Keep Your ERP Project Budget on Track with these 8 Tips

ERP projects are infamous for running over budget and the reasons for this are many. Perhaps your ERP vendor made a mistake, maybe your expectations were not accurate, or perhaps your budget was off to begin with. The third reason is commonly at least a part of the problem as an ERP project budget can be a tricky thing.

Here some tips to help you keep your ERP project budget on track.

1. Estimating the numbers of users you’ll need can be tough. A good way to start though is plan 1 user for every 2 employees in the company. You may want to consider 1 user per every 4 employees if you have a large number of employees who do not need direct access to the system such as manufacturing.
2. Many companies should spend at least 1% of their annual revenue on a new system. For example, a $1 million business should plan a $10,000 expense for the system and consulting.
3. If you are thinking of your ERP project budget in terms of employee size, plan to spend about $1,000 per employee. Considering that a majority of companies hold on to their business software systems for about 7-10 years, your investment is only about $120 employees per year or $10 per month…not bad huh?

What makes up the total cost of your ERP project?

1. Your ERP project will have both obvious and hidden expenses, so be sure to include the following in your ERP project budget:
2. Software licenses. The price of your license (s) will change depending on how many users you purchase, the modules you choose, and maintenance plans.
3. ERP Consulting. This includes implementation, setup, data conversion, custom development, integration, etc.
4. ERP Training.  This is an extremely necessary expense. If your employees do not know how to properly use the system you have wasted this investment.
5. Hardware…or are you using cloud ERP?
6. System Support.

Having the budget is the first step in making sure your project stays on track, but managing your ERP project budget is even more important. One of the most important things to a manager to do is to keep the = project on schedule because additional hours means additional expenses and a possible rough patch with your ERP vendor when it comes down to having that conversation- neither  are something you want, right? If you foresee a problem with scheduling, be sure you are on the same page as your ERP VAR when it comes to billing.

A few other important project management responsibilities to help you stay on track with your budget include:

1. Don’t let the scope of the project sneak up on you and your team.
2. Limit software modifications and customizations to as few as possible. These increase your initial cost and your ongoing costs for upgrades and maintenance.
3. Always check and update your budget- how much have you burned through? How much do you have left? Does it look like your project will stay within budget based on an analysis of those numbers? What costs can you cut to rein things in if you need to? (A topic for a future blog for sure).
4. Monitor your vendor hours

What other factors, in your experience, have contributed to either the success or the failure of your ERP project budget? Share with us in the comments!

About e2b teknologies:

e2b teknologies operates three business units – e2b anytime apps , e2b enterprise, and e2b calibration. e2b enterprise develops custom cloud-based business applications and resells leading ERP accounting software, CRM, HRMS, and other enterprise business software applications from Sage Software, Epicor, Intacct, Sugar CRM, and other publishers. e2b anytime is the publisher of Anytime Collect, Anytime Assets, Anytime 500, Anytime Commerce, and related Anytime brand products. e2b calibration is an ISO/IEC 17025 accredited calibration and repair laboratory providing a full scope of services (traceable to NIST) for most popular calibration, test, and measurement instruments.

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by Jeanne Lee