Two major hurdles organizations face when it comes to ERP implementation or upgrade are: a) the lack of visibility in factors that affect the implementation cost b) defining an efficient, cost-effective implementation model. While helping organizations move to D365FO, we have repeatedly heard these two points. This on-demand webinar, talks exclusively about how to perform a sound cost analysis before moving to D365FO and choosing the implementation model based on an organization’s requirements and budget.
Factors that Influence the Implementation Cost
There are some explicit costs that organizations always consider as they plan ERP implementation or upgrade. Factors such as Licenses, Services fee, and Subscription fee fall in the explicit costs’ category. However, there are other categories of expenses that inevitably arise during the cycle of an implementation. Organizations have hard time identifying and gauging these “hidden” or “soft” factors that lead to exorbitant variable expenses.
Human factors such employees, leadership style as well process factors such size of project team, timelines, and so on fall under the “hidden” or “soft” expenses.
Image: Hidden or soft factors to be considered during cost analysis for ERP implementation/upgrade
First of all – organizations don’t consider these factors as cost heads and then they don’t know to calculate their impact on the overall budget. For example, no organization can ever estimate and say with certainty that there will be 45% resistance from employees in bringing in change or the leadership style could possibly delay the design process by 20% – which cumulatively impact the budget by 37%. However, quantifying how these soft factors can accelerate or delay the project is a good way to calculate its impact on the overall budget.
While it may come as a surprise to many – factors that are considered fix or standard also vary a great deal during implementation/upgrade if the variables associated with them aren’t carefully estimated at the time of budgeting. For example, if an organization is in the Supply Chain Management sector but its employees also need to use the finance module of the application as well then this requirement shouldn’t be raised first time at the implementation stage. When fixed requirements are well thought through at the budgeting stage, the fix cost heads tend to remain in a defined range.
Cost Estimation while Considering the Hidden and Fixed Factors
Considering how these factors can vary depending upon the organization’s requirement and other associated factors, one must think through all the cost heads during the budgeting stage. Synoptek’s Dynamics expert has developed a cost analysis sheet (which is available on request) using which helps organizations can take into account the new à la carte licensing structure of Microsoft as well as the standard factors and soft factors (to a great degree) that influence the D365FO implementation/upgrade cost.
The Right Implementation Model
Sometimes high services cost from the implementation partner becomes a deterrent for organizations when planning for ERP implementation/upgrade. There are two ways to tackle it. First is to freeze the requirements internally – into must-have requirements and good-to-have requirements – before an implementation partner is roped in for the project. This step gives clarity to the organization as to what can be excluded if need be. The second point is using an implementation model that is hybrid in nature, including on-shore and off-shore consultants, which can be followed from the analysis stage through the deployment stage. This model, when implemented properly, helps organization save overhead in terms of services cost.
To listen to this webinar that talks about the cost factors, cost analysis sheet, and the hybrid implementation model in detail, please click here.