How Much Does ERP Really Cost?

True-Cost-of-ERP-SoftwareEveryone knows that enterprise resource planning (ERP) software can improve business efficiency, save time, increase profitability, and reduce the levels of stress across your business, but do you really understand the true time and cost savings ERP could bring to your company? Recent research has proven that while businesses understand the benefits of ERP software, they aren’t aware of the actual cost involved with implementing an ERP system. An ERP implementation involves more than simply looking at the price of the system and calling it good; a successful implementation requires time and additional costs, including training costs, implementation costs, and any add-on costs desired by the business. While it’s true that ERP software can save your business a substantial amount of money, you stand the risk of losing money if you don’t accurately forecast the project.

ERP software implementations are costly in the area of time and money. Because implementing a new ERP system is such a significant undertaking, it’s important for businesses to accurately forecast expenses related to the ERP project. While certain costs will be static in nature (such as hardware costs, software, and ERP licenses), other costs can be more difficult to predict (such as project management fees and additional consulting costs). It’s important to remain aware of any additional costs that may creep up during the process that could hinder your overall cost-savings. If you’re not careful, these costs can quickly get out of hand. In fact, according to Panorama Consulting’s 2014 ERP Report, 53% of the 172 businesses surveyed claimed to go over budget on their ERP installation projects.

In an effort to help you accurately forecast your ERP costs, we’ve created a few key guidelines to ensure you don’t undervalue the costs of ERP implementation. Keep the following in mind as you begin your new ERP project:

  • Do your research.
    Successful ERP projects require time, patience, and adequate research. Just because a certain solution worked for another company doesn’t mean that it will work for you. More often than not, ERP solutions are customized to meet a company’s specific needs, so a blanket implementation of a new ERP system won’t necessarily result in a positive initial return on investment.

    For true financial return, you need to determine your company’s specific needs and research a number of solutions that fit the bill (or can at least be customized to meet your requirements).

  • Sit down with your ERP consultant and create a plan.
    In order to be successful, a business has to develop the correct project scope early on in the process. Together with your top decision makers and your ERP consultant, create realistic goals and an achievable timeline for the implementation. This will help you work at your own pace and not get caught up in side issues along the way.

    It’s also a good idea to work with your consultant to define specific consulting timeframes on a weekly basis, so as not to rack up a bunch of hourly fees. With a little guidance from your consultant, your employees can begin to run with the project on their own, checking in weekly when they have questions or concerns.

  • Use your time wisely during the implementation phase.
    While you always want to work at a speed that is comfortable for you, the cost of an ERP project can add up if the implementation takes too long. Educate your employees adequately on the system to ensure long-term productivity, but don’t become focused on making sure every employee has every aspect of the system figured out. It’s not beneficial to you or your employees. Finishing the project in a comfortable timeframe will help you keep a handle on ERP costs, start realizing a faster return on investment, and aid you in achieving your business goals.

If you’re looking to streamline operations, increase efficiency, improve productivity, maintain visibility, and gather the data you need to make effective business decisions, enterprise resource planning (ERP) software is just what you need to achieve your goals. Make sure you have a thorough understanding of the software (and the cost of implementation) prior to installing the software. Don’t make the costly mistake of assuming you know the costs!

If you need assistance or are simply looking for a new ERP solution, contact one of our Sage 100 ERP experts today. Sage 100 ERP (formerly Sage ERP MAS 90 and Sage ERP MAS 200) is one of the most popular ERP products on the market today and can transform your business with the right amount of implementation.

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