Is it possible to reduce the cost of implementing an ERP system?
So, the cost of ERP implementation is calculated.
And the first question that the customer asks when he comes to his senses a bit is it possible to somehowremove the zero to reduce this figure? So, is it possible to reduce the cost of implementing an information system and how can this be done?
First you need to decide on all the main components of the project cost and think about how they can be reduced and at the expense of what?
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The main thing is not to have illusions. Consulting company - a commercial enterprise, and a charitable society. Mother, Teresa, who aims to achieve a result - making a profit, increasing the number of clients, building long-term relationships with the Customer (+ additional income on maintenance). Thus, reducing the cost of the project will affect either the organizational or functional scope of the project, an increase in project risks (for example, when deviating from the project management methodology to reduce costs, or the quality of service provision (when the executor has to replace experienced consultants with beginners to preserve the profitability of the project) or on the profitability of the project (“Quickly, Qualitatively, Inexpensive: select 2 points from 3”).
In the latter case, the imputed consulting company may refuse to execute the project. I do not recommend believing people who promise to make a project “for the love of art”. Perhaps this is so, just need to be aware that as soon as such companies get a client ready to pay for services, then priorities will be sharply revised in favor of another, profitable client.
So, how can you affect the cost of the project?
1. Change the organizational volume. Start implementation from key departments, from those departments in which the use of the system can quickly recoup the costs of implementation. You should not start a large-scale project, which takes into account the wishes of all departments, from marketing to personnel management. It may be worth starting with automating key business processes (for example, logistics + finance) and only then moving on to supporting ones.
This option, oddly enough, although it requires less cost at the first stage, when introducing full functionality, it can be more costly: it will be necessary to integrate with systems that do not enter the first release of the solution, to carry out repeated integration testing after the next release is launched, with extended functionality, to make changes to user instructions and re-train them, while integrating new business units into KIS in subsequent releases.
2. Change the functional scope of the project. To give up part of the functionality and automation of part of the processes, more fully use the standard functionality of the system. Leave some of the processes in existing systems or automate them using specialized systems. In my practice, this happened once when the company decided to turn out from the warehouse management module built into the ERP with address storage in favor of the domestic WMS system. Here, too, not everything is unambiguous, since it must be understood that, by abandoning part of the functionality, the company loses the end-to-end traceability of processes, in addition, there are costs for integration with additional systems. The most frequent example that I observe is the refusal to keep accounting and tax accounting in Western systems in favor of integration with domestic systems. Thus, a number of fairly costly in terms of implementation and support of functional blocks are replaced by relatively inexpensive integration, but some business functions remain in a separate system, beyond the scope of the project. And then from the “Salary and Personnel” the payments to employees are unloaded for financial accounting, calculating the payroll and getting the base for calculating the cost of production.
3. The best way is to find a ready-made vertical solution in your industry, the development of which for your needs will take a minimum amount of time and consultants with experience in automating your profile companies, which will shorten the time for describing your company's business processes, setting up and refining the System, t .to. These people are well aware of the specifics of the work of your industry, solved similar tasks and spend less time achieving their goals, which will reduce the project implementation time.
4. You can try to change the estimates of the complexity and duration of work. It is quite difficult, because You are dealing with professionals who quite accurately know how to estimate the amount of work. Therefore, one must have the relevant experience. However, one should not forget that in these volumes the Contractor lays down the risks that are associated not only with the work of their own employees, but also with you. For example, if you say - yes, why do there 3 days ?? This is a 2-hour task, and then the Design Decision document will be agreed 10 times and spend a week on it, the costs for consultants will reduce the profitability of the project and change your attitude to you. Most likely, an experienced PM or consultant will not go down on reducing their estimates of project volumes while maintaining the volumes and system requirements. (And if it goes, you need to ask what were the initial estimates that were justified).
5. So, if the volume can not be reduced, then you can try to bargain at the rates. Again, keep in mind that a consulting company does not just have to pay consultants, but maintain administrative staff, conduct marketing campaigns and presales, pay taxes, for an office, after all. Of course, the cost of consulting services for a company is always higher than that of freelancers and employees hired for staff. (I hope that there will be a separate article on the cost of services.) So if you are bargaining at rates, this may affect the quality of the consultants provided to you and increase the risk of the project. Moreover, you can lose a good company - implementer unreasonable bargaining for their services. And agreeing to a penny service, get on the crowd of interns who need to be taught themselves. So do not pursue cheapness. Remember where there is free cheese and who pays twice.
However, you can slightly reduce the cost of services by building partnerships from the very beginning: by promising joint promotion of solutions, organization of refrain visits, participation in the marketing activities of the Contractor, success stories.
6. Another great way to reduce the cost of implementation is to take a part of the work. There are a number of works that do not require high qualifications, but are necessary for the implementation of the project. These are preparation and verification of reference books, integration with a number of third-party systems, writing user instructions, conducting testing. To perform part of this work, the Customer can either select and train employees to carry out the project, or hire a staff member with experience in implementing this system. The advantage is that during the implementation the Customer’s employees will be more involved in the project, they will be able to independently solve part of the work without engaging the Contractor’s employees, they will be able to accompany the system on their own after launching into commercial operation. However, there are also disadvantages. With this option of building the interaction, the burden on key employees, which will already increase during implementation, will further increase. This is fraught with stresses, a decrease in the efficiency and efficiency of labor in the basic duties of the Customer’s employees, the possible departure of a number of employees. The cost of the project will change, but not so much: the costs of managing the project and the Customer’s staff will increase, additional training of the project team from the Customer’s side will appear, and the risks of the project will also increase. So don’t be in a hurry to transfer the work to your own employees: everyone has to do their work, and they have so much work to do. And, most likely, the implementation will be for them the second priority, which will shift the timing of the project. The consulting company has opposite goals - to make the project as quickly as possible, not to go beyond the agreed time frame. So here you need to think very carefully about everything. And, of course, to do this together with a potential partner: the company you are going to entrust the most important thing is the automation of your business.
And the first question that the customer asks when he comes to his senses a bit is it possible to somehow
First you need to decide on all the main components of the project cost and think about how they can be reduced and at the expense of what?
')
The main thing is not to have illusions. Consulting company - a commercial enterprise, and a charitable society. Mother, Teresa, who aims to achieve a result - making a profit, increasing the number of clients, building long-term relationships with the Customer (+ additional income on maintenance). Thus, reducing the cost of the project will affect either the organizational or functional scope of the project, an increase in project risks (for example, when deviating from the project management methodology to reduce costs, or the quality of service provision (when the executor has to replace experienced consultants with beginners to preserve the profitability of the project) or on the profitability of the project (“Quickly, Qualitatively, Inexpensive: select 2 points from 3”).
In the latter case, the imputed consulting company may refuse to execute the project. I do not recommend believing people who promise to make a project “for the love of art”. Perhaps this is so, just need to be aware that as soon as such companies get a client ready to pay for services, then priorities will be sharply revised in favor of another, profitable client.
So, how can you affect the cost of the project?
1. Change the organizational volume. Start implementation from key departments, from those departments in which the use of the system can quickly recoup the costs of implementation. You should not start a large-scale project, which takes into account the wishes of all departments, from marketing to personnel management. It may be worth starting with automating key business processes (for example, logistics + finance) and only then moving on to supporting ones.
This option, oddly enough, although it requires less cost at the first stage, when introducing full functionality, it can be more costly: it will be necessary to integrate with systems that do not enter the first release of the solution, to carry out repeated integration testing after the next release is launched, with extended functionality, to make changes to user instructions and re-train them, while integrating new business units into KIS in subsequent releases.
2. Change the functional scope of the project. To give up part of the functionality and automation of part of the processes, more fully use the standard functionality of the system. Leave some of the processes in existing systems or automate them using specialized systems. In my practice, this happened once when the company decided to turn out from the warehouse management module built into the ERP with address storage in favor of the domestic WMS system. Here, too, not everything is unambiguous, since it must be understood that, by abandoning part of the functionality, the company loses the end-to-end traceability of processes, in addition, there are costs for integration with additional systems. The most frequent example that I observe is the refusal to keep accounting and tax accounting in Western systems in favor of integration with domestic systems. Thus, a number of fairly costly in terms of implementation and support of functional blocks are replaced by relatively inexpensive integration, but some business functions remain in a separate system, beyond the scope of the project. And then from the “Salary and Personnel” the payments to employees are unloaded for financial accounting, calculating the payroll and getting the base for calculating the cost of production.
3. The best way is to find a ready-made vertical solution in your industry, the development of which for your needs will take a minimum amount of time and consultants with experience in automating your profile companies, which will shorten the time for describing your company's business processes, setting up and refining the System, t .to. These people are well aware of the specifics of the work of your industry, solved similar tasks and spend less time achieving their goals, which will reduce the project implementation time.
4. You can try to change the estimates of the complexity and duration of work. It is quite difficult, because You are dealing with professionals who quite accurately know how to estimate the amount of work. Therefore, one must have the relevant experience. However, one should not forget that in these volumes the Contractor lays down the risks that are associated not only with the work of their own employees, but also with you. For example, if you say - yes, why do there 3 days ?? This is a 2-hour task, and then the Design Decision document will be agreed 10 times and spend a week on it, the costs for consultants will reduce the profitability of the project and change your attitude to you. Most likely, an experienced PM or consultant will not go down on reducing their estimates of project volumes while maintaining the volumes and system requirements. (And if it goes, you need to ask what were the initial estimates that were justified).
5. So, if the volume can not be reduced, then you can try to bargain at the rates. Again, keep in mind that a consulting company does not just have to pay consultants, but maintain administrative staff, conduct marketing campaigns and presales, pay taxes, for an office, after all. Of course, the cost of consulting services for a company is always higher than that of freelancers and employees hired for staff. (I hope that there will be a separate article on the cost of services.) So if you are bargaining at rates, this may affect the quality of the consultants provided to you and increase the risk of the project. Moreover, you can lose a good company - implementer unreasonable bargaining for their services. And agreeing to a penny service, get on the crowd of interns who need to be taught themselves. So do not pursue cheapness. Remember where there is free cheese and who pays twice.
However, you can slightly reduce the cost of services by building partnerships from the very beginning: by promising joint promotion of solutions, organization of refrain visits, participation in the marketing activities of the Contractor, success stories.
6. Another great way to reduce the cost of implementation is to take a part of the work. There are a number of works that do not require high qualifications, but are necessary for the implementation of the project. These are preparation and verification of reference books, integration with a number of third-party systems, writing user instructions, conducting testing. To perform part of this work, the Customer can either select and train employees to carry out the project, or hire a staff member with experience in implementing this system. The advantage is that during the implementation the Customer’s employees will be more involved in the project, they will be able to independently solve part of the work without engaging the Contractor’s employees, they will be able to accompany the system on their own after launching into commercial operation. However, there are also disadvantages. With this option of building the interaction, the burden on key employees, which will already increase during implementation, will further increase. This is fraught with stresses, a decrease in the efficiency and efficiency of labor in the basic duties of the Customer’s employees, the possible departure of a number of employees. The cost of the project will change, but not so much: the costs of managing the project and the Customer’s staff will increase, additional training of the project team from the Customer’s side will appear, and the risks of the project will also increase. So don’t be in a hurry to transfer the work to your own employees: everyone has to do their work, and they have so much work to do. And, most likely, the implementation will be for them the second priority, which will shift the timing of the project. The consulting company has opposite goals - to make the project as quickly as possible, not to go beyond the agreed time frame. So here you need to think very carefully about everything. And, of course, to do this together with a potential partner: the company you are going to entrust the most important thing is the automation of your business.
Source: https://habr.com/ru/post/148439/
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