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What was your total ERP cost?
Our management is pretty set on implementing an ERP system but are having a hard time biting the bullet because they're nervous about extra fees. If you've implemented an ERP system before, what was your total cost for the project (software, consulting fees, implementation, hardware upgrades, etc.)?? Also, how long did it take before you started to see a strong ROI?
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4 Answers
I've seen many people ask this question before. I'm not sure you can compare ERP implementation costs in an apples:apples way. Total cost (and time to ROI) will be extremely variable from project to project based on a myriad of factors, including
- Which product?
- What modules?
- What pricing structure?
- How many users?
- How much customization?
- How much data and system integration?
- Internal IT competencies?
Etc.
You may want to outline a few of your requirements and constraints, as well as you general budget for the project, to see if the community thinks an ERP project is realistic under those assumptions. Just a thought.
Good luck with your investigation.
Todd,
There are alternative to suicide...take a look at these statistics on ERP project cost, timeframe and performance. Enterprise Add-On can meet the business objectives without ripping and replacing what you currently have...less disruption, cost and risk to your systems, operation and customers.
Avg. Cost to Implement*
• Tier 2: $3.46 million
• SAP: $16.8 million
• Oracle: $12.6 million
Avg. Time to Implement*
• Microsoft: $2.6 million
• Tier 2: 17.8 months
• Microsoft: 18 months
• Oracle: 18.6 months
• SAP: 20 months
Project Performance
• ERP projects that take longer than expected: 93 percent***
• ERP projects that exceed original budget expectations: 59 percent***
• Tier 2: Percentage of expected value achieved 68.6% *
• ERP project delays caused by lack of business-to-business planning and integration could cost manufacturers more than $1M/month**
• 85 per cent of companies surveyed had experienced delays in roll-outs as a result of B2B integration issues (which can cost over $45,000/day)**
And here are the sources that tie to the astericks:
*In ERP software comparison, SAP scores highest, but Tier 2 competitive
Courtney Bjorlin, News Editor at SearchSAP.com
March 3rd, 2009
http://searchsap.techtarget.com/news/article/0,289142,sid21_gci1349659,00.html#
**ERP project delays cost manufacturers $1M a month
Published by GXS
September 28th, 2009
http://www.marketwire.com/press-release/Gxs-1047274.html
***2008 ERP Report
Panorama Consulting Group: Eric Kimberling
January 7th, 2009
http://www.panorama-consulting.com/whitepapers.html
http://it.toolbox.com/blogs/erp-roi/panorama-issues-2008-erp-report-29172
As Michael Schmier points out in his comment, overall ERP costs can vary widely based on many different factors.
Regardless of project size, however, there are several cost considerations that you should consider:
-- License fees, paid to the ERP software vendor
-- Implementation costs, usually paid to a third-party consultant or system integrator
-- Training and documentation costs, again, paid to external consultants
-- Support and maintenance, paid to the software vendor during the life you own the system
-- System administration costs, paid to internal or external staff during the life you own the system
While tempting to view ERP costs merely as a function of software license fees, the real expenses can go much higher. Be sure your ROI and budget calculations consider the full weight of these additional costs.
As the others have pointed out, the total cost will depend on a myriad of different conditions. As to the software and implementation cost, my firm has developed a calculator based on our recent experience in the past few years with some of the higher-end solutions. Check it out here: http://www.rjmc.net/erp-calculator/
If you are a mid-market company, I would say that the cost to implement that Steve cited above is much higher than you should expect (not that the numbers are inaccurate).
Whatever a system integrator quotes you for the first phase of your implementation, I would say you should add at least 30% plus travel expenses to their number.
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