Surviving the journey of ERP implementation

So you want to implement an ERP system. As a manager you should be aware that ERP projects are uniquely difficult to control.

Why is this and what can you do about it?

Let’s take a typical situation. Bob contracts with an ERP consulting company to implement an ERP system for his company. An ERP software package is chosen from a major vendor. Bob’s company has some unique system requirements, so customization is required.

The consultant estimates that it will take 16 months to implement the system. Panorama Consulting has released the 2016 Report on ERP Systems and Enterprise Software , and it says that 16 months is the average time for ERP implementation.

Bob checks the references of the consulting company and concludes they have a good reputation. He contacts other users of the software package and finds that the software is deemed adequate, although no one is head over heels in love with it.

The cost of an ERP system is usually around $10,000 an employee. It’s a rough rule of thumb, but Bob’s 50-person company is probably going to end up paying around $500,000 if things go as planned. Another cost estimate comes from the 2016 Panorama report referenced above, which puts the average cost at 6.5% of annual revenue. Assuming Bob’s company is generating around $6M/year…