If your company is considering an ERP solution service (such as Odoo ERP for manufacturing or SAP), the cost of ERP implementation is probably on top of your mind. To arrive at an estimate for the entire cost of an ERP system implementation, several aspects which make the overall capital expenditure of investment in an ERP system must be carefully considered. The entire cost of adopting an ERP system includes a number of additional factors rather than licensing fees. As a result, ERP implementation costs will highly depend on the company size, project scope, and specific business requirements.
ERP solution deployment can cost thousands of dollars for small to medium businesses (SMBs) and millions of dollars for major corporations. However, since ERP solutions can give organizations several benefits, they should be seen as a long-term investment that will pay off in the long run. In this article, let's look at the typical breakdown of the ERP solutions implementation costs.
1. Choosing The Appropriate ERP Solutions
a. Type of Businesses
When it comes to ERP solutions, there are a variety of options available. For example, a Small to Medium Business (SMB) would find an open ERP system like Odoo to be more suitable for their businesses, whereas a multi-national enterprise requiring a multi-country and multi-site setup would definitely need a more sophisticated ERP system like SAP which comes with a large set of different modules such as Financial Accounting (FI) and Plant Maintenance (PM), suitable for covering all complex business processes.
Secondly, the price is heavily influenced by the number of users and functionalities included in the ERP solution selected. In general, the ERP license will be charged based on the total number of comparable users each month/or year - large businesses with a large user base should plan to pay more for the licensing cost.
b. Number of Modules
A standard ERP solution generally comes with a collection of distinct modules for its corresponding processes, depending on the system you choose. Manufacturing, inventory, sales, accounting, finance, and other operations are among the most regularly required. The interconnection of different modules for efficient enterprise planning is where ERP's strength comes from. As a result, it's critical to not overlook but select only the vital modules that are required and best suit your business demands
Several particular ERP vendors, such as SAP, offer full-license ERP products, which allow users to access (pending security settings) all modules and features that come with certain SAP products. The more modules, or functional areas you’re going to use, the more expensive it becomes.
c. Hardware & IT Infrastructure
Finally, you must consider whether or not to host your ERP system on your own IT infrastructure. Or are you opting for a cloud/hosted service that the ERP vendor will handle? Businesses that choose an on-premises solution will be able to fulfill their security and regulatory requirements. However, this will necessitate a significant upfront IT capital investment. The second alternative is cloud hosting, which generally involves annual subscription costs that are initially less expensive but eventually cost more than self-hosting in the long run.
2. ERP System Implementation & Cost
Aside from the ERP software licensing and "hardware/cloud hosting" costs, there are also implementation costs, which need a significant amount of technical and development effort from the technology partner. The following is a summary of the implementation costs:
a. Consulting Fees
Before development, your chosen ERP implementation partner will carry out a thorough analysis to identify requirements and deliver the most appropriate solution based on your specific industry capacity requirements. The ERP implementation vendor will charge fees for the time and consulting services provided to the business and gap analysis done.
b. Development Costs
The implementation partner will next proceed with the development by configuring and adding customizations to the ERP solution, based on the analysis and requirements done beforehand. Integrations with other third-party apps are also possible at this point. Especially, the more customizations and integrations are necessary, as well as the amount of customization complexity, the greater the development expenses.
Once your ERP solution has been successfully deployed, the targeted users may require training to become familiar with the system and guarantee adoption. Some implementation partners may deliver training for free as part of the implementation cost, while others may charge an additional fee. Furthermore, training requires time by your employees, which is an additional expenditure for your business.
d. Maintenance Cost
Finally, when your ERP system has gone live, there is the additional expense of managing your ERP system, which includes updating and upgrading your ERP system.
3. Bottom Line
Understanding the elements that impact the cost of ERP deployment allows organizations to estimate the investment needed for their ERP. Nowadays, many businesses’ ultimate goal is to search for methods to reduce the expenses of ERP manufacturing solutions while integrating all of the essential modules into the ERP system.
To summarize, ERP system deployment is indeed a complex, time-intensive, and costly process. It is critical to remember that ERP should be viewed as a long-term investment that continually benefits businesses in the long run (through reduced labor overheads and other advantages), ultimately allowing your company to become much more flexible and efficient.
Choosing the appropriate Odoo implementation partner can help your organization in a variety of ways, including collaborating with your team to establish project scope and needs, providing advice, and building the most optimal Odoo ERP solutions. SotaTek delivers brilliant Odoo ERP solutions based on vast expertise in Odoo consultation, implementation, and customization for worldwide clients in a variety of industries. Contact us via firstname.lastname@example.org if you are searching for an implementation partner for your chosen ERP solution.