If you're considering implementing a new ERP (Enterprise Resource Planning), CRM (Customer Relationship Management), or SCM (Supply Chain Management) system, it's natural to wonder about the cost. Unfortunately, the bad news is that there are often more costs associated with ERP than you might initially think.
However, the good news is that we're here to guide you through the process of estimating the total cost of ownership (TCO) for ERP, including both direct and indirect costs. We'll also provide tips on how to minimize these costs.
Direct ERP Costs
The first area to consider is software costs. This includes annual maintenance and support fees, as well as license fees, which will depend on the size and complexity of your organization. Additionally, you will need to factor in the cost of customization and any additional software modules or add-ons you may need to support your business processes. To minimize software costs, carefully evaluate ERP vendors and weigh your deployment options.
Another important factor to consider is ERP implementation costs, which can include expenses associated with planning, project management, and deployment, as well as any hardware or infrastructure upgrades. Identifying the scope of the implementation, determining what internal resources and third parties you will need, and estimating the project timeline and hourly rate of these resources can help you minimize these costs.
Indirect ERP Costs
Support and maintenance costs are ongoing expenses associated with keeping the ERP system running smoothly. To minimize these costs, invest in ongoing system monitoring and optimization to ensure your system is meeting your changing business needs.
Organizational change management (OCM) is another often-overlooked cost. This includes expenses related to ongoing end-user training and communication, as well as resistance management. To minimize the cost of project delays due to poor change management, it's important to start planning OCM activities early and involve employees in the ERP selection process.
Data conversion costs involve moving data from your existing systems into the new ERP system. This process includes activities such as data analysis and mapping, data cleansing, and data migration. Developing a comprehensive data conversion plan as early as possible can help minimize these costs. Integration costs can be expensive, especially if your organization has a complex IT infrastructure. It's important to select a vendor or system integrator that has experience integrating with your particular systems.
Estimating ERP Total Cost of Ownership
It's crucial to consider all of the above factors, not just in the immediate term but over the expected life of the system, to estimate your ERP total cost of ownership. Once you've estimated these costs, your next task is estimating the tangible and intangible business benefits you expect to realize, so you can calculate the return on investment.
If you're ready to take the first step in implementing an ERP system, contact us to speak to one of our specialized experts in your industry. We help clients to deploy company-wide systems to improve the efficiency of their finance, human capital, operations, and marketing functions. Alithya’s enterprise solutions services include Enterprise Resource Planning (ERP), Corporate Performance Management (CPM/EPM) and Customer Relationship Management (CRM/CXM).