ERP project always goes over budget & gets delayed

Zakir Hossain

Business Analyst | 11 September, 2020 (Friday)View 1456



Most of the time it is heard that ERP projects go over budget than planned and take longer than expected time even never go-live. Maximum times, actual cost of ERP projects go 3 to 4 times than budget even more. Let’s see why those are happening

Why does get delayed?

If an ERP project is not managed properly and actual business requirements are not identified, project will never be go-live.

Poor project planning

  • Unrealistic expectations & planning
  • Too much hurry during planning & preparation
  • Fail to identify the project scopes

Failure to identify actual business requirements

  • Incomplete business analysis
  • Incomplete business requirement identification
  • Not considered all processes, scenarios, information & people
  • Lack of organized documentations about business processes

Read more: Complying ERP software with Business processes

Lots of changes after go-live

  • Lots of discoveries after go-live
  • Change the business processes due to not set up them as per software requirements
  • Rework & reanalysis on the processes
  • Change configuration, customization of the software and re-training the users due to change business processes

Why does go over budget?

ERP cost does not overbudget for Software licenses and hardware cost. Those cost are fixed. But the consultancy costs are not fixed and those cost depend on the services provided by the vendors consultants. If project is not managed properly, consultancy cost will be higher. ERP cost always goes overbudget due to consultancy costs

Read more: ERP Costs Breakdown

Dependency on Software consultants

When an organization does not take project ownership, it will completely depend on software consultants. Consultants hours are billable. They will charge money for every minute. When the project is controlled by consultants, they will plan to make more money. Then the organization will be a gold mine of money for them. The less an organization know about the process & software, the more money consultants will make.

Read more: ERP project ownership by organization

Re-work & re-analysis after go-live

For poor process analysis, all business scenarios & information are not identified; software will fail to execute all business processes, expected results will not come and there will be lots of discoveries after go-live. To meet business requirements, again need to work on business processes and analyze them. At the end, it increases cost & project time line.

Reconfigurations after go-live

Besides re-analyzing the business processes, software also needs to be re-configured to meet business requirements from it. After go-live, it is very difficult re-configure the software and there will be required software consultants help. It will cost huge amount of money.

 

Lots of customizations

Another big cost of ERP implementation is customization. If the business processes are not standard, then need to change the software functions to satisfy business requirements. The situation is worst when software needs to change after go-live. For lots of changes in software, need to pay huge amount of money to consultants and project goes over budget.

 

What to do?

An organization needs to

  • Take the project ownership and don’t depend on consultant completely
  • Build a complete project plan considering people, process & technology.
  • Identify complete & actual business requirements
  • Establish standard business processes
  • Build an internal project team
  • Train the team on business processes & software
  • Identify all configuration & customization before go-live


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