What is the true cost of ERP implementation?

This question is like asking ‘how long is a piece of string’.? Setting a budget for a new ERP system requires planning and forethought along with a thorough understanding of what your business requirements are.

A 2022 ERP report showed that the average budget per user for an ERP project is circa ￡7,300.? If you multiply this with the total number of users a mid-sized business may need for example, an ERP implementation can cost anything between circa ￡120,000 - ￡600,000.? So, getting it right first time is paramount.?

The above statistic is extremely broad, so for your business to plan an accurate budget you need to ask, ‘what are your reasons for starting this implementation/upgrade’ and subsequently determine your desired return on investment.?

5 of the biggest costs to consider are:

Licensing – Licences are required to get access to ERP Software. In most instances these are required per user.? This does make up a significant element of overall implementation costs.

Customisation – Depending on your business requirements, customisation of your chosen ERP solution may be required.? Customisations can take time and effort thus costing more.? Before implementation begins, it is worthwhile to check your chosen ERP software already has all the functionalities you need as standard or whether customisation is going to be needed.?

Implementation – Do not underestimate the time and effort needed to implement an ERP system into an already existing business structure.? It is paramount the new ERP system works collaboratively with all other software as well as processes which are already in place.

Training – ERP systems can be complex and a steep learning curve for employees throughout a business. Investment in training, continuation of this training too, is essential to ensure the increases in productivity and overall business efficiencies are achieved and maintained.? Training can be a significant spend but prevents employees from being left to learn for themselves thus avoiding costly mistakes being made.?

Support & Annual Costs – Once an ERP system is implemented, it can’t be left to its own devices!? Chances are that not everything will be perfect straight away – this is where support costs come in, in the first instance.? In addition to this, most software providers charge annual fees for subscriptions to their software and support packages which must also be factored in.

In summary, choosing the right ERP software for your business is your first key step, one system does not fit all.? Once selected, you must have continued investment following the purchase of your new ERP software, without this you risk compromising your business efficiencies, quality, and utilisation of your new ERP software to its full potential.

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