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ERP Implementation: How to Avoid Typical Cost Traps

Reading Time: 5 Minutes 13.07.2021 Currents & Trends

Spoiler alert: most of them don't have anything to do with functionality.

It's absolutely natural if the upcoming ERP implementation makes you feel queasy. Many decisions have an impact on the next years, if not decades, also in terms of the budget. So be aware not to fall into typical cost traps.

As no company equals another, every ERP project is different. In talks about the selection and implementation of ERP systems, prospects often complain about the same cost drivers. In this blog article, we describe the "usual suspects" and tell you how to best deal with them.

  1. Prototype instead of waterfall
    The first pitfalls already await you in project methodology. With the classic waterfall project approach, where requirements are first defined, drafted and then implemented, users have to wait quite a while until they can see the system they specified in the armchair. And often enough they end up saying: Oops, we totally forgot about that! Or: Well, that's not exactly what we had in mind! Companies should therefore rely on the much quicker prototype method instead of having lengthy design phases. Users can then see their future working environment at an early stage. Flaws can then be detected from the outset, and change requests can be implemented much earlier. This ultimately has a positive effect on the project's budget. 

  2. Respect the integrity of end-to-end processes
    You should always keep your mind on the typical process schemes, which have been thought through from the beginning to the end and have often been drafted in the form of process templates. This helps you focus on the essential: everything that differs from the standard. The project can develop more quickly this way. Ideally, the ERP provider offers fully digital solutions for each process, so that no other software is needed. Another advantage: you save license costs for third-party software.
  3. Stay flexible without bending the software
    Differentiation is one of the biggest strengths of small and mid-sized enterprises, and most likely yours too. In terms of ERP, it used to imply the need for a lot of customizing. The extensive adjustments not only left their mark on the project's budget. They also involved higher costs for maintenance and upgrades to newer versions. Today, the path to a customized system no longer leads through the long and deep valley of customizations. Extra programming has become mostly obsolete since modern ERP systems feature many industry-specific extras in their standard version and provide for comprehensive configurations. A provider who focuses on a few core industries and perfectly meets their needs is better than a software provider who can offer a bit of everything. Obviously, the specialist beats the generalist here.
  4. Integration: all services use the same bus
    It all begins with a harmless sentence: Let's just connect that software, all we need to do is quickly program an interface. The dire consequences only emerge years later when no one knows their way around the many special implementations anymore. Implementing new changes is then like walking blindfolded through a mine field. At the latest when you want to couple your ERP system with various other systems, IoT devices or applications, you might want to invest in a middleware that features an enterprise service bus. Once it has been implemented, other systems can be connected quickly and easily, too. These standardized interfaces don't only make you independent from individual providers, they also reduce process costs as the degree of automation increases. 

  5. Better safe than sorry
    When processes involve many areas of business, countries or subsidiaries, things can get complicated very quickly. Different regulations and currencies turn intercompany processes into a big challenge. This most likely leads to high costs for customizing – or to a wild landscape of different ERP systems in the various countries. You escape this risk by respecting the need for designated country versions already during the ERP selection process.
  6. Want some more?
    When the majority of decision-makers think of monolithic ERP systems, only one word springs to their minds: costly. However, the great benefit of modular systems is that you only have to pay for the functionalities you're actually using. And you can still be sure that the provider invests in the development of the overall system. In case you want to add further modules in the future, you can get state-of-the-art software.

  7. Do it yourself
    The buzzwords of the hour are Low Code, or even No Code. Designing forms, personalizing analyses, setting up intercompany processes, replicating master files – all this can be done with little developing effort or none at all. Thanks to comprehensive configuration options. Of course, you don't have to do everything yourself. You can still have a consultant do it for you. But it's still nice to know that you could if you only wanted to.
  8. New work in ERP consulting
    There were times when a consultant had to visit you for the tiniest of issues. And if the ERP provider was short on personnel, this could take a few days or weeks. Today, a lot can be accomplished with remote access. This saves travel expenses. proALPHA has even developed a new service: remote consulting. Instead of waiting for a consultant to visit them, users can now get quick and professional help regarding questions and tasks in their daily business – in the form of defined packages or individual support.

An ERP project is an investment to every company. It should not turn into a money pit. If you manage to avoid these typical cost drivers, you have already achieved a lot.

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