ERP
Hidden ERP Implementation Costs - Exposed
This article was originally posted in December 2013, but has been updated for 2019.
Many within the ERP industry tend to focus on the somewhat comical number of ERP project failures. I suppose I am guilty of this as well. But, at least I will admit that many so-called “ERP failures,” were really nothing more than a failure to manage expectations in two areas: 1) Benefits of ERP and 2) Cost of ERP.
From the perspective of Senior Management, often the biggest unpleasant surprise is the actual ERP implementation costs. Benefit expectations are one thing (yes, we all desire the advertised 20% increase in productivity), but huge cost over-runs usually take center stage from their viewpoint. Therefore, developing solid cost estimates early on is an important part of the ERP Project Manager’s survival guide.
Potential ERP Implementation Budget Items
Many also state that a primary reason for cost-overruns is not understanding the hidden costs of ERP implementation or on-going ERP support. Well, these costs are not really hiding, you just need to know where to look!
Don’t be overwhelmed. Yes, there may be hidden costs (and yes the list below is long), but that shouldn’t detract you from moving forward with your ERP implementation. This simply underscores the importance of choosing the right ERP system by looking at the top ERP software vendors. Read through the list below, but take comfort knowing that moving forward with one of our recommended ERP software should alleviate any fears of ERP buying and implementation.
Education and Training
- Senior Management ERP Education
- Industry Practices Education
- Project Team ERP Software Training
- IT Systems Admin Training
- IT Application Development Training
- Implementation Tools Training
- End-User ERP Software Training
Application Software
Here’s a big one. A survey in 2015 found that only 7 percent of companies use their ERP as-is, while the remaining 93% required some form of customization.
- ERP Software Package
- ERP Modules
- Bolt-on Applications
Systems Hardware, Peripherals and Accessories
- ERP Servers
- Bolt-on Application Servers
- Internal Network Upgrades
- Telecom Service Upgrades
- PC’s
- Tablets / Mobile Devices
- Data Collection Devices
- Printers
- Storage Access Network (SAN)
Systems Software
- Operating Systems
- Database Software
- Web Services Software
- Client / PC Software
- Middleware / Integration Products
- EDI Software
- Forms / PDF Management
- Job Scheduler (Batch Programs)
- Data Back-Up / Recovery
Implementation Tools
- Application Development Tools
- ERP Application Set-Up Tools
- 3rd Party Application Development Tools
- 3rd Party Report Writers/Data Query Tools
- Project Scheduling Software
- Process Mapping Software
- Other Implementation Tools
Consulting
- ERP Readiness Assessment
- Software Selection
- Change Management
- Industry Practices / Process Redesign
- Project Management
- Application Consulting
- ERP Software Technical
- Bolt-on Applications Consulting
- Systems Software Technical
- Go-Live Readiness Assessment
Software Development
- Data Conversions
- Interfaces
- Software Modifications
- Reports
Additional Employees or Staffing
- Project Team
- IT Department
- Temporary Staffing (backfill, load data, etc)
Other ERP Implementation Project Costs
- Project / Training Facilities and Equipment
- Travel and Living Expenses (Team and Consultants)
- Project Team Incentive Bonuses
- Hardware Shipping Cost
- Sales Tax
- Contingency Factor
On-Going Support Costs
- ERP Software Maintenance
- All other Software Maintenance
- All Hardware / Equipment Maintenance
- Training: Job Changes / New Employees
- Outsourced IT Infrastructure Fees
- ERP Software-as-a-Service Fees
- Software Upgrades
- Hardware Upgrades
Whether the plan is to host the ERP system internally or use Saas(Software-as-a-Service), you will pay something for many of the items above, one way or another.
Want more on ERP Software? Discover and learn more about software by exploring blog posts, whitepapers and more on our ERP resource page. For comparisons of the best ERP software, download Business-Software.com’s Top 20 ERP Software report.
- Consultant
