Introduction Of How To Control The Costs Of Implementation Of ERP Software
How To Control The Costs Of Implementation Of ERP Software. An ERP system connects with other corporate applications to work together. For employees to quickly access tasks and business information. Everything works in a common database. And the processes are more agile (this is what is called Integration).
How To Control The Implementation Costs
ERP performs monotonous functions. It takes care of those non-productive or creative things that people do, such as invoicing, preparing payroll, or managing orders … The most modern can use artificial intelligence, Big Data, and also automation, to find repetitive patterns and analyze how the market will change, different business scenarios, or how a company department is working, for example.
Business Intelligence, Analysis, And ERP software automatically create custom reports, charts, and combined statistics. They are developed and delivered automatically. A study with a survey of 246 companies that had implemented an ERP revealed that: 35% of ERP implementations exceeded the initial Budget by between 0% – 25 % 15% exceeded the Budget by between 26% – 50% AND 6% exceeded it by more than 50% AND concluded.
That Not only should the initial purchase price be considered, but additional or complementary expenses and losses are also very important. How to Control the Implementation Costs of a New ERP Software so that your company’s Budget does not skyrocket. What does the Total Cost of Ownership of an ERP System include?
The Total Cost Of Ownership Of The ERP System
As a reference, I think it is interesting to distinguish between the price and the total cost of ownership. The price is the basic value that must be paid for a product or service. Instead, the ERP Total Cost of Ownership covers both the price of the software and additional costs, including operating and personnel costs. The total cost of ownership of the ERP system can be divided into seven main groups.
Price of implementation or implementation Price of customization Price of training Price of flow evolution (activities for change management or remodeling of business processes) Price of updates Price of software and hardware maintenance Price of support (for quick resolution of problems with new tasks, or something that does not work well.
How to Control ERP Implementation Costs so that the Budget does not shoot? 1. Knowing Business Processes Well Saves ERP Implementation Costs Most modern ERP applications have a modular scheme. They are built with separate pieces or modules that can be easily added or removed. The accounting module, human resources, supply chain management, production or inventory, CRM or customer relations, projects, eCommerce, etc.
ERP Implementation Costs There Are Several Types Of ERP
If you know the business processes very well, you will be able to choose the correct mix of functionalities. Only the right modules for your business. It is a simple way to save on the ERP implementation. 2. Minimum Viable Product and Demo Pre -Implementation The implementation includes the design and installation of software, the configuration of workflows, and so on.
To reduce these expenses, before buying the final ERP, you should be able to evaluate a Minimum Viable Product or a demo oriented to your processes. 3. Acquire Predefined Software, Without Customizations, Save ERP Implementation Costs There are several types of ERP: According to Degree of Customization: ready to use or customized. You Can Also Read The Human Factor In The Digital Transformation In 2022.
The “ready-to-use” packages are based on so-called “best practices”, that is, strategic approaches and functions widely accepted in a given sector or industry. They are vertical sectors: for example, ERP for a dairy factory, ERP for agricultural companies, ERP for insurance companies, or a mechanical workshop. Instead, custom software is a tailored suit.
Implementing An Opensource ERP Can Save Costs
Other types of ERP are classified. According to Size: for micro, small, medium, and large companies. According to implementation: Standalone and SaaS. According to the possibility of accessing the source code: proprietary (legal impossibility of accessing the code) and open-source or Opensource. Implementing an Opensource ERP Can Save Costs Opensource ERPs are characterized by their high level of efficiency and productivity.
And they are distributed, in general, without license costs. The software is free. Which is an ERP is a lot of money. And it is a great advantage for organizations that have their developers capable of implementing it or who can hire third parties to implement it. In this video, I talk about the best free and open source ERPs.
Generically, I could say that ERPs with predefined basic functionalities, those created for SMEs and those hosted in the cloud tend to be cheaper. Of course, customization involves a lot more consulting, scheduling, and maintenance work. And the more processes and complexity the business has, the greater the need for adaptations.
Optimize The Cost Of Training For ERP Users
That said, it must also be said that 100% bespoke ERP solutions have a perfect ROI for businesses, particularly in the long term. And that staff adapt more easily to the new work environment. 4. ERP Software in the Cloud is Cheaper than On-Premise On-Premise tools are solutions that are installed locally on your company’s desktop and servers.
Instead, Cloud tools are solutions based on the cloud, on the internet. Hosted on a third-party server, accessed through a web browser. Cloud computing eliminates the need for your business to purchase, implement, and maintain technology infrastructure or application software on an individual basis.
Regardless of the application, the cloud service provider assumes responsibility for all the infrastructure necessary to run the solution: servers, backup, software, operating systems, databases, upgrades, migration, power and cooling, facility space, etc. ., and the costs of internal staff and third parties. 5.
Optimize the Cost of Training for ERP Users This is a cost that cannot be avoided, but it must be optimized. They are two costs in one. The cost of functional training to get the most out of the acquired solution; and the hidden cost of the time that staff stops dedicating to their direct activities to do the training.
5 Unexpected Costs Expenses Of An ERP implementation
For example, lost profits or lost profits from unrealized sales, or projects that the company must reject because the team is in ERP classes. 6. Rationalize the Implementation to be Efficient and Economical Up to now I have commented on specific aspects that you should take into account to control implementation costs.
Also, you could check this video about 5 Unexpected Costs or Expenses of an ERP implementation that can make the total budget more expensive. But the implementation of a business system of this type is an organic process, which must be carried out comprehensively and rationally. In this sense, to be more efficient and control spending, you should also consider key success factors that cover the entire process.
The Total Cost Of Implementing An ERP System
Create or Find a Dedicated Team that minimally has a Project Leader, in charge of total supervision. Analyst for data verification, import, and validation. Quality control engineer, who performs efficiency and performance tests. A consultant who evaluates software to predict potential problems. – Design a Detailed Plan It is the best thing you can do to control and reduce the total cost of implementing an ERP system.
The plan should have two chapters: Technology Integration Chapter: scheduling planning, data migration, staff training, quality control, and testing, launch activities, analysis, and evaluation. Challenges Chapter: Predicting disruptions and challenges during each stage: communication planning, project management, hardware, software, team management, etc.
Migrate Essential Data: This is a complex issue but of great importance for the success of the implementation: Cleaning and validation of the data. Launch of databases. Legacy package processing. Move data to new storage. Proof of inherited information. Testing new information. – And finally, a Very Good Staff Training Training increases productivity and the ROI of the implementation.