5 Tricks to Control ERP Fees and Save your Money

ERP

5 Tricks to Control ERP Fees and Save your Money

1. Avoid the “Everything Is Easy” Sales talk

If you have gone through an ERP sales talk, and absolutely everything you’ve asked for is “easy” and won’t be a problem, be wary.  I have almost never gone through a sales cycle where there were ZERO risks.  If the salesperson makes it sound a little too good to be true … it probably is.  There are a number of areas here where control of your ERP costs can completely fall apart. Typically it occurs when the salesperson meant “we can customize anything you asked for” without explicitly telling you how much extra that might cost.  Since most ERP projects are time-and-material, asking if something can be done without qualifying “will that cost me extra” is extremely dangerous.

2. Check the Team’s References

When you start implementing, you’ll be assigned an ERP software training and implementation team which will basically run your project. Once you check references, when you may call 4 or 5 companies that used 4 or 5 different teams. You’re not going to get a sense of the repeatability of your Business Central Partner’s process if every reference used by completely different people. Ask for references that used the same team they propose you’ll use.  One other thing about these teams, find out how many businesses in the same industry they have implemented in the past year or two.  Sabre does almost exclusively manufacturing implementations.  Don’t worry about the reference’s market (don’t try and find another company that makes beach balls if that’s what you do – how many of them are there even?)  To control ERP fees, we would like to form sure the references are within the general category that you are in. Repetitive manufacturing like Make to Stock; Engineer to Order; Job Shop; Graphics Arts Manufacturing; Field Service; Professional Services; Wholesale Distribution … these are the kinds of general categories I’m talking about.

3. Get a Transparent Estimate

The estimate you get for your training and implementation should clearly describe all the modules and functions you’ll be trained in. Almost more important, it should list the excluded items!  IT company provides fixed-fee ERP software implementations now for almost all customers, and these are based on pre-created “packages” that are manufacturing specific.  Some customers are suspicious of coming with an “out of the box” solution.  As far as ensuring that we control ERP costs, our fixed and prescriptive approach forces US to control the fees.  Most partners do not do this. In fact, most partners want you to drive and steer the project into more complex features and therefore more billing.  If you have a very clearly defined project with clearly defined boundaries – and a commitment from the partner to push back on scope creep – that is going to really help.

4. To Cap or Constrain Their Project

Does the partner you’ve chosen have any kind of incentive or reason to achieve the estimate they have provided? Is there a penalty for exceeding their estimated hours? Do they have a rate adjustment? Is there a bonus for being on-time and on-budget?  Is the project fixed fee, with clear rules of engagement?  Implementing a product is a very complicated process, and there are a fair number of risks associated with the process.  If you look at the contract and you are taking on all the risks and responsibilities to control ERP costs in this project, then you have an asymmetrical agreement. You’re accepting the risks of project cost overruns.  They’re not willing to cap or constrain their project.  Ask them why.

5. How do They Implement?

And this is the most important part. How does the partner implement ERP project? Do they follow the old “we train you so you can set up the software” or do they use an approach of “we’ll set up the system based on our understanding of your industry and best practices?” If the former, you need to be sure your employee has extensive (8-10) ERP implementation projects under their belt so they understand the risks. If the latter, then be sure part of the process involves your employee testing their setup and assumptions – and be prepared to do some tweaking.  In our experience, partners that “train you so you can set up the software” often do so because they don’t actually have a lot of experience in your industry. They’re not experts in your business, they are experts in the software.  This is important.  Being experts in the software is critical to success.  That being said, it’s necessary but not sufficient for ensuring success.  To control ERP costs you need to make sure that YOU are not training THEM.  Actually, every consultant must to learn your unique business elements.  They should not learn things that anyone in your general industry would know.

 

If you’d like to know more about how Multiable ERP system can help your business grow, contact for a free consultation with one of our experts at Multiable.

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