The Budget for your ERP Implementation This is how you
plan realistically

Strategic Budgeting for your ERP Project

The budget for an ERP implementation should never be determined hastily or solely on the basis of quotations from software vendors. Quotations are usually based on profitability and often overlook important aspects. In addition, they are often based on incorrect assumptions - especially with regard to project scope and complexity. To avoid mistakes when defining a budget, you need to take a strategic approach and ensure that all aspects of the project are considered. What points should you keep in mind when planning your budget?

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These Aspects are important when determining the ERP Budget

1. Thinking ahead about the Services offered by Vendors

Perhaps the most important point first: check the vendor quotations being available. Of course, these are an important starting point for ERP implementations - no question! They provide first estimates of the cost scope. However, they often contain incorrect assumptions. For example, vendors may underestimate the amount of customization required to adapt the ERP system to your specific business processes. This can result in additional costs, particularly in this respect, that exceed the original offer.

It is often assumed that data migration is quicker and easier than it is in reality. The complexity of data cleansing, mapping and validation is often overlooked - this aspect can not only lead to unexpected delays, but also to further costs during implementation.

In addition, the effort of change management may be underestimated. Especially when it comes to ensuring user acceptance.

2. Make realistic Assumptions

Always make realistic assumptions regarding the scope and complexity of the project. This includes carrying out a thorough analysis of the framework conditions, defining the exact scope of the project, determining the necessary resources (including training and change management) and considering potential challenges. Be honest with yourself in all of these determinations and, above all, do not be overly optimistic! Only on the basis of detailed and realistic planning can you ensure that the project is implemented successfully and delivers the desired results.

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3. Include the Total Cost of Ownership (TCO)

Include the Total Cost of Ownership (TCO) in your budget. This includes not only the acquisition costs of the new ERP system, but also all ongoing operating costs, maintenance costs and other long-term expenses incurring with the ERP system and its implementation. This also includes the integration of the system with existing applications and databases and the creation of a seamless data flow. A comprehensive view of the TCO helps you to uncover hidden costs and thus plan the budget more precisely.

4. Consider the Cost of Risk

Every ERP project bears risks that can lead to additional costs. These can be delays in the project as well as unforeseen financial expenses, such as for necessary customizations or additional change management measures. Plan an additional budget buffer to cover unforeseen costs. This gives you more leeway to react to unexpected challenges - which makes the success of your project much more likely.

Precise Planning, a Holistic Approach and proactive Action

If you want to set a truly realistic budget for the ERP implementation, this requires careful planning and a holistic approach. Invest a little more time rather than risking failure of your project. By considering all of the above-mentioned points, you will create a good basis for meeting the planned budget.