What Are Hidden Costs of ERP Software?

Posted by Gerry Poe


erp software costs

ERP software implementation is for the more serious businesses that want to take complete control of their planning and management processes.  Many times the issues are not from the software or the company but the consultant responsible for implementation.  We are fortunate to have over two decades of success with ERP implementation which allows us to anticipate the problems before they happen.  This is especially important when forecasting the costs of ERP software implemention.

ERP software has both the direct and indirect cost of the ownership. Here are a few steps to include in an ERP plan:

  1. Acquisition (Purchasing ERP process)
  2. Installation  (Installed by consultant, third party inspections, and engineers)
  3. Implementation  (Including the training cost, experts, data management etc)
  4. Owners involvement in the operation.
  5. Maintenance, Support, Upgrades and Add-ons, and Future/lifecycle (replacement if necessary).
Category Include
1)  Acquisition cost Purchasing, preliminary expenses with the order

Lead time cost, admininistration

 
2)  Consultant or Engineer cost Salary, training, data management, consultant expenses etc  
3)  Installation cost Installations, systems, Internet, netrork connections  
4)  Implementation cost Ensure operation in all the departments  
5)  Operational cost Operate successfully and meeting the expected results  
6)  Maintenance, Upgrades and Support cost After implementation service, potential replacement, changes, etc.  

Anticipating the potential hidden costs:

The total life cycle cost of ERP software needs to be factored into the cost analysis.  There may be hidden costs such as:

  • What hardware and additional software are required?  
  • What extra resources are needed to operate?
  • Are there any special configurations we need which will add extra costs?
  • Is there an added warranty cost?
  • What does the software license cover and what added costs might be tacked on?
  • Is extra security necessary?
    • If yes, physical?  Firewalls?  Virus protection?
  • What will be the costs for upgrades, patches and fixes?
  • Are there costs for IT training and/or end-user costs?

ERP software implementation is a much simpler undertaking when having the benefit of an experienced and expert ERP consultant who understands every aspect and knows the importance to prioritize the business and people first to ensure smooth operation at each step. 

If you are interested in learning more about how to avoid the hidden costs and thinking about implementing or upgrading an ERP software system, contact Santa Clarita Consultants.  

Santa Clarita Consultants has been a proud Syspro Partner for over 20 years.  Syspro 6.1 Enterprise software is an award winning solution which allows a business to take complete control of all facets of their planning and management.

Tags: ERP, Enterprise Resource Planning Software, SYSPRO

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