{"id":10903,"date":"2023-08-16T14:22:41","date_gmt":"2023-08-16T12:22:41","guid":{"rendered":"https:\/\/blog.der-digitalisierungsberater.de\/cost-control-in-digitalization-projects-mistakes-can-lead-to-impoverishment\/"},"modified":"2026-05-04T11:28:05","modified_gmt":"2026-05-04T09:28:05","slug":"cost-control-in-digitalization-projects-mistakes-can-lead-to-impoverishment","status":"publish","type":"post","link":"https:\/\/blog.der-digitalisierungsberater.de\/en\/cost-control-in-digitalization-projects-mistakes-can-lead-to-impoverishment\/","title":{"rendered":"Cost control in digitalization projects \u2013 mistakes can lead to “impoverishment”"},"content":{"rendered":"

Digital transformation has prompted companies around the world to rethink and modernize their business processes. However, alongside the benefits of digitalization come financial risks. <\/p>\n

In this blog post, I explain how important cost control is in every digitalization project\u2014true to the motto: Trust only yourself!<\/p>\n

Because if you do not, you risk not only an empty wallet, but in the worst case, bankruptcy.<\/p>\n<\/div><\/div>

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So, when would your project wallet be empty if you do not calculate properly?<\/p>\n<\/div><\/div>

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The temptation of technology<\/strong><\/p>\n

The world of technology offers an almost endless range of solutions that can help companies optimize their processes and increase efficiency. But every new tool, every piece of software, and every platform also comes with costs\u2014whether in the form of licenses, implementation costs, or ongoing fees. <\/p>\n

Companies entering the exciting terrain of digitalization may easily lose sight of cost control in their euphoria about the possibilities. After all, they trust the software provider, who seemingly has a lot of experience and will surely present the costs transparently. But is that really true? <\/p>\n

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The importance of cost control<\/strong><\/p>\n

Cost control is more than just an accounting process. It is protection against financial bottlenecks, the preservation of profitability, and ensuring that technology investments actually deliver added value for the company. <\/p>\n

An uncontrolled rise in technology costs can harm a company\u2019s health and even lead to project cancellations\u2014or, in the worst case, insolvency.<\/p>\n

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In the beginning, there was the tender<\/strong><\/p>\n

Simply controlling the contractually agreed costs merely means controlling the “evil” that was agreed.
\nHowever, anyone who has formulated their requirements vaguely, has no cost structure, and has no idea what costs and ancillary costs will arise later has a real problem.<\/p>\n

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Squeezing out the last “drop of blood” in negotiations can be really expensive<\/strong><\/p>\n

The bigger the customer, the more likely a buyer is sent in to negotiate a “good deal”. Sometimes, in their euphoria\u2014and the possibly associated bonus\u2014they go a bit too far. And then it becomes expensive instead of cheap.<\/p>\n<\/div><\/div>

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If your provider looks like this after the negotiation, it means: Watch out.
\nBet he will claw back the beaten-down costs two or three times over?<\/p>\n<\/div><\/div>

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Here are some very popular ways to extract more money from you than was negotiated:<\/strong><\/p>\n

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Issue: Time tracking<\/strong><\/p>\n

How long did the provider take? Especially for activities that do not take place on site, it is purely a matter of trust, right? It does not have to be, because you can also record times daily\u2014either with start and end times or as a total time. There are great digital systems for this, which, surprisingly, are not used by all software providers. Why is that? <\/p>\n

On your premises, you could also very politely ask the software provider\u2019s employees to clock in like everyone else.<\/p>\n

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Issue: Accuracy of time tracking<\/strong><\/p>\n

How is it recorded? To the minute, in 5-minute increments, in quarter-hour or half-hour blocks, or even every started hour?
\nYou can do the math yourself on the possible impact if the provider records times a bit “less accurately”<\/strong><\/em>. The question you should ask yourself is: why, exactly?
\nIt should at least be in 5-minute increments. Anything beyond that has the potential to skim unnecessary money\u2014true to the motto “over 250 days, 10 minutes too much every day is no longer peanuts”<\/em> <\/strong>(just do the math yourself\u2014unless you work at Deutsche Bank). <\/p>\n

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Issue: Reinventing the wheel again and again<\/strong><\/p>\n

If the software provider boasts about its hundreds of implementations during the sales phase, you should ask why preparing a kickoff meeting takes hours, all reports are created individually, checklists are reinvented, project plans are developed from scratch, or forms have to be created completely individually.
\nAnyone who pays in full for such “busywork”<\/em><\/strong> by the software provider has only themselves to blame.
\nExpect more finished and pre-prepared documents, information, etc.\u2014because they do exist!<\/p>\n

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Issue: No tracking and budget monitoring at detailed cost level<\/strong><\/p>\n

Anyone who simply commissions 100 days of implementation should ask how they intend to monitor a budget at all. Because, for example, an ERP project consists of training, development, data migration, consulting, testing, acceptance, and quite a bit more.
\nHow on earth are you supposed to notice that data migration has already eaten up 50% of the costs and the rest can no longer be implemented as planned? Exactly: NOT AT ALL!<\/strong><\/p>\n<\/div><\/div>

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If you have no cost projections in projects, you might as well go to a fortune teller.
\nThe cost forecasts will be about as accurate!<\/p>\n<\/div><\/div>

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Issue: No cost projection<\/strong><\/p>\n

If you have already used 50% of the budget, but the feeling creeps in that you have only completed 10% of the work, then you have a problem.
\nUnfortunately, there are hardly any software providers who can do this well or support it in their own systems.
\nIt gets especially funny when the provider says “we work agile, so that\u2019s not possible”<\/strong><\/em>. True to the motto “it costs what it costs”.<\/strong><\/em>
\nWould you handle your private money like that\u2014for example, if you were building a house? Seriously\u2014was your answer just yes or no? <\/p>\n

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Issue: Ancillary costs<\/strong><\/p>\n

Have you calculated in your budget how many trips, overnight stays, per diem allowances, etc. are planned for the entire project? No? Oops\u2014then prepare for an interesting cost surprise.
\nAnyone who now comes up with the excuse “we do everything remotely”,<\/em><\/strong> does not understand that projects like this are carried out by people who should not only receive instructions from afar, but with whom you should also interact in person\u2014unless you like treating them like “machines”<\/em><\/strong>, in which case that fits, of course. <\/p>\n

By the way, the “remote”<\/strong> <\/em>card is often played as an excuse when both sides have neglected this budget, to pretend it was always planned that way anyway.<\/p>\n

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Issue: Unclear allocation of services and a flood of invoices<\/strong><\/p>\n

Have you ever seen an invoice where it was not at all clear where it fits into the budget? Welcome to the club. That is why you should absolutely ask to see sample invoices in advance, so you can flag this early.
\nThe billing interval also plays a role\u2014anything from daily to weekly or even monthly is possible. And if the provider “forgets”<\/em><\/strong> something, then a bit later as well. <\/p>\n

Whether it is sloppiness, incompetence, or intent, simply waving an invoice through just because you do not understand it yourself and do not want to look bad\u2014or because you are still at the beginning of the project\u2014is not a good decision.<\/p>\n<\/div><\/div>

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