How to Keep Costs Down in ERP Projects

The primary goals of any ERP implementation are to increase efficiency and reduce costs. This begins right at the very start of the project, before you’ve even chosen your ERP software. By giving careful consideration to a variety of key factors early on, you’ll be better able to control your project costs, more effectively manage your resources, and increase your long-term return on investment.

Here are a few pointers to help you keep the costs of your ERP implementation down, right from the very start of your project.

Allocate the right people, and give them the right resources.

ERP implementations involve input and commitment from different areas of your business. Expecting people to manage this extra work in addition to their day jobs can be a false economy; don’t give them enough time and resources and they’re more likely to rush the job and take shortcuts. So to avoid unnecessary overtime, missed deadlines, and rework, make sure everyone knows what they are committing to and give them the time to do it.

Choose the right software.

This may seem pretty obvious, but choosing an ERP solution that forces you to work in a particular way, may not meet your needs in a few years time, or conversely makes you buy far more functionality than you actually require, will cost you money. To keep costs controllable, choose an ERP solution that is easily tailored to the way people work, flexible enough to adapt to the changing requirements of your business, and modular so you only buy the functionality you need. Make sure you’ll be able to extend  the functionality in the future, it has a long-term road map, and is priced so that it offers value for money.

Follow a defined project methodology during implementation

Most good ERP business partners will work to a defined and structured project methodology. They will base your implementation around it, and of course should let you see the methodology before you sign up with them. A project methodology reduces risk, prevents project creep, reduces the time spent completing project stages, and makes monitoring and controlling the project more efficient (especially during the execution phase). It also helps prevent the project from stalling and reduces overall costs by saving time and effort building and implementing deliverables.

Choose the right deployment option

Products such as Microsoft Dynamics NAV are available as both on-premise ERP solutions and cloud-based software. There are a number of reasons which will influence your decision to deploy your ERP software in the cloud or on-premise, but one of the key factors is how the costs break down.

On-premise ERP is likely to initially incur additional hardware costs, and you need the resources to run and look after this hardware. You will usually pay for the software as an up-front payment (sometimes staged), but after that you will effectively own it. Cloud-based ERP is usually offered as ‘software as a service’, for which you typically pay a monthly fee based on the number of users you have. So on-premise ERP is usually considered a capital expenditure, and after the initial costs, keeping the system up and running is much cheaper than cloud. In the long-term cloud ERP may cost more than on-premise, but is more of an operational cost and you’re effectively outsourcing hardware as well as software licencing and maintenance.  Many finance professionals and business owners prefer to incur an operational cost. There are other financial considerations with both types of deployment and there’s no right or wrong; you need to talk to your provider and do the sums.

Consider concurrent licensing

If your users don’t all need to use the system at the same time (for example, you have job shares, shifts or part-time employees), consider concurrent licensing. Some ERP solutions, such as Microsoft Dynamics NAV offer concurrent licensing options. This can keep costs down, because you only pay for the users that need to access the system at any one time. So, if you have say fifteen users, but only ten of them need to access the system at once, then you only need to pay for the ten licences.

Maintenance and support

Software maintenance means you get kept up to date with any software enhancements, bug fixes, and updates. Support means you have someone to contact and put things right if you run into problems. There are different levels of maintenance and support agreements, so you need to judge the right level for your organisation’s needs. Not keeping your software up to date or software issues not being resolved quickly enough can be expensive. Matching the levels of ERP software maintenance and support to the requirements of your business will save you time and money.

Take a ‘train the trainer’ approach

You can rely on your business partner to provide training, but better still is to take a ‘train the trainer’ approach. In this way your business partner trains a few of your key staff in selected areas, and your staff then pass this training on. These staff may also need a little training in how to train, as well as how the system works, but  taking the responsibility largely away from your business partner and keeping it in-house is often more convenient, as well as cheaper. By educating key members of your project team in basic and advanced user training, they will be able to train other user-levels of staff, reducing your initial and on-going training costs. Training staff in areas such as system administration or even development will reduce future reliance on your business partner or other training providers, again keeping costs down.

Keep talking!

One of the key ways to keep costs down during ERP implementation is to maintain clear and open channels of communication. From the top down, it’s vital to keep everyone up to date with what’s going on, while also enabling them to update everyone and express any concerns. Good communication between projects teams, different departments, business partners, and all other stakeholders in the project gets things done quicker, reduces the amount of problems and rework, and saves money.

Whatever the size of your business, and whether you’re implementing ERP software for the first time or changing systems, ERP projects are a significant investment in time and resources. Keeping project costs down right from the start of your project not only gets you off to a good start, but provides a strong foundation for long-term success and return on investment (ROI).

There are many more ways of keeping costs down in ERP implementations. For more information on implementing an effective and successful ERP solution in your business while controlling costs, please contact Concentrix TSG.

By Concentrix TSG – independent ERP and business software specialists