Who can ensure success of ERP implementation: External Consultants or Internal Consultants?

Zakir Hossain

Business Analyst | 02 February, 2019 (Saturday)View 2654

ERP projects are very expensive and risky but if an organization fails to manage properly, cost goes overbudget. Now who are the real heroes to make organization to success in ERP implementation, minimize cost and integrate business process with ERP software? Internal consultants

Internal Consultants

They are the good & smart employees of an organization who are in ERP project team; know the business process, people, culture, policies, practices, the business requirements; can identify problems & opportunities; can propose alternatives and solutions that make sense for the people and the organization. Below people are in the ERP project team called internal consultants.

  • ERP project manager
  • Business Analysts
  • Software programmers

External Consultants

External consultants are the ones who provide professional or expert advices. They are coaches, facilitators. They educate internal consultants on software architecture, configuration & Customization based on business requirements. They transfer knowledge to internal consultant to successful ERP implantation.

Why Externals Consultants will not ensure success but Internal Consultants will?

The only thing external consultant can do is to help organizations to success by transferring software knowledge to internal consultants.

External consultants are very costly

External consultants work on hourly based. Their hour is billable (About 850 US dollars per day). The more hours they spend in your organization, they more money you need to pay. About 60%-70% cost in ERP implementation is consultancy cost. For this reason, organizations provide time limit to external consultants to complete their jobs.

Internal consultants are regular employees of organizations. They are paid by monthly. 1-year salary of internal consultants can be 1-month consultancy cost of external consultants. Therefore, internal consultants are more cheaper and have more time to complete process design, analysis, software set accurately.

Not possible to understand full business by external consultants for time limitation

Different organizations have different business processes. Also, time is limited to external consultants as they are expensive. Therefore, within short time, external consultants can’t understand the full organizational structural, all business processes & scenarios, problems, cultures, policies, people behaviors, expectations & limitations.

On the other hand, internal consultants are the permanently employees of the organization who work closely with the functional departments. So, it easy to them to understand each & everything of business of the organizations.

Wrong business decisions due to limited business knowledge by external consultants

As external consultants can’t know all business processes & scenarios of organizations for time limitation, so they can’t design improved processes by considering all business cases, problems & limitations. In this case, they take decisions based on assumptions and previous experience. As a result, wrong decisions are taken which can’t resolve the business problems.

But internal consultants know every corners of the organization. Therefore, it’s easy for them to design improved business processes by considering all business requirements.

Incorrect software configuration & customization by external consultants

External consultants are not clear about all business processes, so it’s not possible to them to connect all business processes and integrate with software. At the end wrong configuration & customization are done which can’t satisfy business requirements.

Internal consultants have full knowledge of business processes, so only they are the guys who can do the right software configuration & customization to satisfy business needs. One thing is, internal consultants must be well trained on software configuration & customization by external consultants.

Cost overbudget for incorrect software configuration & customization by external consultants

As All business scenarios, processes, people, culture, policies, practices, the business requirements are not possible to fully understand by external consultants within short time, system configuration & customization will not be accurate. Therefore, processes need to be redesigned, system needed to be reconfigured & customized again which will increase cost of project many times than the budget, as consultancy cost is the biggest cost to ERP implementation. In this case 5 million dollars projects turn into 20 million dollars disasters.

Internal consultants will consider all business scenarios when configure & customized system since they are familiar with full organizational processes. This will save a huge amount of consultancy cost and ensure the integration of business processes with system.

Final thoughts

Organizations must need to take ownership of the ERP project. ERP implementations depend on how business requirements are satisfied by software. If software is not configured & customized as per business needs, ERP will fail to provide desire output and million dollars investment will be waste. Internal consultants can configure & customize the software as per business requirements, make the ERP successful to provide desired output and save huge amount of consultancy cost. Another thing is, External consultants are very expensive (60% on total budget), not reachable all time due to time zone different. So, organizations must invest more on internal consultants and utilized external consultants to train & transfer software knowledge to internal consultants.