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The Top 8 Myths About ERP Implementation That You Should Ignore

CHAPTER 4

Myth 4: It’s Impossible To Know How Much Deployment Will Cost

 

False. Granted, it’s impossible to list every single expense because the process should be customized.

However, it is possible to break down the key factors that will influence costs and help you get a rough estimate. These factors are indispensable and will affect deployment, no matter what. Here’s a list of crucial fixed costs and variables.

FIXED COSTS

Licensing
  • Cloud-based
    • Initial costs are lower for cloud ERP systems because they comprise software requirements and connectivity to the system. Meanwhile, the ERP provider hosts and maintains the IT infrastructure, minimizing demands on time and resources.
  • On-premise
    • On-premises solutions require large upfront and ongoing costs for purchasing and managing the perpetual license fee. Also, there are added costs related to maintaining the necessary hardware, servers, facilities, and additional personnel.

VARIABLE COSTS 

General
  • The industry your company belongs in, as some sectors are heavy ERP users compared with others. Wholesale distribution, retail, and manufacturing industries have the highest percentage of employees using an ERP system, Software Path’s 2019 report says.
  • Size of your business and the number of employees that will use an ERP.
  • Company goals and strategy for which you’re installing an ERP, whether it’s to optimize operations or increase production.
  • The integration with legacy systems, especially if these are outdated or on-premise.
  • In the case of the first -time implementing an ERP or replacing an existing system with an upgrade or a different program altogether.
Specific
  • Planning

This plan should include:

  • The initial cost of configuration
  • Costs of standard modules
  • Costs of customized functionalities
  • Data migration
  • Configuration
  • Installation
  • Coding and testing
  • Going live
  • Number of users
  • Coding and testing 

These highly-technical factors typically comprehend:

  • Prototyping
  • Software add-ins
  • Extra applications
  • Additional configurations
  • Upgrades (on-premise or legacy ERP)
  • Going live deployment
  • Post-implementation evaluation and technical support
  • Guidance and counseling

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