12/3/2015. We will begin momentarily. Presented by Blytheco. Beginning now. Presented by Blytheco.
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1 We will begin momentarily Presented by Blytheco Beginning now Presented by Blytheco 1
2 Welcome! Today s Agenda Introductions How to Budget for Software Implementation Q&A How to Participate Today Arrow = Open/close your panel Questions = Submit text questions Follow up with video link 2
3 Introduction Apryl Hanson Senior Director, Customer and Partner Strategy, Blytheco San Francisco Bay Area 12 years of extensive business system and management consulting experience, specializing in sales, marketing, customer experience and process improvement. Broad industry experience including financial, manufacturing, entertainment, retail, software development, marketing automation, SaaS and wholesale/distribution. Lover of shoes, food and dogs. Audience Poll How Well Does Your Company Budget for Software? We have a good handle on all the costs associated and are never surprised with budget overruns We have a handle on the costs but sometimes have budget overruns We have an idea what costs to include but are often surprised by the final cost We don t really know what to include in the budget for software, and usually have budget overruns We have no idea what to put in the budget for software, and our CFO has heart failure when we suggest a change 3
4 How to Budget for Software Implementation Apryl Hanson, Blytheco How to Budget for Software Implementation What are common problems when budgeting for software? 4
5 Why Do Projects Go Over Budget? A study by Panorama Consulting showed that reasons for going over budget on ERP projects included: Additional technology needed to be purchased to meet project goals 16.7% Project budget was unrealistic 16.7% Project staffing was underestimated in the initial budget 22.2% Initial project scope was expanded 44.4% Instead..take your time getting to a number 5
6 Scope: Key to Your Software Budget It s vital to define scope of the project before you can know how much it will cost Do you want a Ferrari or a Ford Focus? What functionality do you need? What reporting do you need? How many users? What other software will you need (i.e., EDI, ecommerce, etc.)? Cloud Based or On Premise? Each has different costs On premise Lower software cost, but consider: Hardware costs Hardware maintenance costs (appropriate room, IT staff, etc.) Maintenance and upgrade fees Integration costs Cloud Lower hardware costs, but consider: Subscription costs 6
7 What Should Your Software Budget Include? Software Costs Licensing Consider # of users Add on software Maintenance fees Hardware (On premise) Server IT Staff Services Implementation Data conversion Integration Customization Training Support Data conversion Data cleansing Plan for Growth How long will your next system last? You don t want to have to change software again sooner than you need to Cost Downtime Most companies change their business software every 8 years on average Early adopters will change every 5 years Recession caused some companies to wait longer What s right for your company depends on your growth rate On premise solutions may have longer lasting power so you don t have to change as frequently 7
8 How Much Should You Expect to Spend? What Percentage of Revenue Do Companies Spend on Software? Small companies (Less than $50M) spend 6.9% of revenue on IT on average Mid sized companies ($50M $2B) spend 4.1% Larger companies (over $2B) spend 3.2% * Manufacturing companies on average cost about 14% more than other industries and the average cost to revenue ratio is.3% higher than that of all industries due to the complexity of those additional requirements. How Much Should You Expect to Spend? Keep in mind that: Implementation costs can run from 1 1/2 to 2 times the cost of the software, depending on your needs and customization For cloud based software, the ongoing cost of the software could have a 1:1 ratio with implementation For on premise software, the software itself may be a small percentage of the total software budget 8
9 Cheapest Is Not Necessarily Best In fact, cheapest is usually NOT best Good discovery = getting what you need Thorough discovery = no surprise costs Study: 63% plus of manufacturing ERP implementations go over budget, with actual cost exceeding expected cost by an average of over $3 million. Integration with other software often the cause Complete discovery = smooth go live Study: 51% of organizations experienced some sort of material operational disruption at time of go live, such as not being able to ship product or close the books. Of those, approximately two out of three experienced a disruption lasting one month or more. Cheapest Is Not Necessarily Best Make Sure You re Comparing Apples to Apples in Proposals You Receive: Customized system vs. out of the box Does it Include all of add ons you need? Have you considered phasing to reduce up front costs? Compare the hours allotted for training? Include project management hours? Calculate your own team s responsibilities in the project and your level of involvement. 9
10 Consider Funding Options Is This the Right Time to Get What You Need? May need to wait a year to afford/justify the system your company needs in the long term Get it right rather than getting it right now Consider your funding options as many companies can fund software + implementation and training for you Why go through a software implementation twice in a short period? Additional cost Downtime twice Conclusion Remember: It s vital to scope your project before you budget, including all the functionality your company truly needs Conduct thorough discovery to uncover what your company requires Consider all the costs involved, not just software Remember, cheapest is not usually best Get it right, not right now A good consulting partner will help you build the right budget so that go live is a non event 10
11 Q & A Please type your questions into the Questions Pane on your GoToMeeting Dashboard. Next Steps? Get a free 2 hour consultation You can get two hours with Apryl! Want more info? Get our free Project Scope Template Questions? , x2500 or solutions@blytheco.com 11
12 12
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