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Should implementation resources be included in an ERP package?
As we start the process of trying to quantify our total cost of owning an ERP system, we have heard that most of the time you need to hire external consultants to help with the implementation of the system. Is that the case and what does that normally end up costing as a percentage of total cost of ownership?
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3 Answers
Most of the time you can expect to pay 2-3 times the cost of the software for implementation and training. So if you are looking at a $30,000 ERP system, expect for the whole project to cost somewhere around $60,000-$90,000, not including hardware.
They aren't usually included but should be part of the price of a solution. For a small to mid size implementation we find the ratio a little lower, more like 1 to 1. The closer the product fit to your company’s requirements the less your implementation costs. The pre-buy work reduces costs later. A couple of things that make the implementation a success and keep cost down are:
Employee Buy In: During the buy cycle, make sure your employees have a chance to be heard. Any ERP solution provider that is concerned with implementation success will be happy to listen to the needs of your finance and operations teams. They may even uncover legitimate problems out of your purview. This also helps the software provider uncover possible challenges that may pop up during training or implementation and bring them to your attention. The employees feel heard and begins the process for a successful implementation.
Management Support : Management has to support the implementation with a positive attitude. Choose a project leader that can foster an environment of change and can say no when needed. You must be an advocate for the change not a reluctant participate.
Have a Clear Project Objective: The consulting team should provide you with a clear project plan that you can refer to when questions arise. This is a picture of what the completed implementation looks like. Of course things will arise where this plan may have to be amended, but it should only be after a look at the cost benefit to your organization.
An example for us of implementation costs are a 10 users Sage MAS 90 Extended Enterprise Suite is about $25K in software/maintenance and $15K to 22K in services. The timeline for this conversion is 60-90 days. Again I will stress that pre-purchase evaluation is critical. You must make sure the product you implement is a close fit to your requirements.
If you're buying SAP, Oracle, Lawson, Microsoft AX you pay 1.75:1 to 3:1 for services vs software. The software vendor selling you the software should provide you with implementation services. Costs should include hardware and operating systems, vendor software, third party software, custom mods (hopefully not), services (installation, planning, configuration/consulting, data conversion, training, and maintenance (18-22% of the license fee).
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