To be able to control a budget you first to identify the real or true costs of ERP. Think about hardware and software costs, staff training, organisational change management, ad-hoc developments, external consultancy fees and any additional staffing requirements (including backfill). If you are using an ERP consultancy they will provide you with a scope of services and software/hardware budget, but remember this will not be the whole budget. The first thing you need to know is what is not included; as these soon add up. Brainstorm this and try to leverage the experience of others who may have been through the process previously. Factor in as much as you can before you begin.
Certain elements can be difficult to define because the breath varies greatly project to project and business to business. However, almost all projects involve data migration, backfill and some form of modification to third-party software. Also consider any other third-party software costs, or non-related ERP software costs, and any freelance consultant costs you may need along the life of the programme.
“A budget document is an evolving document as the project progresses and the estimates are known in greater detail.”
Once you have a budget, you need to control it. This means continually monitoring and reviewing, so it is absolutely critical to identify milestones and targets. Actively managing your budget is the only way to ensure it is on track and there will be no surprises – a sure way to irritate stakeholders and board members. Any significant overspend will almost inevitably jeopardise the completion of the programme.
There are lots of ways to construct a budget. You can use anything from high-end accounting software to a simple Microsoft Excel spreadsheet. Whichever option you decide on, it is only ever going to be as good as the information you put into it. All the widgets and colour coding in the world are worth nothing if you have not done your sums and thought about every little cost.
Many companies find that ERP implementation cost twice as much originally planned. Indeed, it can be very easy to overspend an ERP budget. However, apart from a significant increase in scope, assuming you are working to a reasonable budget that is been carefully put together in the planning stages, there is no reason why you would not be able to complete things on time and within budget.
Neil ran his first SAP transformation programme in his early twenties. He spent the next 18 years working both client side and for various consultancies running numerous SAP programmes. After successfully completing over 15 full lifecycles he took a senior leadership/board position and his work moved onto creating the same success for others.