ERP PROJECT COST

Cost of ERP - What does ERP really cost?


The total cost of ERP ownership includes the costs of packaged software, hardware,

professional services (for ongoing maintenance, upgrades and optimization) and internal

costs.

Costs of Software
 
The cost of packaged ERP software depends on the scope of implementation (the # of ERP


modules and the number of end users), complexity of software and ERP vendors. ERP

software that involves the integration with external business entities generally costs more.

ERP vendors offer discount for organizations who invest in a suite of ERP software

systems. Mid-sized organizations typically commit a few million dollars to packaged ERP

software.

Costs of Hardware

Implementation of ERP systems routinely requires purchase of new computer hardware,

systems software, network equipment and security software. The costs of hardware vary in

a wide range dependent on the scope of implementation and platforms. The hardware

typically costs about half million dollars for mid-sized organizations that implements ERP

systems.

Costs of Professional Services

Customization The big chunk of costs of Professional Services is customization. The cost

of customization can easily out-run the cost of packaged ERP software, but it is the

customization of ERP software that makes an ERP a success or a failure.

Integration ERP systems won't demonstrate its full potentials unless they are properly

integrated with other enterprise software application:

1. the integration of various functional ERP modules,

2. the integration of ERP with other e-business software applications, and

3. the integration of ERP with legacy systems.

Data Conversion

The cost of data conversion depends on the format and the media that

store the historical data. Data conversion from legacy systems to RDBMS is a timeconsuming

process. Data conversion may lead to further data gathering to fill the missing

links in data requirements.
 
Testing
 
 ERP systems are thoroughly tested before they go into production. ERP testing


includes unit testing, component testing, regression testing, performance testing and user

acceptance testing.

Training

Workflow and UI design in ERP software are more complex than average

business software. ERP training is expensive because workers almost invariably have to

learn a new set of processes of doing their daily tasks besides learning how to use the ERP

software. To reduce the cost of ERP training and to ease the transitions from old processes

to new, organizations often seek the help from training companies which are specialized in

coaching workers on using ERP software from particular vendors.