Is ERP Budgeting a Pain?

Let’s start with the obvious – growing companies have a real problem when it comes to budgeting and forecasting. In short, Budgeting and Forecasting are critical to any Business Success.

Nowadays, companies employ smart people to solve complex problems for their customers on a regular basis, and use technology tools to efficiently manage business processes and they often have no good answer for the annual budgeting ritual.

[vc_custom_heading text=”So what makes the budgeting process so problematic? Is it ERP implementation? ” font_container=”tag:h4|text_align:left” use_theme_fonts=”yes”]

Organizations pursue enterprise resource planning (ERP) to boost their business management software capabilities. And while, overall, nearly two-thirds of organizations consider their ERP implementations a success, there are lingering pain points, according to a new survey.

Specifically, the vast majority of these projects exceed their scheduled completion time, findings show. And while cost containment is improving, most ERP initiatives still run over budget. Meanwhile, two-of-five survey respondents express dissatisfaction with their ERP vendors.

Given ERP’s impact across the entire business and the implementation costs, companies may want to consider a different deployment strategy. Implementation resources provided by the vendors are valuable, but they are paid by the vendors.

To help get the most out of ERP, it is beneficial to look at where it is most needed. If certain process workflows are efficient, there is little need to completely replace them. As ERP connects channels and departments, it is important to consider the effect each silo will have on the wider business.

It is important to align ERP ambitions with project budget; there is little point in planning for certain advanced functionality if it does not fit into your designated budget. By working through priority areas, ERP experts can help mould the project to get as much functionality as possible for your budget.

[vc_custom_heading text=”The ERP game has become one of keeping up with change.” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes”]

ERP system cost should be viewed in the context of life-cycle cost or total cost of ownership (TCO). Be the up-front cost for hardware, software and implementation plus operations, support and maintenance cost for a reasonable span of time like (at least 7 years). Most ERP system providers charge an annual maintenance fee in the range of 18-20% of the purchase price—and it is well worth the cost. A maintenance subscription will insure that you have continuous (phone and web-based) support, “bug-fix” services, as well as system updates and enhancements as the supplier continues to invest in the product and take advantage of new functions and technologies.

As all businesses operate differently, the way they adopt ERP will vary. If you are putting in a large team (which is not that productive) and lots of nice-to-have customization, then ERP implementation will become expensive. If you go for standard (and add-ons) instead of customization, with a well-managed implementation plan, then you can often save 30-40% of the implementation costs (compared to what the big partners quote their clients).