When upgrading existing enterprise resource planning (ERP) systems, organisations should – if possible – avoid using third-party implementation specialists, according to a report, ‘ERP Upgrades Are Big Business' by analyst Allison Bacon at AMR Research.
Organisations that use IT consultants rack up an average ERP upgrade cost of $2.25 million – double that of the average cost of an upgrade carried out by an internal team. In addition, an in-house project team takes on average six months to complete an ERP upgrade, compared to around 10 months for consultants.
According to Bacon, most organisations spend more time on planning an upgrade and getting it approved by management than they do actually implementing it, says Bacon.
But despite this extensive planning process, most ERP upgrade projects cost more than planned. Most is spent on people-related costs including training and professional services fees. These account for 42% of overall project costs. "Hardware and network costs account for 31% of an upgrade, with additional software and technology capturing 25% of the overall costs," says Bacon.