The Hidden Costs of ERP

A common problem with many ERP implementation projects is inaccurately projecting total project costs. In order to achieve a high ROI on projects, costs need to be controlled and constantly compared to benefits. Some of the common indirect or hidden or costs of ERP projects include:

• Internal company resources to make decisions on ERP requirements, help with system design, and perform testing. Aside from a full-time core team, most ERP projects require the involvement of 3-5 part-time subject matter experts for each full-time core team member.
• Internal or external resources to manage data conversion, interface development, and report generation
• Employees to support communications, training material development, and training deployment activities
• Time that senior management is involved in decision-making and conflict resolution
• Design of business processes, particularly if the project involves a large, multi-national company with fragmented operations
• "Backfilling" project team members with contract or other employees that manage day-to-day activities while the team members are working on the implementation project
• Travel and expenses for team members, particularly if dealing with a global project. Project budgets should assume at least 15% of total consulting costs for travel, then double this amount to account for internal project team travel.

Obviously, these are not all the costs associated with an ERP project, but they are the ones that are most likely to be overlooked during the budgeting and planning process. These costs should be included in the ERP business case and budgeting process.