Gartner Research

Avoid Misleading ERP Cost-Estimating Rules of Thumb

Published: 24 October 2013

ID: G00252750

Analyst(s): Denise Ganly

Summary

Organizations undertaking ERP projects often seek rules of thumb to estimate and compare their costs with those of other organizations. CIOs and ERP leaders should use this research to understand the pitfalls of these measures, and the fallacy of comparing one ERP initiative with another.

Table Of Contents
  • Key Challenges

Introduction

Analysis

  • Understand Why Rules of Thumb Do Not Work to Better Educate the Business on ERP Costs
    • Rule of Thumb No. 1: Project Costs as a Multiplier of Software Costs
    • Rule of Thumb No. 2: Project Costs per User
    • Rule of Thumb No. 3: Project Costs as a Percentage of Annual Budget or Revenue
    • Another Common Cost Question: Average Project Cost
    • Potential Consequences of Using Rules of Thumb
  • Define ERP Project Cost Categories as Thoroughly as Possible, and Estimate Based on Project Scope Rather Than Arbitrary Metrics

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