Mike on Manufacturing

How a Small Business Can Reduce ERP Implementation Costs to Zero

By Mike Hart

In my last post I explained why ERP implementation costs can be ruinous to a small business and how those costs escalate as various services inevitably get added to the implementation project.

Why is ERP Implementation so Costly for Small Business?  

The case for self-implementation   

There is an alternative to costly ERP implementation – it’s called self-implementation and it eliminates implementation costs altogether.  Doing it yourself may not seem possible in view of ERP complexity, but keep in mind that all ERP systems are not equal and there is an alternative to the high cost of implementation services. 

Why is ERP Implementation so Costly for Small Business?

By Mike Hart 

An ERP system is a massive investment, not only in software, but in implementation services.   Implementation costs typically exceed the software cost and can be ruinous to a small business.  Why is ERP implementation so costly?  Let’s examine the various service costs that are likely to be incurred.    

Consulting Costs  

The ERP software industry relies on services for much of its revenue and profits.  As a consequence, software companies avoid offering self-implementation tools that would threaten this revenue stream.  Implementation services are provided by in-house consultants, resellers, or contractors.  Consulting is either billed by the hour or by a flat fee, neither of which is cheap.  While you may be able to finagle a discount on the software, you almost always pay the full rate for services. 

The Economics Favor Videos for Software Training

By Mike Hart 

A major source of revenue for ERP software companies and their resellers is providing live training, both on site and via off site seminars.  I believe that a significant portion of this revenue will erode in coming years because the economics favor video training over live instruction.   

Live instruction has a low cost-benefit ratio.  Not only are good trainers expensive, it’s the travel cost that eats you alive.  It is rare for trainers to live in your locality or for seminars to be hosted in your city.  To justify the travel cost, training sessions are stretched over several hours or days, which lessens their effectiveness because of information overload. 

The Employee’s Self Interest Is Not Always in Your Best Interest

By Mike Hart 

If you have a small manufacturing business and you are considering the implementation of a manufacturing software package, be aware that the new software can be a source of anxiety for veteran employees because it threatens their job security. 

The shop foreman who knows your products inside and out, but holds all that knowledge in his head, doesn’t want to transfer that knowledge into a database so that anyone who can read a job traveler can function without him. 

Can You Farm Out Implementation?

By Mike Hart  

You are the owner of a small manufacturing business and you decide to upgrade from general accounting software to a manufacturing software package.  Can you farm system implementation out to a consultant?   

For the majority of small companies, those that only need 5, 10, or 15 computer users, using a consultant for implementation is not a viable option. 

Implement Your Manufacturing Software in One Fell Swoop

 

By Mike Hart

 

Selecting a manufacturing software package is the easy part.  For a small business, the tricky part is getting the software implemented.  While you are implementing the system, you still have to operate the business and keep your customers satisfied.

 

My company, DBA Software Inc., has been a developer of manufacturing software for small businesses since 1992.  The majority of our customers implement our software package, DBA Manufacturing, on their own, while some get outside help from consultants.