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Training is the near-unanimous choice of experienced vERP implementers as the most underestimated budget item. Training expenses are high because workers almost invariable. Erp2 have to learn a new set of processes, not just a new software interface. Worse, outside training companies may not be able to help you. They are focused on telling people how to use software, not on educating people about the particular ways you do business. Prepare to develop a curriculum yourself that identifies and explains the different business processes that will be affected by the vERP system. One enterprising CIO hired staff from a local business school to help him develop and teach the vERP business-training course to employees. Remember that with vERP, finance people will be using the same software as warehouse people and they will both be entering information that affects the other.

Implementation teams can never stop

Companies intend to treat their vERP implementation as they would any other software project. Once the software is installed, they figure the team will be scuttled and everyone will go back to his or her day job. But after vERP , you cant go home again. The implementers are too valuable. Because they have worked intimately with vERP, they know more about the sales process than the sales people and more about the manufacturing process than the manufacturing people. Companies can't afford to send their project people back into the business because there so much to do after the vERP software is installed. Just writing reports to pull information out of the new vERP system will keep the project team busy for a year at least.  And it is in analysis and, one hopes, insight that companies make their money back on an vERP implementation. Unfortunately, few IS departments plan for the frenzy of post-vERP installation activity, and fewer still build it into their budgets when they start their vERP projects. Many are forced to beg for more money and staff immediately after the go-live date, long before the vERP project has demonstrated any benefit.

Integration and testing:

The links between vERP packages and other corporate software links that have to be built on a case-by-case basis is another often-underestimated cost. A typical manufacturing company may have add-on applications from the major e-commerce and supply chain to the minor sales tax computation and bar coding. All require integration links to vERP . If you can buy add-ons from the vERP vendor that are pre-integrated, you're better off. If you need to build the links yourself, expect things to get ugly. As with training, testing vERP integration has to be done from a process-oriented perspective. Veterans recommend that instead of plugging in dummy data and moving it from one application to the next, run a real purchase order through the system, from order entry through shipping and receipt of payment the whole order-to-cash banana preferably with the participation of the employees who will eventually do those jobs.



Waiting for ROI

One of the most misleading legacies of traditional software project management is that the company expects to gain value from the application as soon as it is installed, while the project team expects a break and maybe a pat on the back. Neither expectation applies to vERP. Most of the systems don't reveal their value until after companies have had them running for some time and can concentrate on making improvements in the business processes that are affected by the system. And the project team is not going to be rewarded until their efforts pay off.


Add-ons are only the beginning of the integration costs of vERP. Much more costly, and something to be avoided if at all possible, is actual customization of the core vERP software itself. This happens when the vERP software can't handle one of your business processes and you decide to mess with the software to make it do what you want. You're playing with fire. The customizations can affect every module of the vERP system because they are all so tightly linked together. Upgrading the vERP package no walk in the park under the best of circumstances becomes a nightmare because you'll have to do the customization all over again in the new version. May be it will work, maybe it won't. No matter what, the vendor will not be there to support you. You will have to hire extra staffers to do the customization work, and keep them on for good to maintain it.

Post-vERP depression

vERP systems often wreak cause havoc in the companies that install them. In a Deloitte Consulting survey of 64 Fortune 500 companies, one in four admitted that they suffered a drop in performance when their vERP system went live. The true percentage is undoubtedly much higher. The most common reason for the performance problems is that everything looks and works differently from the way it did before. When people can't do their jobs in the familiar way and haven't yet mastered the new way, they panic, and the business goes into spasms.That is a tall order, building a single software program that serves the needs of people in finance as well as it does the people in human resources and in the warehouse. Each of those departments typically has its own computer system optimized for the particular ways that the department does its work. But vERP combines them all together into a single, integrated software program that runs off a single database so that the various departments can more easily share information and communicate with each other.Enterprise resource planning software, or vERP, doesnt live up to its acronym. Forget about planningit doesnt do much of thatand forget about resource, a throwaway term. But remember the enterprise part. This is ERPs true ambition. It attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departments particular needs.

Data Service

Data conversion :

It costs money to move corporate information, such as customer and suppltspier records, product design data and the like, from old systems to new vERP homes. Although few CIOs will admit it, most data in most legacy systems is of little use. Companies often deny their data is dirty until they actually have to move it to the new client/server setups that popular vERP packages require. Consequently, those companies are more likely to underestimate the cost of the move. But even clean data may demand some overhaul to match process modifications necessitated or inspired by the vERP implementation.

Data analysis :

Often, the data from the vERP system must be combined with data from external systems for analysis purposes. Users with heavy analysis needs should include the cost of a data warehouse in the vERP budget and they should expect to do quite a bit of work to make it run smoothly. Users are in a pickle here, Refreshing all the vERP data every day in a big corporate data warehouse is difficult, and vERP systems do a poor job of indicating which information has changed from day to day, making selective warehouse updates tough. One expensive solution is custom programming. The upshot is that the wise will check all their data analysis needs before signing off on the budget.

Consultants ad infinitum :

When users fail to plan for disengagement, consulting fees run wild. To avoid this, companies should identify objectives for which its consulting partners must aim when training internal staff. Include metrics in the consultants contract; for example, a specific number of the user company's staff should be able to pass a project-management leadership test similar to what Big Five consultants have to pass to lead an vERP engagement.

Replacing your best and brightest :

It is accepted wisdom that vERP success depends on staffing the project with the best and brightest from the business and IS divisions. The software is too complex and the business changes too dramatic to trust the project to just anyone. The bad news is a company must be prepared to replace many of those people when the project is over. Though the vERP market is not as hot as it once was, consultancies and other companies that have lost their best people will be hounding yours with higher salaries and bonus offers than you can afford or that your HR policies permit. Huddle with HR early on to develop a retention bonus program and create new salary strata for vERP veterans. If you let them go, you'll wind up hiring them or someone like them back as consultants for twice what you paid them in salaries.