Your ERP Budget is Like Your Holiday Funds: It Only Goes So Far


money labeled holiday budget

Early Phase ERP Project Considerations for Getting the Most from Your Budget

In a recent post, I wrote about how a little diligence during the sourcing process for selecting your ERP SI can help prevent the kind of frustration that accompanies getting a Christmas present that doesn’t live up to expectations.  Now imagine yourself as the gift giver.  Just as you need to make sure your Christmas budget goes far enough, there are several things a company needs to think about during the blueprint or design phases of an ERP project to make sure you don’t blow your budget.

Have a Plan

Most people don’t have an unlimited Christmas budget, so you must be strategic to ensure your budget goes as far as it needs to.  You start by deciding the target amount for each recipient on your list.  Naturally, certain people will get more of your wallet than others (e.g., spouse, kids, etc.).  That usually means that most of the others on your list only get one gift, even though there are lots of things you could get for them.

Similarly, your organization has a limited budget for your ERP project.  Just like some people on your Christmas shopping list have priority, certain areas of your business are truly strategic and are critical to giving you a competitive advantage in the marketplace.  To maximize the value of the project, you need to make sure the lion’s share of your ERP budget goes to these strategic areas, which in turn requires keeping the other areas as standard and out-of-the-box as possible.  Without a clear understanding of your strategic priorities, you will end up paying too much for aspects of the solution that simply don’t deliver the equivalent value, which both decreases the overall impact of your budget and erodes the value of the business case.  Without a solid plan, you could unexpectedly be starting a money pit.

Quality Over Quantity

It is usually better to give someone a single thoughtful gift than a half a dozen things they don’t really want.  Even for the “strategic” people on your list who get proportionately more of the budget, giving recipients twelve things just so they have many gifts to open instead of the one thing they really want is not a winning strategy.  They will end up being disappointed.

The concept of quality over quantity also applies to ERP projects.  Everything cannot be a priority.  Be relentless when it comes to separating the “must-have” requirements from everything else on the list.  Focusing on these critical items across the board will ensure that everyone involved is aligned and increase the value of the project.

“This Would Be Perfect!”

Even after you think you’re done, there is almost always that one extra item that you can’t resist buying.  The problem is that “just one more” is rarely the case.  Keep that in mind when designing your ERP solution.  Long after the design phase is completed, it is almost a certainty that there will be functional scope changes before you go live.  Make sure you’ve got enough contingency on hand to avoid stalling the project and/or having to make a trip to the Board of Directors to ask for more money.

“You shouldn’t have…”

Regardless of what your budget is for any given person on your list, you want to get something thoughtful that reflects their desires and not what you think they want.  Unless you know everyone on your list well enough to get them something you know for certain that they would like, they might actually mean it when they say, “You shouldn’t have.”

Now let’s flip that to your ERP project.  Make sure you get all of your key stakeholders engaged so that you understand the wants and needs of the entire organization.  This will not only help to drive alignment throughout the organization but also facilitate adoption once the system is live.

Follow me on Twitter @sstamp_ue.  Find my other UpperEdge blogs and follow UpperEdge on Twitter and LinkedIn.  Learn more about Project Execution Advisory Support.

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