Implementing an ERP system is a major investment for any organization. While software licensing costs are just the tip of the iceberg, many companies overlook the full scope of expenses involved in a successful ERP program.

To budget accurately and avoid cost overruns, consider these key elements that comprise total cost of ownership for ERP:

Software Licensing

ERP software is available either through on-premise licenses or cloud-based subscriptions:

• Generally speaking, on-premise ERP systems require large upfront licensing fees and ongoing maintenance costs. Additional expenses for hosting and IT support may not be included.
• Typically, Cloud ERP bundles license, maintenance, and hosting into a yearly subscription model. However, long-term costs can exceed on-premise.

Implementation Services

Often, the software vendor will not provide a sufficient level of implementation and training services. They typically take a one size fits all approach which can leave customers with large gaps.

Third-party implementation partners are often needed for ERP configuration/customization, data migration, testing, training and go-live support.

Many companies also underestimate internal labor costs – ERP projects can demand 25-50%+ of some team members time for months. A solid change management plan is important to keep team members motivated and engaged.

Ongoing Support

Post-implementation support, troubleshooting and upgrades are essential after Go-Live. This might involve in-house resources, outsourced contracts, or both.

Often, the software vendor will include some support services, but many clients are surprised to find these services inadequate. All too often we see clients that are frustrated with the long wait times and poor quality of support provided by the software vendor.

Planning and budgeting for third-party support will help your business avoid costly delays and downtime.

Business Disruption

ERP initiatives inevitably cause some disruption to normal operations during implementation and transition. Mitigating downtime through proper planning and meeting project deadlines can result in major savings.

By understanding the full spectrum of potential ERP costs – both obvious and hidden – companies can develop accurate budgets and build a strong business case. A detailed cost analysis also allows you to identify potential savings to contain expenses without sacrificing project success.

Whether you are in the planning stage, mid implementation or already using your system we can help get your business to its desired state. Contact us to schedule a free consultation and we can discuss how Stinsora Consulting can help achieve your business goals.