Determining Costs of an ERP Implementation
When evaluating ERP (Enterprise Resource Planning) software, often times the cost is one of, if not the most, important factors involved in making a final decision. After all, if the best ERP solution for your needs is outside of what the company can spend, it will not be selected.
The problem is costs can vary greatly based on what your needs and current situation are. Along with that, ERP software vendors charge differently for their services, support, and software solution. Although it is always ideal to budget and predict costs, in the case of ERP, it is best to speak to vendors directly to get budgetary costs. Here are some keys to determining those costs.
1. Number of users
ERP implementation quotes can range on a user basis. Anywhere from $2,000-$6,000 per user is typical. There are multiple ways this cost is calculated, but there is one basis: ERP modules. Some ERP vendors sell one package (all modules included) and they are often at a higher cost per user. Other ERP vendors allow you to pick and choose which modules you would like. This not only helps keep costs down, but also can help simplify the ERP learning curve.
2. Third-party software
The costs for outside software add-ons vary greatly based on your industry and needs. They are, however, readily available as ERP software companies often have partnerships with other software to add value and functionality to their systems. A good budget range for these add-ons is 10-15% of the total software cost.
3. ERP Customizations
Software that comes “out of the box” without any customization is few and far between when it comes to ERP implementations. A vast majority of companies need to customize their ERP solution in order to make it fit their processes and workflow. This will vary depending on how many customizations there are and what the scope of the projects are.
Ultimately, if we have to put a range on it, $150-750K is a good place to start. There is a lot of room to move in that range, but based on your company’s information, you should be able to better pin down a closer amount.