, you can see trouble before it does irreversible damage.
Set clear goals
The second of our ERP budgeting tips follows naturally from the last. Of course, your budget is not the only thing you’re going to want to document. For any project to succeed, whether it’s an ERP implementation or the design and building of a new home, it’s crucial to set clear goals everyone understands from the outset. Without knowing what you are hoping to achieve, it is impossible to develop a plan that will get you where you need to go, or even to select the right ERP system and consultant. The overall success of your ERP project absolutely hinges on having a sound plan with clear goals. What should those goals look like, you ask? Great question! Talk to people in every department that will use the new ERP, ask them what about their job is difficult or time-consuming? What would they like to improve with the new software? The answers will give you a great jumping off point to develop the goals for your ERP project.
Be realistic
Just like when building a home, being unrealistic about the costs involved in executing your plan is a surefire way to lead to disappointment and overspending. There are several factors many people, especially those who have never implemented an ERP in the past, are likely to overlook. A few of these include:
- Hardware on which to run the ERP (for cloud-based systems, this includes the computers, smart phones, tablets and Internet service your employees will use to access the system. For on premise ERPs, there’s also the cost of the servers which will run the software and their maintenance to consider.)
- Consulting (how much outside help will you need to implement the ERP so that it meets your goals? What is the hourly rate for this?)
- Data cleaning and conversion (moving data from one system to another is never as easy as downloading it from one and immediately uploading it to the next. And why bring dirty data into a shiny new system? Consider who will handle data cleaning and reformatting.)
- Customizations (will your new ERP system meet all your needs out-of-the-box? If not, what tweaks do you need to make to the system?)
- Report prep (does the ERP already include the reports you need in the proper format? If not, you’ll probably want to get some help from your consultant to tweak them, so they meet your needs.)
- Third-party add-on tools (if you need some features not provided out-of-the-box by your ERP, adding third-party tools can be an excellent choice. However, discuss these needs with your ERP consultant from the beginning so that you can include the cost of the software itself and the time to implement it into your overall budget.)
Avoid scope creep
If you’re not familiar with it, “scope creep” is something that happens when you add new tasks and features to your ERP implementation with reckless abandon, causing the project to spiral out of control. This not only destroys any timeline you hope to stick to but also will quickly blow your budget as well. When you begin an ERP project without a strong plan or are reluctant stick to it, you’re likely to fall victim to scope creep. Therefore, the planning stage is the key to the overall success of your ERP project.
Don’t overlook data conversion
I alluded to this one earlier, but it’s so important it bears repeating. No two ERP systems handle data in the same way and preparing it to move from one system to another can be a real time hog. But if you take the time to clean your data, removing files you no longer need, de-duplicating it and making sure you have strong naming conventions in place. If you use the same capitalization and punctuation throughout, the data import becomes easier.
A best practice is to take the time to clean your data before you begin the ERP implementation. That way, it will be ready for your consultant when they’ve reached the data conversion part of the process. Also, if you have questions about the data conversion process and who will handle what, speak with your ERP consultant about these early on, so you can include the data conversion tasks in your project plan.
These ERP budgeting tips may seem simple, but if you follow them, you’ll be way ahead of the pack in helping to make sure your implementation project stays on budget from the very beginning. If you would like to learn more about these and other ways, you can help keep your ERP budget inline, .
