Setting A Budget For ERP Evaluation

Budget For ERP Evaluation

If you’re in charge of putting together a plan for finding and replacing your existing ERP, don’t forget to budget for the ERP Evaluation process itself. Failing to put in the effort up front to have a clear path forward for the ERP implementation is likely to lead to frustration or ERP failure on the back end after cutting over to the new system. What your ERP selection plan looks like will depend on many factors including your comfort level with ERP options as well as each ERP’s strengths and weaknesses related to your business. Regardless of whether you choose to bring in an ERP selection consultant, you’ll want to set expectations for costs associated with the evaluation including both external and internal resources.

Costs For ERP Selection Consultant

Because of complexity and nuance in the ERP landscape, organizations are increasingly opting for a selection consultant to lead the ERP selection process. Good selection consultants are familiar with not only ERP options but also have a good understanding of how an ERP choice could have an impact on the business. As of 2024, a good starting place to budget for an ERP selection consultant is somewhere in the range of $200-$600 USD an hour, with significant differences based on location, industry, and experience. How many hours you’ll need is highly dependent on factors including the size and complexity of your company, how many ERPs you’re wanting to evaluate, and the depth of the selection criteria. The most simplistic evaluation could require as few as 50 hours, but if you’re like most organizations, you’ll probably need a few hundred hours of selection consultant time. 

Costs For Internal ERP Evaluation

The cost for an ERP selection consultant may be overwhelming to some organizations, and they may opt for an internal ERP evaluation process instead of using a consultant. While an internal selection may reduce cost for a selection consultant, there are other costs that you are likely going to pay without even realizing you’re paying them. If you’re not bringing in an expert, you can expect that someone is going to have to do additional research on ERP options, potentially a lot of research. There’s also cost for executive involvement, which likely won’t be less than $100K and could surprisingly go as high as millions of dollars in large organizations. Another cost you might overlook is the cost of making the wrong decision based on inexperience, which is hard to quantify but should be a consideration. 

Ways To Reduce Costs

One of the most important factors to reducing costs in an ERP evaluation is to make the process a priority with buy-in throughout the organization. By prioritizing the ERP selection, you’ll gain momentum and will avoid additional costs in having to repeat parts of the process. Our team has also made it possible to get the best of both worlds by having an expert Guided ERP Evaluation without the additional expense of a selection consultant. You can also use a standardized ERP Evaluation Checklist to stay organized and allow easy comparisons for ERP options. If you have additional questions about budgeting or an ERP you’re considering, Contact Our ERP Evaluation Team.