Asset Management

Four ways to save money on ERP and digital transformations

Enterprise resource planning (ERP) and digital transformations can be a costly process. Some early preparation and work can help reduce the final bill.
By Eric Kimberling January 22, 2019
Image courtesy: Bob Vavra, CFE Media
Enterprise resource planing (ERP) implementations and digital transformations more often than not cost more money than expected. However, there is a secret recipe to save a ton of money on your ERP implementation costs. To summarize, investing in an effective implementation is much less expensive than screwing it up.

Four ERP best practices

To ensure a project is ready for go-live, invest in these four things:

1. Clearly define the business processes before asking a vendor or system integrator to start designing and building software. System integrators make their money on business process mapping to build systems, but your processes should drive the software configuration – not the other way around.

2. Invest heavily in organizational change management. Intentional and unintentional resistance to change is more likely to increase time and costs than other aspects of your transformation. This is why a complete organizational change management strategy that goes beyond basic training and communications is so important.

3. Ensure a contingency budget. Establishing an ERP contingency budget of 15-20% may not save money, per se, but it will help manage internal expectations. It is also important to define realistic implementation time and costs for your ERP implementation.

4. Ensure the implementation is aligned with the company’s strategy and direction. Many ERP implementations with goals and objectives are often completely misaligned with a company’s strategic objectives. This is a recipe for disaster that is very hard to overcome. Companies need to take their time to get this right before even beginning a transformation.

These few things may not solve all of your risks and challenges, but they will go a long way to setting a company up for success. If a company doesn’t have these fundamentals in place, it may make sense to call a timeout to regroup before moving forward with technology transformations.

Eric Kimberling, CEO and founder, Third Stage Consulting Group, a CFE Media content partner. This article originally appeared on Third Stage Consulting’s blog.

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Eric Kimberling
Author Bio: Eric Kimberling is the CEO and founder of Third Stage Consulting Group.