Business Direction Archives

Change Management Tips for Your Epicor Kinetic Upgrade

by EstesCloud | Feb 28, 2024 | Business Consulting, Business Direction, Cloud, Epicor, Epicor 10, Epicor Kinetic, ERP, ERP Consulting, ERP Implementation, Hosting

The Process

Is your team ready to unlock the full potential of Epicor Kinetic? Don’t fear the upgrade process – with these key strategies, you’ll guide your team through a smooth and successful transition. You can quickly elevate operations with Epicor Kinetic. But before you embark on this exciting journey, let’s address a common concern: Change Management.

Change Management Epicor Kinetic Upgrade ERP

What is change management in an Epicor Kinetic upgrade?

Change management for Epicor Kinetic is your strategic roadmap for a smooth transition from an older Epicor system to the new Kinetic platform. It involves proactively preparing, guiding, and supporting your entire organization throughout the process. The ultimate goal is to minimize disruption, ensure your employees embrace the new system, and maximize the benefits it has to offer.

How to Manage Your Change Management: Epicor Kinetic Upgrade Management

Successfully upgrading to Epicor Kinetic requires a collaborative effort. By implementing these key strategies, you can equip your team with the knowledge, ownership, and resources they need to thrive in the new system:

Keep employees informed about the upcoming changes, the reasons behind them, and the expected timeline is crucial.
Provide employees with the necessary training on the new features and functionalities of Kinetic ensures they can effectively utilize the system and its benefits. Actively involving key stakeholders and employees in the process can foster a sense of ownership and encourage participation.
Use your top talent at all levels to create a detailed plan that outlines the steps required to migrate data, update workflows, and adapt to the new system.

The Culture

Navigating an Epicor Kinetic upgrade requires a strategic approach. Discover how to minimize disruption, ensure user adoption, and maximize the benefits of your new system with effective change management strategies. Learn how to anticipate and address concerns, foster communication, and build a successful transition plan for your team:

Acknowledge and Address Concerns: Understand change can be daunting. Openly discuss potential challenges and proactively develop solutions to keep your team engaged and motivated.
Foster Communication and Transparency: Keep your team informed throughout the process. Share updates, address concerns, and encourage open communication to ensure everyone feels involved and heard.
Empower Your Team with Training: Equip your team with the knowledge and skills to navigate the new system effectively. Prioritize comprehensive training tailored to their specific roles and responsibilities.
Leverage Collaboration and Teamwork: Encourage knowledge sharing and collaboration between team members. Create a supportive environment where everyone can learn from each other and adapt together.
Celebrate Successes and Milestones: Recognize and acknowledge individual and team achievements throughout the transition process. Celebrate milestones to maintain positive momentum and reinforce the value of embracing change.

Prepare for your Epicor Kinetic upgrade with confidence.

Move quickly from your first decision to your building a team that can make the best decisions at every step:

Decide what you truly need from your ERP system. Collaborate to identify essential features and streamline your system.
Customize with purpose. Assess your current customizations, pinpoint those crucial to your workflow, and remove outdated ones.
Discover the power of Kinetic. Break down the new features and how they’ll benefit your specific operations.
Build a rock-solid upgrade plan. Develop a detailed strategy and assemble a dedicated upgrade team for a smooth transition.

Knowledge is power, especially when it comes to navigating complex upgrades.

A proactive approach fosters transparency and ownership within your team, paving the way for a smooth and successful transition to the new Kinetic system. By empowering your team with knowledge, you’ll be well-positioned to unlock the full potential of Kinetic and achieve your business goals. Here are a few tips:

Equip your team for success: Leverage EstesGroup’s expertise to provide your team with comprehensive documentation and resources.
Empower them as upgrade champions: Foster confidence by equipping your team with the knowledge to navigate each step of the process.
Gain clarity through collaboration: During an initial consultation, EstesGroup will guide your team through the entire journey, ensuring they feel fully prepared and informed.
Transparency and ownership pave the way: This proactive approach fosters transparency and empowers your team to take ownership, setting the stage for a smooth transition to Kinetic.

Anticipate to Migrate

During your Epicor Kinetic upgrade process, anticipate and address potential challenges and concerns your team might have. Understand that fear of change, unfamiliarity with the new system, and perceived disruptions to workflows are common sources of resistance. Partner with EstesGroup to ease the pain and get peace of mind knowing that your project will be successful, your ROI will be bountiful, and your team will be grateful for change.

BRING ON THE CHANGE: TALK TO A CONSULTANT NOW

Elastic Computing Revolutionizes Business Dynamics

by EstesCloud | Sep 26, 2023 | Backup, Business Consulting, Business Direction, Cloud, Disaster Recovery, Distribution, ERP, Managed IT Services, Prophet 21, Security, SYSPRO

Cloud Resources are Changing the Manufacturing and Distribution Industry Landscapes

In the world of cloud options for businesses, elastic computing refers to the ability to dynamically scale computing resources up or down based on demand, without the need for significant manual intervention. It involves the use of cloud computing and virtualization technologies to provide flexibility and cost-efficiency in managing IT infrastructure. This allows for greater flexibility and scalability, as resources can be easily scaled up or down based on dynamic business needs. Cloud computing also eliminates the need for organizations to invest in and maintain their own physical infrastructure, such as on-site servers, reducing costs and increasing efficiency.

What is Virtualization?

Virtualization, on the other hand, involves creating a virtual version of a device or resource, such as a server, operating system, or storage device. This virtualization technology allows multiple virtual instances to run on a single physical machine, effectively maximizing the utilization of hardware resources. By consolidating multiple virtual machines onto a single physical server, organizations can reduce the number of physical servers required, leading to cost savings in terms of hardware, power, and cooling.

Bringing Cloud and Virtualization Together

When combined, cloud computing and virtualization technologies offer numerous benefits for managing IT infrastructure. Firstly, they provide flexibility in terms of resource allocation. With cloud computing, organizations can easily scale up or down their computing resources based on their needs, ensuring that they have the right amount of resources at any given time. Virtualization allows for the efficient utilization of hardware resources, enabling organizations to make the most of their existing infrastructure.

Pay-As-You-Go, Quick-To-Market Technologies

At the end of the day, new cloud-based technologies offer cost savings throughout the entire business ecosystem. By leveraging cloud computing, organizations can avoid the upfront costs associated with purchasing and maintaining physical infrastructure. Instead, they can pay for the resources they actually use on a pay-as-you-go basis.

Virtualization further reduces costs by allowing organizations to consolidate their hardware resources, reducing the number of physical servers required and the associated costs of power, cooling, and maintenance.

Additionally, cloud computing and virtualization technologies enhance the agility and scalability of IT infrastructure. With cloud computing, organizations can quickly provision and deploy resources, allowing for faster time-to-market for new applications and services. Virtualization enables organizations to easily scale their infrastructure up or down based on demand, ensuring that they can meet changing business needs without disruption.

Furthermore, these technologies improve the reliability and availability of IT infrastructure. Cloud computing providers typically offer robust infrastructure with built-in redundancy and failover mechanisms, ensuring high availability of services.

Virtualization also enhances reliability by isolating virtual machines from each other, preventing issues in one virtual machine from affecting others.

The use of cloud computing and virtualization technologies in managing IT infrastructure provides organizations with flexibility, cost-efficiency, agility, scalability, reliability, and availability. By leveraging these technologies, organizations can optimize their resource utilization, reduce costs, and improve their overall IT operations. Here are the top 10 benefits of elastic computing for manufacturing and distribution businesses:

Scalability

Elastic computing allows businesses to easily scale their IT infrastructure to accommodate fluctuating demand, ensuring that resources are available when needed without over-provisioning.

Cost Efficiency

By scaling resources up or down as required, businesses can optimize their IT costs, paying only for the computing power they actually use, reducing overall expenses.

Resource Optimization

It enables efficient use of computing resources, avoiding underutilization during periods of low demand and preventing resource bottlenecks during peak periods.

Improved Performance

Elasticity ensures that applications and systems can maintain consistent performance levels even during traffic spikes or increased workloads.

Flexibility

Businesses can quickly adapt to changing market conditions or unexpected events, such as seasonal variations in demand or unforeseen disruptions by adjusting computing resources in real time.

Reduced Downtime

Elastic computing minimizes the risk of system failures or downtime due to resource constraints, as additional resources can be provisioned automatically in response to increased load.

Enhanced Disaster Recovery

Elastic computing can support robust disaster recovery and backup solutions, enabling businesses to replicate their systems across multiple locations or cloud regions for data redundancy and resilience.

Global Reach

Businesses can leverage cloud providers’ global data center networks to expand their operations into new regions and markets without the need for physical infrastructure investments.

Resource Isolation

Elastic computing can provide resource isolation and security, ensuring that applications and data remain protected even when sharing cloud infrastructure with other users.

Agility and Innovation

With the ability to rapidly provision and experiment with new resources and technologies, businesses can innovate more quickly and bring new products or services to market faster.

The Value in Cloud Elasticity

In manufacturing and distribution, elastic computing is particularly valuable because it allows companies to handle seasonal demand fluctuations, respond to supply chain disruptions, and efficiently manage their IT costs. In today’s fast-paced and ever-changing marketplace, businesses need to be agile in order to stay competitive. This means being able to quickly adapt to new trends, technologies, and customer demands. Agility allows companies to respond swiftly to market changes, seize new opportunities, and stay ahead of the competition.

However, agility alone is not enough. Businesses also need to ensure the reliability and performance of their critical systems. These systems are the backbone of the organization, supporting key operations and processes. Any downtime or performance issues can have severe consequences, such as lost revenue, damaged reputation, and dissatisfied customers.

By combining agility with reliability and performance, businesses can achieve a winning formula. They can swiftly respond to market changes while maintaining the stability and efficiency of their critical systems. This requires a careful balance between innovation and stability, as well as a robust infrastructure and effective risk management strategies.

Agility enables businesses to quickly adapt their strategies, products, and services to meet changing customer needs and preferences. It allows them to experiment, iterate, and pivot as necessary, without being tied down by rigid processes or outdated technologies. This flexibility is crucial in a dynamic marketplace where customer expectations are constantly evolving.

On the other hand, reliability and performance ensure that businesses can deliver on their promises consistently. Customers expect products and services to work flawlessly, without any disruptions or delays. Critical systems, such as e-commerce platforms, supply chain management systems, or customer support systems, need to be highly available, scalable, and efficient. This requires robust infrastructure, rigorous testing, and proactive monitoring to identify and address any issues before they impact the business.

Why Manufacturers and Distributors are Choosing EstesCloud

Businesses need both agility, reliability, and performance to thrive in today’s dynamic manufacturing and distribution industry landscape. Agility allows companies to adapt and innovate, while reliability and performance ensure that their critical systems can support their operations effectively. By striking the right balance between these two factors, businesses can remain competitive, deliver exceptional customer experiences, and achieve long-term success.

Ready to move your business to the cloud? In the cloud and ready for a better cloud environment?

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Understanding the Value of a Project Manager

by Rob McMillen | Feb 12, 2022 | Business Consulting, Business Direction, ERP Consulting

Project Management & the Future of Your Business

In the next 5 years almost 88 million people around the world will be working in Project Management. More importantly, project-oriented activity will have reached $20 trillion in value. With this many projects and this much value in play, the success and value of projects is a high priority. Yet many leaders don’t appreciate the value of using projects and see them as the exception to the normal business process. Why is this?

At a high-level there are two types of efforts a company undertakes:

1) Operations:

Running the organization

2) Projects:

Changing the organization

Project manager leading project management team

The first type of effort is day-to-day. It includes sales, customer service, finance, manufacturing, and IT. It focuses on efficiency, productivity, and speed. And that focus is mostly short-term. For success in operations the organization depends on command and control to get results.

The second type of effort is more about the future of the organization. It is about adaptation, innovation, transformation, and longer-term value. Its focus is medium to long-term. It is successful when it is led by entrepreneurship and collaboration.

Both efforts require teamwork, but one focuses on continually tuning the current environment and the other focuses on adapting to the future. And while Operations keeps the organization afloat, it is not able to alone ensure the survival of the organization. The reason is that change is permanent for most industries because of competition, government rules and disruption. More efficient Operations help but cannot create the cultural and operational changes necessary to stay relevant in the market. That’s why anticipating, managing, and driving strategic change has become a top priority.

So, if strategic Projects are essential how does an organization ensure that they are successful?

It’s no secret that less than 40% of most projects are successful. And everyone has a story of a failed project, right?

To avoid these failures, there are many things that can be done. One of the most important is to develop Project Management skills in the organization. And those skills need to be practiced by both Executive sponsors and the Project Manager(s). It is not enough to put someone in charge of a project, they need to be skilled and supported to ensure success. Then the organization gets the real benefits of project management.

And what are those benefits? I would offer that they always include these eight items:

Clear Ownership for Project Success

Team members of the project are working towards a common goal, but they focus primarily on their individual responsibilities. The Project Manager is always considering the overall project, the resources, the upcoming tasks, the costs, the risks, communication needs and schedule. They look above the day-to-day activities to see what is happening across the project and the future. This provides clear ownership and a chain of command for the organization.

Project Organizing and Planning

The Project Manager works with the team to create and track schedules and budgets for the project. They also provide clear direction and expectations for the project team, steering committee, and end-user involvement. The organization knows that someone is continually reviewing progress of the project so that issues can be addressed earlier and more efficiently.

Project Accountability

The project team makes commitments, and the project manager holds them accountable for those commitments usually on a weekly basis. The team knows they have to provide updates to the project manager on their progress. This protects the organization from delays, extra costs and missed steps.

Project Scope / Budget / Schedule / Resource Management

Every project has a risk of either expanding or contracting the scope of the effort which can lead to missed objectives. It also has a budget and a schedule that should be monitored continuously. The Project Manager guards the scope of the project and ensures that objectives are met within the parameters of time, cost and resources. They know the best methods for tracking each of these and reducing the risks entailed. The organization is better protected from wasted efforts and missed objectives which can cost thousands of dollars in rework when a Project Manager is at the helm.

Project Rigor

Projects are complex and expensive. A Project Manager has invested (and continues to invest) time in learning and applying best practices to each project. They bring prior project experience and skills that are not found in other members of the project team or sponsors. They know how to manage project risk, scope creep, and organizational politics. They understand project measurements like Earned Value, Cost Performance Index, Schedule Performance Index, Planned Value and the variances to track. Because of this, organizations reduce the risk of project failure when they have a competent and focused Project Manager involved.

Team Building

While accomplishing the objectives of the project is a priority, that happens best when the project team is working well together. Building relationships of trust and negotiating conflicts is part of the job of the Project Manager. They know the stress incurred during projects and help ensure a healthy working environment that engages and values everyone. Organizations improve the quality of the results when the Project Manager is building and supporting the team responsible for delivering the project.

Communications

Most projects have multiple stakeholders, a sponsor, a customer, internal/external resources, a steering committee, and vendors that must coordinate to accomplish the project objectives. Ensuring that these participants are informed and kept up to date is a key role of the Project Manager. They use email, phone calls, status meetings, Zoom-type meetings, text messages and one-on-one meetings to ensure that everyone is informed to perform. There is no one approach to communication and organizations benefit from the focused communication that a Project Manager brings to the table.

Change Management

Completing a project is only part of the success of a project. The other is that the end-customer needs to be prepared for the changes that the project brings. The ability to educate and prepare for change is more important than most realize. Many projects are successful on one hand yet fail because the organization never adopts the solution. A skilled Project Manager brings a change management strategy and rigor to the effort. They are working with the customers of the project to ensure that the solution is accepted, that customers are trained to use it and that there is ongoing support for the solution. Organizations that have a robust Change Management process led by the Project Manager increase the impact of the project on organizational performance.

About the Author

Rob McMillen is a Senior Project Manager with EstesGroup. He has worked in the manufacturing industry for over 30 years supporting multiple implementations of new ERP systems and leading projects. Because his mom was an English teacher, he grew up with a love of writing. Combined with his working experience, he has written articles for LinkedIn and User Groups, and has published numerous blog posts. He is also a co-author of a book on technology and working collaboratively. He currently lives in the DFW area.

Are you in need of a project manager?

Do you need help with planning your project or ensuring that your plans are successful? Having a good PM (project manager) is a win-win for your organization. EstesGroup consultants have the project management experience to keep you on time and within budget. Sure, you could post project management positions and hire to boost your internal resources. But think about this: our services have been trusted for nearly two decades by thousands upon thousands of people, and time is of the essence when approaching even the most simple project life cycle. Projects require both hard and soft technical skills, and even though each case is unique, our proven project management methodology will bring you the human talent necessary to optimize your business, saving you precious time. EstesGroup project management focuses on the people on your team. Let’s talk now to get your project good people, good methodology, and a good future.

Watch Rob McMillen host an EstesGroup Summit

Learn more about ERP Project Management

Employee Retention: The Attrition Mission

by Rob McMillen | Sep 29, 2021 | Business Consulting, Business Direction, Distribution, ERP, ERP Consulting, Manufacturing Innovation

There’s a significant shift occurring in the job market. And our manufacturing and distribution industries will not escape the impact.

For the past few years, it has been an employer’s market and many workers were unable to find jobs. But that has changed in the last 18 months and there are growing concerns about employee retention.

In the past 5 months, over 15 million US workers have quit their jobs.

Plus, in recent surveys, 40% of employees are considering leaving their jobs in the next 3-6 months. Rather than cooling down, there are projections that more attrition is coming.

There are many reasons this could be occurring. And many strategies to consider. What’s clear is that if your organization is not understanding the root issues, it will increase your employee attrition rate rather than reduce it.

Before we can answer what it takes to retain your best employees, it’s important to understand the dynamics of the situation.

Employee Attrition vs Attraction Recruit and Retain Gears

Differing Perspectives

A recent article, by McKinsey and Company, explored this topic. It noted several disconnects between organizations and employees. These disconnects are likely contributing to employee dissatisfaction.

The article highlights that organizations often focus on increasing compensation and financial perks as a first step to stop employee attrition.

But is that scratching the itch that employees are feeling? What if there is “more at work” (pun intended) than making more money? And if compensation is not the driving issue, how should your organization respond?

Let’s start with the emotional toll of the last 18 months during the pandemic. Behind it we can learn more.

Most employees have experienced rapid change. Illness, online meetings, hospitalizations, new work procedures, vaccines, deaths, politics, changing recommendations, school closings, and daily unknowns have been their daily diet. At work their relationships were frayed by new routines and rules. Constant fear contributed to few social interactions, no get-togethers and limited travel. And with it the use of masks limited our ability to communicate visually.

Employee Expectations

The result has been a change in employee’s work needs. Studies are showing that employees are looking for these benefits in their work:

A sense of value from being in the organization
The potential for advancement
Having caring and trusting teammates
Options for a more flexible work schedule
Feeling more valued by their managers
A sense of belonging

Shared Expectations

Both employers and employees do agree on some things. They both believe that these issues need to be addressed:

Work-life balance
Unmanageable workloads
Feeling disengaged at work
Help with caring for families

Organizational Focus

This leaves us to consider whether employers are right in focusing primarily on these issues which may not be valued by employees:

Creating more opportunities
Accommodating more remote work
Improving the health of employees
Discouraging employees from looking for new jobs
Taking steps to limiting poaching by competitors

Suggested Focus

The McKinsey and Company article recommends that organizations start by listening to employees and including them in discussions. This signals that employees are valued.

That doesn’t happen when management decisions are handed down without employee input. Such decisions are often seen as indicators that management is uncaring and disconnected from employees. And who wants to work in a place like this?

There are positive things that can change the tone in organizations. And they involve asking hard questions about your organization and then moving to address any problems.

Is our organization sheltering toxic leaders who do not value, inspire or motivate their employees?
Are the right people in the right roles in both our management and non-management ranks?
How can we make our culture more collaborative and open to conversations?
How do we replace transactional approaches with relational approaches that stress collaboration and value?
Are our company benefits aligned with employee priorities that are top-of-mind?
What career paths and development opportunities do our employees really have?
How can we build community at work by encouraging better relationships?

From Ideas to Action

Each of these questions focuses on increasing the collaborated relationship across the organization. They send the message that the organization is empowered by trusted relationships and a shared future.

So, what can we say at this point?

First, it is clear is that the employee/employer relationship has changed over the past 18 months. Employees are wanting a more relational approach to their work, more connectivity and more value from their workplace.

Secondly, there are real opportunities for your organization. Those manufacturing and distribution organizations which lead with dialogue and listening will find ways to benefit from the changes.

They will retain top performers because they communicate value, a shared future and positive opportunities.

Now, what can you do to get this moving with your team?

Ask the Author

Manufacturing in America, Made in Colorado

by Brad Feakes | Sep 15, 2021 | Business Direction, Disaster Recovery, ERP Consulting, Manufacturing Innovation

Made by Colorado Manufacturers

Like many areas in the US, the Colorado manufacturing scene has been scrambling to adjust to the ongoing movement of the pandemic and its aftershocks. Changes in demand, fluctuations in labor, and radical shifts in supply and availability have resulted in new and unexpected challenges, and manufacturers across the state have, out of necessity, worked to devise clever solutions to a shifting array of problems.

Made at the NOCOM Manufacturing & Trades Show

The NOCOM Manufacturing and Trades Show 2021 conference, coming soon to the Larimer County Fairgrounds in Loveland, exemplifies one such clever strategy, which is actually an old methodology that we sometimes forget we have — in-person, mind-to-mind, heart-to-heart collaboration. It’s this type of energy that has not only kept the manufacturing industry afloat during the pandemic, but also allowed many of us to survive the seemingly endless virtual office hours.

At the recent P21 CONNECT conference, an in-person Epicor Prophet 21 user event, I realized how much I missed the benefits that come from being able to gather under the guise of a common association. There is a surprising amount of value that can be gained by the act of simple collaboration.

There are great benefits to sharing challenges facing one company (or an entire industry), and it often takes a community to surface the steps needed to prevail. Together, companies can work to delineate the quick and effective measures that can be taken and perform the actions required for mitigating risks. In the distribution industry, with community knowledge at the core, Prophet 21 consulting is largely revolving around supply chain issues, cybersecurity threats, and the shift from on-premise servers to cloud-based technology.

As we’ve seen in our preparation for NOCOM 2021, the manufacturing industry is facing similar challenges: supply and demand shifts, ransomware and malware threats, and cloud availability amid outdated technology trends.

So, what is your manufacturing strategy, and how has the pandemic changed community involvement in your business culture?

The sharing of the intellectual property of daily problem solving is something that just didn’t translate into online forums and Zoom calls. As we stagger back into some semblance of “normal” life, we look once again to share the value of in-person business meetings and socialization.

As we’ve faced together more than a year of volatility, we’ve learn that the solutions to problems in one industry might have applicability in another. We’ve learned that our problems may not be things that we have to bear on our own. In manufacturing and distribution, the ability to adapt quickly results in success.

There’s an old saying that goes “you are your friends” or “you are only as good as your friends.” In enterprise resource planning (ERP) consulting, we learn from our friends, so that we can adapt and succeed in our projects.

What can we learn from our friends as the Colorado manufacturing industry reopens?

The “Made in America” movement continues to find new applicability, as companies struggle to supply products locally, products that have been historically outsourced. The reactions are inconsistent — in some commodities, I hear of manufacturers and supply chain companies switch back to offshore supply as soon as it becomes available.

In other cases, I discover commodities that may remain in North America after the dust has settled. Increasingly, I stumble across products that have been crafted in Colorado, products new to the state. Colorado, like the rest of the nation, is learning to make things again, and this is one adaptation that you’ll see in the NOCOM community, whether you’re still following along from your virtual office or attending the in-person event this year.

Next week, EstesGroup will once again be returning to NOCOM in person. While we had fun at the virtual conference last year, we’re looking forward to the friend-to-friend interactions that can only be present while walking together, sharing dinner together, exchanging stories together. Providing cloud and IT services for manufacturers and distributors throughout the pandemic has taught us much about the resolve of the nation as we work with the companies as they reshape themselves to take on the needs of a reopening world.

If you are a manufacturer facing the challenges of reopening in 2021, 2022, and beyond, EstesGroup’s ERP and IT consultants would love to help you understand industry trends. Our team will be at NOCOM 2021 BOOTH 62 on September 23rd, and we’re hoping to see you there!

Are you a manufacturer struggling with cyberthreats? We fully support manufacturers remotely and in person! Our coast-to-coast consultants circle out from our Loveland office, supporting Colorado manufacturing and beyond, even throughout Canada!

Total Cost or Total Loss: New Software, New Budget

by EstesCloud | Jul 30, 2021 | Business Direction, ERP, ERP Consulting, Software

The cost of a software budget

Software selection can be a lot like car shopping. You do a few test drives. You talk to happy drivers. You ask for the price and then ask for a better deal. You begin to investigate how much this new vehicle is going to cost. One part of the software budget is easy: that it’s going to cost you something. You might already have a quote from your prospective supplier. You might have more than one quote addressing different ways to acquire your new software or ERP system. But how can you predict the total cost of ownership?

African Professional Chartered Accountant Woman Budgeting For Enterprise Software

Initial installation costs

One option for a new software or ERP system is an on-premises installation, complete with your own hardware to support the platform. In the past, this was the only option. A business would pay money at the beginning and obtain the software to install on a company-owned computer network. Ongoing costs would include financing the staff required to maintain support, manage future upgrades, and navigate bug fixes.

Many software acquisitions today use software as a service, or SaaS, as an option. This is commonly known as the cloud, but it is the most public of the multitudes of cloud-based solutions available to businesses. SaaS requires an agreement to pay a fee monthly for some years into the future. Software as a service usually involves low or no upfront cost since the profit for the vendor is based on long-term commitment to the software subscription. Salesforce is a common example of SaaS. Implementation costs are low to none, as the software and related data are loaded on a vendor-maintained system somewhere outside of your corporate walls. Initial costs vary for SaaS, but generally they’re the deal that opens the door for a more lucrative future for the vendor, rather than an early expenditure for the purchaser.

Project management costs

Acquiring and implementing enterprise-level software of any kind is a major project that can require several years to complete. One of the first considerations is that you’ll need someone to manage the overall project. Some companies will hire a specialist who has managed similar implementations successfully with the intention that the job will be limited to this one project. Others might choose to challenge an up-and-coming person already employed with the company to transition into a position of management of the ERP or software project. The intention here is often to develop that person’s skills and groom them for future promotions. There are other options, of course, but the bottomline is that managing your enterprise software project will cost money. Even using an already-employed person has a cost, as someone will need to be hired to perform that person’s job in the interim.

Most businesses will form a steering committee that will act as a board of directors over the project. The project manager and senior executives will fill this committee and help keep the project on track, leading to completion on a schedule that will most benefit the company.

Real costs will come from the defined implementation group. This group can be made from currently employed people, but all of them, while working on the project on a part-time or full-time basis, will need replacement personnel to fill previous roles. One or more software consultants from the software provider will have roles in this group, and all of them will cost money. Likely there will be specialist consultants required to fill roles and perform tasks when the business is in need of additional resources.

Data conversion costs

Extracting data from legacy systems and converting that data to the formats required by your new software is one of those specialist roles. Most of the cost will come early in the project, but some expenses will certainly be ongoing, as new needs and corrections are found during the testing of the new software.

The price of testing

Testing the new software to ensure all transactions and reports yield the results required actually work will be an ongoing cost throughout the project. Some tests will be completed and changes to processes or data will be made and then the test will be made again until the results are satisfactory. Set aside money and time for a testing phase. This is a critical step and should have substantial representation when you’re developing your software budget.

The savings found in training

Your users will need training so that they can work with the new software immediately. Whether you hire training specialists or develop your own training process, there will be an investment here that will result in a lot of savings and profitability for your company.

The budget for hardware and networks

Your new software has the most up-to-date technologies. Likely you will need upgrades to hardware and networks to enable those technologies. Your legacy hardware probably could use some upgrades anyway if your systems were bought years ago. To create an accurate budget for hardware and networks, add up all the incremental costs and make a time-phased list of those costs. You can now compare the costs in each time bucket against the benefits you expect in each time bucket.

Looking for help developing a software budget reflective of your company’s needs and capabilities?

Get a business process review today. Our experts can assist you with full-circle enterprise resource planning, managed ERP hosting, and managed technology. EstesGroup has helped manufacturers and distributors for more than 17 years, and we have specialists for everything from Epicor Kinetic to Prophet 21.

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