In this 7-part series we will present ideas and solutions to help build a business case for a new ERP in just 7 steps. In this third step we will take a look at some of the ERP Cost Assessment challenges to getting support for your ERP project.
Step 3: ERP Cost Assessment
Here in Step 3 of our ‘Making a Business Case for a New ERP’ series we are going to take a look ERP Cost Assessment. The first question you should ask any ERP vendor when being approached with their solution: What the total cost of ownership (TCO)?
An ERP solution is not a cheap corporate purchase, they also typically come with a hefty acquisition cost. ERP solutions are broken down by a Tier system, so when a smaller company is looking for a new ERP, they want Tier 1 functionality at a lower Tier price. With the growth of cloud and web based ERP solutions, small to medium sized business are now able to find ERP solutions with the functionality they need at a price point they can afford.
Another cost to consider, the cost of expanding the solution. When taking into account features and function look for a solution that is best-in-class with a complete range of add-on features to integrate throughout accounting and financial management, purchasing, inventory management, manufacturing and even sales. You should pick an ERP with the ability to be scaled to work with any company department within your company.
Is the ERP your team is choosing intuitive? Will you be adding systems new your IT department? These are just a couple of the questions you should be asking when coming up with your cost assessment, because training costs can begin to add up. If you find an ERP you absolutely love, but the cost of training a new staff may be too much, so make sure you have a full view of the solution and all of the workflow processes and how it works with your current systems and staff.
There is no process that poses a greater danger to your ROI than the ERP implementation process. When it comes to implementing a new ERP, looking for a system that is highly configurable and customizable will help cut down on the time to get your ERP up and running. Picking an ERP with features that let you chose who can do what within the software will cut down on the time you need to have your ERP vendor on site implementing the solution. Also, make sure your solution is customizable to address your business needs.
Every bit of software on the market, whether commercial or consumer, will require some bit of maintenance or administration from time to time, ERP software is not immune to the occasional bug. The ERP solution you chose should be able to easily grow and evolve with your business needs to meet new requirements and regulations.
Technology is in a constant state of flux, do you have Mainframe or do you use the Cloud? These are questions you need to ask an ERP vendor so you can forecast what kinds of hardware, systems and support you will need to employ to keep your shiny new ERP solution up and running at full capacity for the lifetime of the solution.
The sticker price on the ERP solution being presented to you is not going to be the only cost you will incur during the purchase and implementation. You need to ask questions about the Total Cost of Ownership of the ERP solution. The key to keeping the cost of your implementation down is to ask questions, take a 360 degree view of the product, and to get a clear estimate on the project time and cost of getting the ERP up running.
Make sure to check back next week for Step 4: Implementation Risk Assessment
Step 4: Implementation Risk Assessment
Step 5: The Implementation Approach
Step 6: Return on Investment Measurements
Step 7: Recommend the Preferred Solution