Budgeting for ERP projects: Calculate beforehand!
24 Sep

Budgeting for ERP projects: Calculate beforehand!

That ERP projects are a time-consuming affair, we have already mentioned at several points. Where the project actually originates and when it will actually be completed can sometimes not be concretely determined in advance. Whether it is tackled at all should depend on whether one can determine the profitability of the project. The time-cost plan is a risk factor in every project, but it can be calculated. In order to make the planning of the values as realistic as possible, here are some tips around the Budgeting for ERP projects.

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 essential question that every company should ask itself before deciding on a new ERP solution. And there are several answers. On the one hand, it may be that the company has grown and can no longer be adequately supported in its processes and size by the solution currently in use. In this case, many systems (such as SAP Business One) offer the option of upgrading through 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 meets your requirements for the ERP software and make a decision on the basis of 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. Here, you only have to take over 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. Often, it is precisely those companies that are looking for a new solution that 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 one starts to add or replace, which means uncalculated values for the project.

When defining the requirements for a new ERP system, it is helpful to consider whether 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. The mistake is often made here of making a simple calculation of the utility value. In the end, they argue with figures such as 'users who work with 80 % in the ERP system are then 5 % faster in the new one'. Of these Calculations we advise against, because they seldom have anything to do with reality.

The benefit factor of an ERP system can be measured financially in some respects (e.g. through the digitalization of certain processes, which saves working time). However, there are also benefits that are not measurable 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 benchmarks for budgeting ERP projects?

The answer is simple: there are no benchmarks at the Budgeting for ERP projects! There are various reference values circulating on the web that range between 5,000 and 15,000 euros per user (factor 10) for a total cost calculation. However, you should urgently refrain from using these figures in your calculation. The cost framework in this case is far too uncertain to be determined on the basis of these sums. In addition, with ERP systems there are still 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 for ERP projects?

What additional factors must one reckon with?

In addition to the costs that the ERP system such as SAP Business One itself, when budgeting for ERP projects, the costs of implementation and staff must also be calculated. From the interface to the training, a lot of additional costs are to be expected. Here, too, the rule is: always remain realistic! Workers who are employed in the project team fall away elsewhere. Additional services must be expected, as during the project there are usually new demands on the ERP solution result. Especially with these costs, it would be naïve to set a sum. Of course, it is important to set limits, but still assume an amount that is currently too high.

Then why 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 requirements and capacities that make such a project feasible in the first place. However, do not assume that you can set all the figures in stone.

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

At which points in the project does the company benefit from budgeting for ERP projects?

Actually always. Based on the information gathered, decisions can be made, justified later and success can be measured. Risk factors can also remain under observation - since they have already been recognised as such in the budget planning - and thus make a quick reaction possible.

How useful are reference observations?

Very! As mentioned before, fixed sums are not relevant, as every company has a different starting point. However, every company has experience with evaluation and implementation. And all of this was preceded by budgeting ? and afterwards, as we all know, we always know better. Therefore, do not compare prices, but procedures!

Change of perspective

It is also good to ask how much the ERP solution should actually cost the company. This question usually already draws a clear line as far as the budget is concerned. Nevertheless, it should also be taken into account what you want to achieve with a system change or expansion.


Netting creditors-debtors

Netting and creditors with debit balances

Netting and creditors with debit balances are two concepts used in finance to offset debts and receivables between companies ...
SAP Business One Partner - the right one is important

SAP Business One Partner – the right one is important

As a SAP Business One Partner with over 20 years of experience in the successful deployment and care and maintenance of SAP...
Data migration in ERP projects

Data migration in ERP projects

Current studies such as the Trovarit study "ERP in Practice 2020/2021" show that many companies are overthinking the implementation effort of an ERP system ...
ERP upgrade

ERP upgrade – at some point it will be time

Inconvenient but true, an ERP upgrade is almost inevitable after a period of running the business software. There is a renewal...

Business process reengineering before ERP implementation

By its very nature, ERP software implementation requires review and adjustment of business processes to properly install and configure the software...

Coding or customizing: Correctly adapting ERP software

There are two methods for customizing the processes of an ERP. Customizing is the method that the system, within the possibilities ...
Wird geladen ?