How To Calculate The Real Cost Of ERP
An ERP system is gaining popularity these days because unlike the accounting system running in the business it handles all the business tasks along with the accounting task. Thus, it is the suite of software packages that perform and manages the account, product planning & development, manufacturing task, inventory management, sales management, human resource and much more.
Seeing all these features many businessmen and companies are seeking an Enterprise Resource Planning (ERP) solution for running your business smoothly. If you are one among them, then there are a lot of factors that you must consider before choosing the best. Among all considerations, the most important is the cost that must be included in your forecast and estimation. The cost of ERP software not only includes the licensing fees but also an additional cost of a complete ERP system like Implementation, Training, Development, Support etc.
Various Factors That Defined ERP Cost
- Ownership cost: The cost of the cloud-based model is relatively lower because of smaller upfront cost and their availability under the subscription-based model. The price can be customized and can be cut according to the company's need.
- Implementation cost: Since the software is complex it is required to change its operating system, upgrade of servers, change of hardware and software without affecting company's real-time data so that the ERP system runs smoothly in your system. Thus the ERP software requires professional installation that employs implementation cost.
- Training cost: ERP software system is a complex software that is the suite of software programs that make the task simpler but in order to use the software easily it is essential to offer training to your employees. Generally, the training is offered by the ERP vendor upon making a request. This charge additional fees that you must include in the total cost of the product while reviewing ERP systems for purchase.
- Upgrade Cost: ERP software like every other software requires a periodic upgrade. It is important to consider the time span in which you require to upgrade your ERP system and do not forget to add the cost of the process. Make sure that any upgrade in the software programs does not interrupt any of your business tasks.
- Customization Cost: Every ERP system require customization in order to meet the need of the company and business. Some business requires the addition of features while the other removes some unwanted features. The customization cost of the software should be added to the minimal cost of the software.
- Maintenance Cost: Every ERP system require maintenance for the smooth running of the software. This requires technical assistance from IT and other departments for maintaining hardware network. Generally, the maintenance cost of the ERP software ranges between 15-20% of the total cost of the product.
- Support Cost: Sometimes there might be a rise of certain bugs that require complete technical support. Ask the vendor whether they will provide you with adequate technical support for free or is there any additional fees for the same.
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