17 Jun Building a Budget for ERP Training
If you haven’t already, be sure to check out our previous post on Planning Your ERP Training Project- it may be useful before we dive into building your ERP budget.
There’s no doubt about it: ERP projects are expensive, and so is the training needed to support your rollout. In fact, research about ERP training cost is eye-opening if not startling.
IDC Learning Services Research shows that organizations, on average, spent 15% of their total ERP budgets on training, while indicating that a 17-20% investment yields better results.
Research from the Gartner Group shows similar averages and an interesting fact… Organizations that spent less than 13% of their total ERP cost on training were three times more likely to see their ERP projects run over time and over budget when compared to organizations that spent 17% or more.
What should you do? March right up to management and demand your 17% of the pie for training?
We don’t think so.
Instead, budget from the bottom up, and use the 17% figure as a sanity check when you arrive at a total.
Spending Categories
Use our cheat sheet to make sure you’re accounting for all spending categories that will apply to your project. Typical categories for ERP training include:
Hardware
How much extra hardware will you need to support the training system?
Vendor Classes
Will you need to budget tuition for vendor-supplied training?
Software
Will you need additional ERP system licenses for training IDs? Will you need one or more training clients, or will you be simulating the system using course authoring software? Will you need a learning management system to track and administer courseware? What about project management software?
Training Support
Will you need developers to publish training on your intranet or learning management system? How about foreign language translation and sign language interpreters required for special learners? Finally, don’t forget about classroom set-up, including whiteboards and workstation installation.
Tools
Are your users and team members spread out geographically? Will you need WebEx or conferencing services to facilitate distance learning or training development meetings? Do you need course authoring tools to create online learning?
On-going Support
This is a broad category, not usually required in your initial budget but worth considering from the start. It includes such “looking forward” items as new hires and services that may be required when ERP system upgrades occur or new functionality is added and training needs to be updated.
Upgrades
Does your current learning management system or course authoring software need upgrading to support the new project?
Team Fun
ERP projects are stressful and you’ll need to maintain morale. Treat your team members to an occasional event, such as an ice cream social or mini-golf outing.
Administration
How many training coordinators will you need to support courseware management and training sessions? What about the cost of materials reproduction for those items you determine must be hard copy?
Travel
What is the estimated cost of moving, housing, and feeding the people who will be on the road? These include trainers and employees who need to travel to training sessions, and training developers who may need to work at various sites.
Internal Staff
Will you need to supplement your staff to cover gaps when your employees are away conducting or attending training?
Facilities
Can you accommodate all training sessions in-house, or will you need to budget for outside facilities?
Roll-up and Review
After all categories have been researched and costed, roll up the budget and consider the total.
- What percentage of the estimated total ERP project cost does your training budget represent? Is it significantly different from the guidelines we mentioned at the beginning of this article?
- If it is too low, review your line items and make sure you’ve accounted for all costs. Also, consider adding a risk premium to cover “unknown” costs.
- If it is too high, ask yourself if you are being too cautious. Remember that budgeting always contains an element of risk. Also, is it a number you can sell to your project management?
In the end, however, ask yourself the most important question… “Is this a number I can live with?” If you’ve done your homework and obtained solid numbers and commitments, the answer should be “Yes.”
Stay tuned for our next post where we’ll cover staffing the ERP training team. In the meantime, if you need assistance budgeting your ERP project, ISC Resources can help. Get in touch with our experts today.