Total Cost of ERP Implementation

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Enterprise Resource Planning system is being implemented by most of the companies to streamline their internal processes and for a smooth flow of data within the various functional departments of the companies. A lot of time, efforts and money are involved in the ERP implementation process. The cost of ERP implementation varies and depends on many factors. The size of the company and the complexity of the business process also determine the cost of ERP implementation. ERP involves a huge investment and a proper analysis of the costs should be done before the implementation. The execution of ERP includes many processes which add to the cost of ERP implementation. The ERP consultant offers the services at a high price and the training also is a crucial determinant of the ERP costs.

Cost of ERP implementation is usually high and a costly affair for the companies. It is important to have an estimate of the total costs of implementation before starting off with the project. One needs to have an overview of the factors which are associated with the implementation costs and help you decide whether you should purchase the ERP package from that vendor. Some of the costs overrun the budget like the costs of installation, data migration and implementation. The location of the project can also determine the cost of ERP implementation.

The prices for the services are competitive and lower in major metro metropolitan areas than smaller cities. One can consider remote consulting or off site consulting in this condition. Training of the users is a significant expense. Some of the staff may also be opposed to accept the new changes and technology. The cost of ERP implementation depends on these various factors and many more like the number of software licenses, implementation time, additional resources, integration, testing and future costs. The costs involved are direct and indirect and vary in each case.

The direct costs include software license cost, hardware costs, operating systems, modules, integrations, etc. The total cost increases as the number of users increase. The indirect costs are customization, training, maintenance costs, etc. Total Cost of ERP starts with the estimation of these direct and indirect costs. To calculate the total costs, the company has to specify the needs of the business with no place for ambiguity. This aids in calculation of the cost of ERP implementation with no surprise costs coming up later in future. One way to limit the cost is by implementing ERP phase wise. This way the vendors can quote the price phase wise.

The costs can be controlled by doing an analysis before keeping all the factors in mind. The estimation of all costs related to the project and process areas should be done. An estimation of the implementation time frame, preparation and planning, training time and change management should be also done. It is necessary to consider all these essential points to plan the project. Cost of ERP implementation can be realized after estimation is done of all the factors.

Read about Oracle ERP Software. Also know Difference Between ERP and CRM. Read information about Benefits of ERP.

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Peter Filinovich has 607 articles online

Peter Filinovich

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Total Cost of ERP Implementation

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This article was published on 2011/05/06