The ERP implementation cost depends on the type of hardware, software maintenance, internal cost, the vendor charges, and on the hidden costs. But due to the recession the cost of ERP implementation has been reduced in the last year. For example, in 2008 the average cost of the ERP implementation was of $8.5 million while n 1010 the cost was reduced at $6.2 million.
The company must choose the software according its needs. The small and middle sized companies can opt for a client server module while the large organization might select N-Tier modules. Those companies that have retail units indifferent locations might go for multi location ERP solution, while many other companies might choose ERP software that can offer solutions in different remote geographical areas. So the ERP software cost can be determined according the software functionality and the depending on the user’ request.
The consultancy cost is included in the ERP overall cost. So the costs of an external ERP expert are added to the ERP software cost.
There is also a customization cost that must be taken into account. Many ERP packages might need additional customization and for this some vendors might charge additional charges.
Data conversion is the most difficult job when it comes about software implementation. Data conversion implies the process in which the organization historical data is integrated in the new software. The difficulty of the implementation process consists in ensuring the data accuracy. The proper functioning of the software depends on the accuracy of the data that are transferred into the new database.
Tasting cost can also determine the overall ERP cost. Testing the new software is a very important process because during the testing the errors are corrected and the software bugs are fixed. During the tests you can check the integration level, you can ensure the correctness of the transferred data and you can ensure the software scalability to determine if the software is able to handle a certain number of users.
There is a training cost, too. After the software has been implemented the company employees must be trained to use the new software. If the employees are not initiated in handling the ERP software they will find very difficult to use it.
When we talk about ERP implementation cost we have to talk about hidden costs, too. There are a series of hidden cost that cannot be seen from outside but the companies that undergo the automation process often confront with them. These hidden costs consist in: the period of time necessary for the resources and employees to familiarize with the new software and to be able to use it properly. It is well know that during this period the software productivity is minimal and this fact is considered a hidden cost.
Another hidden cost is considered the replacement cost. Many times the companies must discontinue the old system in order to replace it with the new one. Because the replacement of the hardware attachments is not included in the ERP initial cost we can consider it a hidden cost, too.