ERP consultants face many risks. The high cost of Fee Write-Offs shouldn’t be one of them.
There are recurring costs in every business, such as the obvious SG&A (sales, general and administrative) and not-so-obvious (i.e., product and period expenses) that keep the engine running and the doors open. And as anyone who’s ever managed a budget knows, you have fixed costs – think amortization, depreciation and salaried employees and variable costs - such as billable staff wages and commissions.
What your costs shouldn’t include are fee write-offs. By that we mean, lost or reimbursed fees. Money out of your pocket because of blind spots in the engagement of client stakeholders, inconsistent approaches to requirements definition and agreement on core or local design. 'Cost of quality' as it’s known in the business, is crippling to the success of a project and ruinous to your company’s bottom line.
The most common hidden, underestimated or just plain forgotten costs of ERP implementation that become fee write-offs may include staff training, out-of-scope software configuration and unplanned or UN-scoped data conversion. Your experience may mitigate many of the hidden costs by anticipating the extra work, training and features. But you’re taking an enormous risk for reduced margins.
Project Scope (particularly in the requirements gathering and requirements decision phases)
We’ve talked ad nauseam about the foolishness of flip-charts, spreadsheets, sticky notes and young analysts flying around the nation and/or globe, to facilitate and scribe your client’s configuration options. If your deployment process involves the population of highly convoluted workbooks (frequently used to configure cloud-based enterprise apps for clients), you probably already know that it’s not the most efficient method for agreeing on global or localized requirements.
When there are multiple business units, geographic locations, demographics, herding the proverbial cats becomes extremely difficult. Departments who needed to weigh in can frequently be overlooked, and/or requirements and disagreements that arise at the 11th hour suddenly become a point of contention. Who should pay for the extra hours, extra fees - you or the client?
On Scope Creep
As changes and new requirements inevitably emerge, it's important that consultants and the enterprise team are aligned on how these fit—or don't—within the scope and contingency. The ‘Art of Scope Creep’ management is a huge Achilles heel for ERP projects and can spell the end of your involvement in the client’s ERP implementation. Since requirements and organizational needs are easily lost across the ERP implementation lifecycle, a standardized, automated and consistent stakeholder engagement process is key. Manual and analog tracking of these changes won’t cut it, and you’ll be hard-pressed to recoup the inevitable expenses and write-offs that arise.
It’s time to get back on your firm’s good side and eliminate the fee write-offs. Implement a system of engagement that allows for a much more standardized process of client engagement. A way to put the client teams and stakeholders into the requirements definition and decision-making process directly, rather than rely on your own consulting resources to transcribe what’s heard into convoluted workbooks. A digital trail of breadcrumbs and sign-offs that reduce ambiguity, clarify scope vs scope creep and minimize the likelihood of fee write offs or eating the cost of your next client change order.