How much does an ERP cost? Factors that determine the price

Many companies are using enterprise resource planning (ERP) systems to replace their legacy applications. An ERP software differs from an accounting system in that the latter only performs accounting-related tasks. An ERP system, however, not only manages accounting, it also helps you manage your business.

An ERP system is essentially a set of software that can perform accounting, product planning and development, manufacturing, inventory management, sales management, human resources and other business functions. When it comes to how much an ERP system costs, you need to consider not only the price per user and license, but also the additional costs that come with an ERP system, which we'll tell you about below.

Cost 1: Implementation

You will need to have professionals install and configure the ERP system. You will need to include these implementation costs in the total price of the ERP software. ERP systems are complex software applications, so you will probably need to change operating systems, upgrade servers, and change other hardware and software you use on your company's network to make the ERP system work properly. You will also need to, or should, set up a test environment as part of the implementation. This way you can test the ERP system without affecting the actual company data.

Cost 2: Training

As we have already mentioned, an ERP system is a complex software application. It can be considered as a set of software programs that are compatible with each other. Your employees will need training on how to use the programs. An ERP system is not as intuitive or easy to use as a basic accounting software program, such as QuickBooks or Peachtree. Your company's employees will need time and training. Often, the ERP service provider will include a training course, upon request, at a standard hourly rate. Sometimes you will need to find consultants who specialize in the ERP system to provide the training your company will need to use the ERP system effectively. In any case, you will need to factor these additional costs into your analysis to calculate how much ERP costs.

Cost 3: System customization

The standard configuration of an ERP system may not be sufficient for your business needs. You will have to incur some costs to program custom reports. An ERP system can store a substantial amount of information, but users are limited in how they can access that information. Therefore, it is not uncommon for IT staff to engage in developing custom reports for various departments. So that analyses can be tailored to a particular area.

Cost 4: Process redesign

If your company is going to move from using various software tools to an ERP system, then many processes will need to be redesigned. Companies that use accounting software perform many tasks outside of the software itself, manually in a paper format or in a third-party application such as MS Excel. Purchasing ERP software should, in theory, mean that many of these tasks are being automated by the software to increase both accuracy and efficiency in performing these functions. Even if your company migrates from one ERP system to another, with no two being the same, you would have to make some changes to your company's processes.

Cost 5: Maintenance

You will need to have maintenance. You will have to include these costs to know how much an ERP costs. To the price of the ERP you must add the costs of hardware, network, labor for technicians and other departments to ensure that the system can function properly.

Cost 6: Upgrades

Like all software programs, ERP systems require periodic upgrades to avoid becoming obsolete. Consider how often you will need to upgrade your ERP system and what costs will be involved. Also count on the fact that any upgrades may affect business processes and require additional hardware or software to keep the system running smoothly.

Cost 7: Support

At some point your employees will have complications using the program or detect errors. You will need to know if your vendor will provide adequate technical support to resolve these issues. Ask if support is included in the price of the license or if there is an additional cost.