Gartner Research

When Costing Postmodern ERP Projects Don't Use Rules of Thumb

Published: 09 June 2017

ID: G00318548

Analyst(s): Denise Ganly

Summary

Organizations often use rules of thumb to estimate and compare their ERP project costs with other enterprises. Application leaders transforming their ERP approach into a postmodern ERP strategy should use this note to understand the pitfalls of these rules and the fallacy of comparing ERP projects.

Table Of Contents
  • Key Challenges

Introduction

Analysis

  • Rules of Thumb Do Not Work to Improve ERP Project Cost Estimation
    • 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 Thoroughly and Estimate Based on Project Scope

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