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The 6 ‘other’ costs of ERP implementation

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The 6 ‘other’ costs of ERP implementation

There’s nothing worse than setting a budget, getting underway and then blowing it with hidden costs that seem to have surfaced from thin air.

It’s no different when implementing a new ERP solution for your business. Often businesses look at the services component of an ERP proposal and use that as the project budget. Of course this is only what you’re paying for professional services.  There are less obvious costs which can sting you if you don’t know what to look for.

So diving into the project balance sheets and with a little help from our experience in delivering ERP solution, we distilled down the top 6 hidden costs companies need to account for when implementing an ERP solution AND how you can minimise them.

1. Training goes beyond the classroom

Training is crucial. It is the difference between truly getting significant ROI on your ERP. The better trained your staff, the better utilisation of the software. It begins with your primary system operators being trained by the software consultants.  More time is then required for knowledge sharing process through you wider user base internally.

Your team will need to learn new skills. Saying goodbye to spreadsheets also means up-skilling in a wide range of different procedures. The time needed

There is no “normal” when it comes to training time.  Different staff learn at different rates and we need to be mindful of that. Give some extra fat in the budget to ensure training is fulfilled.

2. Get testing and be strict about it

Testing of business processes needs to be a hands-on task.  There are some automated testing applications that are available and may assist in some areas, but human interaction is critical.  The system being stable on a technical level is one thing, being practical in assisting business activities is another.

New ERP systems should be continually tested. You need to build a system that can account for every possible scenario as well as staff that can react to every possible scenario.

3. Labor costs – business doesn’t stop

Often the hardest to measure and a cost that can frequently blow out if you don’t prepare.

Take into account the additional workload on your team time for your project team. Remember, they had other obligations before you tasked them on this one. It may be necessary to hire temporary staff to backfill these holes

You should consider engaging consultants to manage your implementation, it can’t be stressed enough just how much money an expert can save in guiding the direction of your implementation

You may have an existing system that you are replacing, for your business to function, this still needs to work until you get everything up and running.  

4. Too much change

Before considering re-engineering a particular process within your ERP, you need to ask yourself: Is this really necessary.

It’s easy during implementation to get carried away re-engineering processes that will never be used to their desired intention. This drains resources by spending time not working towards the ultimate goal.  Keep the focus on what’s important.  Fine tuning can always come later.

5. Employees not getting on board

This is a common one. Anything new is likely to create internal conflicts where one party wants change and the other doesn’t. It’s important to remember that change is difficult for many of us so we need to be mindful of that.

Consider adding a change management specialist to your implementation or at the very least introduce some change management practices. They are invaluable in fast tracking the process of sweeping the team together through strategic training and getting them working harmoniously towards the one goal.

Everyone needs to be moving in the same direction.

6. The pay off

You will have constant tapping on your shoulder asking to know when those projected cost savings are being achieved.

Keep a close eye on the goals and constantly look at how the budget is being spent. Getting sidetracked and introducing Are you including too many people? Is training taking too long? Stay on top of these things and plan ahead to contain the cost.

Ultimately, streamlining processes and creating one true source of data is going to yield results, but it takes time and requires a solid implementation.