It may hurt your chances of getting your business case approved, but as a general rule of thumb, you should double the budget for the implementation of your new system anyway.

Huh?

Let me explain as I see this scenario all the time.

Your preferred software vendor just gave you a quote to implement a new system.

“Perfect! That’s exactly what I’ll put into your business case, right?”

Well, if you do that…I can guarantee that you’ll be asking your board for more money from them later. Do you really want to do that?

Why should you double the budget?

Many organisations are surprised when I tell them to at least double whatever the vendor price is.

“Why would I give them such advice?” you ask.

Because the vendor quote is limited.  Not only is it generally an indicative price if you have no special needs or requirements, it also lacks other costs such as:

• Internal costs for backfilling staff and a project manager.
• Integration costs.
• Data migration and/or clean-up costs.

In reality, it’s those internal costs that are a killer to budgets and board approvals. Yet, if you fail to include them, you risk:

• Staff burnout, leading to turnover as they try to do their day jobs and implement the new system at the same time.
• Schedule delays because the project is less of a priority.
• Impact to BAU as your staff’s already busy attention is now divided.
• Mistakes and shortcut decisions made in the system design because no one really had time to think about the consequences.
• Negative impact on productivity and possibly future revenue (depending on the system) because training was rushed and insufficient.

Few organisations consider these internal risks and issues sufficiently when they consider a new system implementation, focussing only on the vendor risks.

What should you also include in your new system budget?

For a major business system like a CRM or Payroll/HRIS, I like to include the following:

• 30-50% contingency on top of vendor costs for additional configuration and customisation needs, plus the many unknowns that come up along the way.
• Budget for a business lead from the organisation to be backfilled. This may be full or part-time depending on the size and complexity of the org.
• Budget for a project manager who has experience with these types of implementations. Ideally, they have some change manager experience, too, when budgeting for a separate role is impossible.
• Annual budget for ongoing training. Systems are constantly being updated, and yet few organisations get full value out of the software they already have because they are not aware of what’s possible – not to mention that new staff never get trained otherwise.

Final Thoughts

While doubling your budget may feel like a huge stretch for a business case, it more accurately represents the full cost of such software projects.

So, keep in mind that you can either ask for this budget upfront or beg for the other half later.

 

I regularly help Not for Profits select and design new IT systems.  Let me know if you need some help.

 P.S. If you found this article helpful, you might want to read these too:

• When you asked for a Rolls Royce CRM on a Kia budget
• What is the business case for IT investments in Not for Profits

 

Tammy Ven Dange is a former charity CEO, Association President, Not for Profit Board Member and IT Executive. Today, she helps NFPs with strategic IT decisions, especially around investments.