Enterprise Resource Planning is used by most of the companies to better handle their needs. When a company first start looking into the process of implementation, their first question is often about what will be the complete process cost. Project cost varies because of the size of the company, number of users, their training time, age of their computers and other miscellaneous hardware.
You can easily calculate hardware cost for an ERP implementation. Every Enterprise Resource Planning software has a different hardware requirements and as important as the software itself. Consider the company that has old hardware and they have not upgraded their hardware for several years. In this case, company has to replace their all existing hardware and computers. So the cost of implementation will be high for this type of company. Next important thing is size of the company; if your company is small you will not be able to spend lot money to meet your company needs and requirements. Larger company can spend more as compare to smaller company. The basic reason for less investment from smaller company is lesser needs than their larger counterpart. You have to identify the needs of the company and determine the expenses associated with those needs. Usually implementation cost is equal to the software cost or more than the software cost.
For smaller company, ERP implementation cost is Rs. 4,00,000 at minimum. This is only implementation cost. Software license cost, AMC (Annual Maintenance Contract) and other cost will be extra. For larger company, budget is very high so company may choose to have their own IT department for installing and implementing the Enterprise Resource Planning software, rather than an outside firm. If something goes wrong during or after the implementation in the company, their IT department can find a suitable solution to the problem. This will save company time and money.
To identify an answer for the question of how much does Enterprise Resource Planning software cost, the company needs to look at various factors. They need to identify their VED (Vital Essential Desirable) analysis, and decide if the particular process will be done with their own employees or by using an outside firm. They have to check their hardware and software whether it is up-to-date or not.
Implementation includes testing and training activities also that are frequently overlooked and not accounted for in operational budgets. Many projects fail because the employees are not empowered to understand and use the full functionality of the Enterprise Resource Planning system. Without proper training, the software cannot be used 100%. To start ERP implementation it is important to take time to understand all the critical success factors that can give the successful completion.
The best practices is to involve all users in the planning stages, at the time of data entry, process mapping, testing and training. Companies should involve all users during implementation. If company is not interested to train all users then in this case, there are some employees, who have no idea of the changes. This is one of the worst situations, not the best practices.
Planned budget and stick to that budget is one of the best practices. Company may try to buy the best system, regardless of its cost. In this case they will have numerous functions unrelated to the needs of the company. They will use only 20% to 50% of their system after paying for 100%. It is better to take suitable software in a budget. The best practices of implementation is to stick with the budget that will fulfill all vital and essential requirements of the company.
ERP systems can automate complex transaction processes. Implemented Enterprise Resource Planning software uses several software applications to improve performance of company in term of resource planning, management, and operational control. Implementation can radically change the way of working in the company. It will dramatically improve the business processes. The benefits are only achieved by proper planning, effective preparation and successful implementation.