SAP B1 blog

The basis: Why a new ERP system, what does it have to contain and what are the benefits?

Why do you need a new system?

This is the key question that every company should ask itself before deciding on a new ERP solution. And there are various answers. Firstly, it may be that the company has grown and can no longer be adequately supported by the current solution in terms of its processes and size. In this case, many systems (such as SAP Business One) offer the option of upgrading by Add ons extend the solution so that the company can continue to work effectively with the ERP.
If this is not the case, you need to look for a system that does not serve as a replacement for the existing solution, but instead fulfils your requirements in terms of ERP software and make a decision based on this. This has a completely different scope than if the solution simply has to be replaced because it is no longer being developed further, for example. In this case, you only have to adopt the existing requirements. This means a much smaller project effort and in turn has a corresponding impact on time and budget.

What is the scope of the project?

Determining the scope of a project is often underestimated. Companies looking for a new solution often make the mistake of wanting to adopt old structures instead of introducing effective innovations. During the project (or even afterwards), the disappointment is great when the system does not have the expected effects. Then you start to supplement or replace, which means uncalculated values for the project.

When defining the requirements for a new ERP system, it is helpful to consider whether the desired applications (such as a integrated project management) in the ERP solution should be integrated, or remain in its previous form or be replaced by another system. This accelerates the integration and thus also has an impact on the budget.

What is the benefit value of an ERP system in the company?

On this question, it is very important to clarify: A ERP system is not a means of production. Here, the mistake is often made of making a simple calculation of the utility value. In the end, arguments are made with figures such as "users who work with 80 % in the ERP system are then 5 % faster in the new system". From these Calculations We do not recommend using such information because it rarely has anything to do with reality.

The benefit factor of an ERP system can be measured financially in some respects (e.g. through the digitalization certain processes, which saves working time). However, there are also benefits that cannot be measured in this way, such as better data quality.
This question predominantly gives you a realistic view of the cost-benefit equation in the ERP project.

Additional question: What are the guideline values for budgeting ERP projects?

The answer is simple: there are no benchmarks at the Budgeting for ERP projects! There are various guide values circulating on the web that range from 5,000 to 15,000 euros per user (factor of 10) for a total cost calculation. However, you should urgently refrain from using these figures in your calculations. In this case, the cost framework is far too uncertain to be determined on the basis of these sums. In addition, with ERP systems there are always the Maintenance costsbut which are calculated on the basis of the licence costs. However, the base and factor are not fixed values, making the final budget, in terms of value invested, random.

In the middle: What do my requirements mean for budgeting ERP projects?

What additional factors have to be taken into account?

In addition to the costs that the ERP system such as SAP Business One In addition to the costs of the ERP project itself, the cost of implementation and employees must also be calculated when budgeting for ERP projects. From the interface to the training, some additional costs are to be expected. The same applies here: always remain realistic! Labour employed in the project team will be lost elsewhere. Additional services must be expected, as new requirements usually arise during the project. ERP solution result. With these costs in particular, it would be naive to set a sum. Of course, it is important to set limits, but assume that the amount is currently too high.

So why do budget planning at all?

Yes, despite the great uncertainty, budgeting at the beginning of an ERP project makes sense in any case. This planning creates the facts about the requirements and capacities that make such a project feasible in the first place. However, do not assume that all the figures are set in stone.

To the front:  What are the benefits of budgeting an ERP project and what else can I do to improve it?

Where in the project does the company benefit from budgeting for ERP projects?

Always, actually. Decisions can be made on the basis of the information collected, justified later and success measured. Risk factors can also remain under observation - as they have already been recognised as such in the budget planning - and thus make it possible to react quickly.

How useful are reference observations?

Very! As previously mentioned, fixed sums are not relevant, as every company has a different starting position. However, every company has experience of the evaluation and implementation process. And all of this was preceded by budgeting - and afterwards, as we all know, you always know better. So don't compare prices, compare procedures!

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