How long, how much; ERP questions

Are you considering a new ERP system for your company? Have you asked the questions; how long will it take to implement and how much will it cost in dollars and resources? If you have, you are probably still wondering what the real answer is. We have heard such a wide range of answers that it only begs asking more questions. You should know the answers to these questions before embarking on an ERP journey.

We'd like to offer some "rule of thumb" guidelines to help answer these questions. First, it depends on a few criteria:

  1. How many companies will be reporting financials in the new system?
  2. How many physical locations will be accessing the software?
  3. How many office users (people that are in sales, purchasing, inventory management, manufacturing, customer service, accounting, management, and others who will need regular access to the system)?
  4. How many people from your company do you plan to have on the implementation team?
  5. Will the implementation team devote 100% or some other percentage of their time on the implementation? (most of our clients have a team that commits to 10-25% of their time to the project)
  6. Do you have an employee with strong project management skills that will manage the project?

So, as you can see, there are some variables to consider before someone can give you a solid answer. We would be happy to give you specific answers based on your answers to these questions. Just send us a quick message through our website's contact us form. 

Let's take a look at an example company:

Manufacturer of widgets
$50MM in sales
200 employees

  1. This is a single company reporting financials under one federal ID number.
  2. Three locations - one main plant, two distribution centers.
  3. 75 people will be accessing the system. There are an additional 10 manufacturing cells reporting labor and the distribution centers each have 5 handheld devices for picking and packing.
  4. Eight people will be on the implementation team. 
  5. The team will devote 20% of their time to the project. Some work will be back-filled and other work may need to be done in off hours.
  6. We will contract for a project manager because we don't have any employees with the experience or time to manage the project.

Based on the example above, you should consider budgeting the following:

Q:  How long will the implementation take?  
A:  9-12 months

Q:  How much will it cost?
A:  The software will be approximately $4,000-5,000 per user and the implementation should be about $3,000-4,000 per user. This is assuming core manufacturing and distribution functionality. Adding engineering, quality and warehouse management modules may add some cost to both of these estimates.

Q:  How many hours of internal resources will be required?
A:  While the effort will ebb and flow, using the 20% effort that the team agreed to commit to on the project, that comes to about 8-10 hours per week for the 9-12 months.

If these numbers have not given you a mild stroke, then onward and upward. Here is a series of articles we recently wrote about the ERP journey that may help you navigate.

Software Selection - Part 1
Software Selection - Part 2
Software selection - Part 3

As always, if you want any degree of our help in either the selection or implementation of your next ERP system, please don't hesitate to ask.