Cost of ERP- Why It's Worth It
One of the costs of ERP includes the money spent on the software. Each year, there are billions of dollars spent on ERP software, and this cost is quite significant. Some companies spend up to a few million dollars on the software system itself. The size of the system is another indicator of ERP cost.
A business can also expect their cost to rise with the number of users that will be a part of the ERP system. ERP costs are comparative with the size of a company and the services needed. This will expand as more users become a part of an ERP system. The larger a company is - the more complex the implementation is because the needs are more significant and more analysis is required to give a business good results.
Another major cost associated with ERP ownership is the ongoing maintenance that will be needed. No system is full proof, and every database warehouse requires proper maintenance, which might include optimization of the system or even upgrades so that the system continues to run effectively.
External costs are also a factor to consider. Consulting and technical services will be the majority of these costs. Consulting firms have made billions of dollars each year, and a significant portion of that money is made advising companies and business owners on the correct way to implement their software. Technical expertise and experience is not always easy to come by. Finding professionals to work with certain ERP software systems play a significant role in ERP costs.
According to a survey conducted by Meta Group, corporations were paying an average of 15 million dollars for the total cost of ERP ownership, however, this survey was conducted in 2002 and since that time ERP cost has increased in price. Major corporations are easily committing a vast amount of their financial resources to ERP costs.
One of the largest portions of ERP cost continues to be customization. Each company must make sure software programs and databases can cater to their specific needs. Custom ERP costs are often required because customization can specifically help a company achieve growth and productivity. Without proper customization, an ERP implementation could be in vain and companies are willing to pay exorbitant ERP cost so that a system is properly customized.
Employees must also receive training so that they can learn how to properly use their new ERP system and this involves an external cost that businesses must also factor in. The process of training takes time, energy and money, but various consultants and training companies can help alleviate some ERP costs. Proper training makes the transition of using the new ERP system easier for the company.
