How to reduce ERP implementation costs

13 May 2022

Photo by Mathieu Stern on Unsplash

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How to reduce ERP implementation costs

ERP implementation projects are expensive—and often contain unforeseen costs that you didn’t have in your budget. Even the best planned projects are bound to encounter a few unexpected expenses along the way. 

Read on to learn about the three most common hidden or unforeseen costs of ERP implementation.

1. Training Costs

Training costs are probably the most overlooked area when it comes to ERP implementations

Training is one of the most critical aspects of the implementation process. It will give your staff a chance to learn and use the system properly—preparing everyone in your organization to be ready for the launch of the new system. 

But, estimating training costs is difficult. Some people within your organization will need little training—either their job processes will change very little under the new system, or they are naturally fast learners and quick to pick up the system. 

Others in your organization, however, will require extensive training. For some, all of their daily tasks and processes will change, meaning they will need extra time to learn the new system and their new job duties. You will probably also have people on staff who are less comfortable with technology or just need a little extra time to become thoroughly familiar with the new ERP system.

Investing in quality training is essential. Trust me when I say it will be cheaper for you in the long run to ensure that everyone is using the system properly from the start. Experienced ERP training consultants can be expensive, but it is worth it to have knowledgeable people who can help you learn, understand, and use your new system.

ERP projects can also take over a year to fully implement(!). You will most likely have some staff turnover during that time, which means that you will also need to invest additional time and money into training new hires to get them up-to-speed on the system.

Many ERP implementations fail because companies are unwilling to invest the needed time and energy into the appropriate level of training required to get a new and complicated system up and running. While it may seem like a cost savings to cut some corners when it comes to training, you are just costing your company money, as the expensive ERP software system you invested in isn’t being used properly—meaning you are not reaping the rewards you should be from your ERP.

What this adds up to is more money spent on training that you may have initially budgeted for. No one likes cost overruns, but taking the time to invest in and properly train your staff is one of the most important components of an ERP implementation project—and one that will pay off for your organization in the long run.

2. Re-engineered Processes

Many businesses try to remove process re-engineering from their ERP implementation process.  

Even though evaluating your business processes and identifying pain points is an important step of the ERP selection process, many companies will try get the implementation complete in the shortest time with the least amount of changes required.  

The truth is that none of us have fully optimized processes—inefficient processes was probably one of the reasons you decided to get a new ERP in the first place. 

Your new ERP will have best practices built into it, so it only makes sense that you take the time to re-think and revise your processes to match with these best practices. It makes alot more sense to use the built-in best practice than to pay to customize your new ERP system to continue using a process that is inefficient.

ERPs are robust tools that, when used properly, can save you time and money and help your entire company—from back-office operations to the shop floor—run more efficiently and effectively. But to get full advantage of your ERP system, you need to use it in conjunction with better processes.

Consider taking this opportunity when your employees already need to make changes and adapt to a new system, to ask them to adopt a better process at the same time. You’ll find re-engineering a process a lot cheaper than the alternative of customization of an ERP system to fit your old and ineffective business processes—plus you will create a more streamlined shop. 

Taking time to create newer, better processes—or hiring an ERP or manufacturing consultant to help you—can be costly. But, like with most things in life, if you take the time to do things correctly the first time around, you will be rewarded—in this case, with a shop that runs smoothly and efficiently.

3. Employee Resistance to Change

I know I sound like a broken record on this front, but ERP implementations are disruptive

Naturally, any system that affects so many areas of your organization will bring a lot of change to your shop—and change can be difficult for many people to deal with.

Some within your organization will be excited about the new system and will foresee the positive effects the system will bring your business. But others within your organization will be reluctant and resistant to change—and if not effectively dealt with from the start, they may hinder or even sabotage your efforts to bring the new system in place.

It is crucial to get key users and stakeholders within your company on board with the new system from the very beginning. If you know how important the operations manager will be to the ERP implementation process, get him involved with the system from the start. Make sure he understands the importance of the new system to the business and that he is an invested participant in the project. This way, instead of being someone who can delay and derail the implementation process, he is an ally and a partner—and he’ll actually help you get other people on board.

You may also consider adding a change management specialist to your implementation team.  Change management specialists have very specialized training related to organizational change.  They will help you differentiate between and will provide you with strategies to help those who can easily deal with change from those staff members who need a lot of handholding to get past their reluctance to change.

A change management specialist may be an additional cost that you were not initially budgeting for. Still, like with everything else on this list, if you address problems and issues at the beginning of your implementation project, you will be better off at the end of it.

Want to save on ERP implementation costs?

I don’t want the above list to scare you off from an ERP implementation project. ERPs are life-changing to your organization, and anything that brings so much change with it is bound to have some unforeseen costs and hiccups—but getting a new system in place is worth the disruption.

Source: GeniusERP