Why Do So Many ERP Software Projects Go Over Budget? (And Who is to Blame!)

The most common reason accounting software implementation projects go over budget is because the implementation consultant (Partner) is spending time working on things not included in the original quote.  This work is called “out of scope”.

Here are a few examples of how this can happen:

• You see all the cool things the new system can do and find yourself a kid in a candy store saying, “wow, can we get it to do this too?” The answer is yes, but this request is beyond the scope of the original proposal.
• You were quoted 8 hours of training for the AP clerk. This AP clerk is slow to learn, or is replaced by a new person halfway thru the project. The Partner must spend additional training time that was not included in the original quote.
• You have a report you require from the new system, but you didn’t show it to the Partner in advance because you just assumed it would be included. It needs to be designed from scratch and this time wasn’t included in the original quote.

A good Partner will tell you in advance if work needs to be done that was not included in the original quote, and get your approval before moving forward.

It is not always your fault

At times, going over budget could be the Partner’s fault if they underestimated the amount of time required. If this is truly the only cause, an honest ERP Software partner may take the time as a loss and quote more efficiently the next time.

Budget overruns can also happen if you are working with a less-than-honest Partner that has intentionally low-balled the initial quote in order to win your business. 

Some companies take advantage of the fact that many prospects do not ask enough questions. These prospects find out later that work they assumed was included in the proposal are now considered “out of scope.” To make sure you know what to ask I recommend you read the report “30 Questions Every CFO Needs To Ask About the Cost of Accounting Software”

Remember, price is only one piece of the puzzle, and you should not always choose a Partner based on the lowest quote. A higher services quote could simply mean that you are dealing with a more honest Partner. 

This Deloitte and Touch report is extremely telling. It compares the Top 10 buying criteria of companies the first time they purchased ERP software vs. the second time. The first time, the #1 criteria was price. The second time “Level of support from the solution provider “ was #1 and price was knocked down to #5.  Learn from this example and choose your partner wisely!

There are more reasons why ERP Software Project go over budget, but this gives you some food for thought. The biggest takeaway - take the time to make sure you know what is included in the quote and what is not.