ERP Implementation: How to Control the Cost

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Controlling Costs

When you’re contemplating a new or upgraded ERP solution, there is a lot to consider. Features and functionality are essential. You need a solution that best meets the needs of your industry and your company. You also need a solution that your employees will adopt. And it should be able to scale with your growing business.

Oh, and there’s one more thing: cost is a major consideration. If you’ve budgeted for the cost of the software, you still have to take into account ongoing costs and any customizations that you’ll want during implementation.

You may not have much leeway in the cost of the software itself. The software manufacturer sets that price.  The resale partner who implements the ERP solution will present a proposal suggesting the time required to design and customize the software to your specifications and to implement it. You’ll agree on an hourly rate, and a timeframe for completion will be established.

But final costs are somewhat within your control. There are several factors to consider if you want to control the cost of your ERP implementation.

Scope

Scope refers to the size and complexity of your ERP implementation project. Controlling the scope of your project will go a long way toward keeping your implementation costs in check.  Before you begin, scrutinize your system requirements and separate wishes from must-haves. What are your true needs? Yes, it would be nice to have all the bells and whistles, but everything comes with a price both in time and money. If you make the mistake of trying to get it all at once, you’ll increase the cost and the delivery time. A better approach is to implement the most valuable functions first and leave some others for future phases. Experience some early successes and allow your teams to become familiar with what the new ERP offers.

At ArcherPoint, we recommend starting with a business process analysis and agreeing on a project plan, budget, and timeline. This planning phase is crucial. This is the time for stakeholders and those who will use the system to collaborate and agree on requirements.  Once the scope has been set, try not to continually add “extras.” Additional functionality can come later after the system is up and running.

Of course, some changes can be absorbed and processes improved as the project progresses. But try to complete one phase at a time, giving your team a sense of accomplishment and keeping morale high.

Try not to extend the implementation project longer than a year. Human factors such as your employees’ ability to focus will impact your success, and the project may bog down. Keep it under a year to reduce fatigue and maintain focus. If you have complex business requirements, plan some for a second phase.

Timeline

Pay attention to your timeline. If you try to get your new system up and running too quickly, your costs will increase. Spending too long will have the same effect. With your implementation partner, determine the optimal timeline and make every effort to stick to it. Don’t rush the start before the groundwork is laid and take into consideration any seasonal fluctuations in your business including internal factors such as vacation and holidays.

Work Sharing

Every implementation involves a number of tasks. Some of those tasks will be performed by your implementation partner, others will be the responsibility of your in-house team. Some steps can be done in parallel. (e.g., your implementer may be working on some tasks while your internal team works on others.) It will extend the time and cost of the implementation if the implementation partner has to do it all.

For example, your staff would clean up the data selected to be moved to the new system, but your implementation partner would do the actual data import. The partner would verify and validate that the data was in place, then your staff would perform a final review.  Both teams work together on the customizations. The implementation partner would run the task, but your staff would have to be involved to ensure the resulting customizations meet your requirements.

The more work you, the customer, can do, the more money you will save. This also has a powerful secondary impact on the quality of the project.  The more your employees are involved, the more they will understand the value of the project and be happy to adopt the software and learn to use it.

Your implementation partner will take care of:

  • Developing the training plan, providing materials, and executing the training
  • Creating a plan for system and integration testing
  • Putting the system into production; being available for issues and questions

Your internal team should take care of:

  • Data cleanup and verification
  • Data formatting and cleansing imports
  • Scheduling training
  • System testing
  • Go live! Avoid distractions. This is crucial because your business needs to keep running without interruption.

There is some flexibility in the above tasks but remember, if your goal is to control costs, you must be willing to help. Depending on the ERP selected and your employees’ skills, you may be able to handle the training online or in-house. You could task your power users with training the rest of the staff.

The Right Personnel

Having the best people on your project team is essential. It can save both time and money. Choose employees that have the necessary skills and a good knowledge of your business processes. They should see the value of the new software and be excited about the project. They should also be willing to work hard and accept the challenges of an important project. You don’t want people on your team who will put up resistance when you run into obstacles or fizzle out halfway through the project.

Include representatives from the implementation partner and your company. Choose a project manager, who is positive, a good listener, and a communicator who will take responsibility and keep the team on task.

The Right Partner

The key to a successful ERP implementation is selecting the right implementation partner.  The best partners are efficient, experienced, and have a record of successful projects. Ask for references. Even if they are not the least expensive, they can save you money in the long run when they deliver a successful implementation on time and on budget.  Because they know what they’re doing, they will also prevent you from making decisions that could cost you money—including cautioning you about cutting corners that could negatively impact the outcome. Put as much time and effort into selecting a partner as you do in selecting your ERP system, and you’ll be in good hands.

Don’t risk a failed implementation by trying to cut costs

There are many opportunities to control the costs of your ERP project. A trusted implementation partner and a well-selected internal team will be the key to success.

If you’d like to know more about making your ERP purchasing decision and how you can control costs for a successful ERP project that will add value to your business, contact our experts at ArcherPoint.

By ArcherPoint, archerpoint.com

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