Have you ever contact one of the ERP vendors but end up shocked by the price they offered? If you answered “yes”, it’s probably because you haven’t collected enough data about ERP implementation for your business.
There are a lot of things to consider before ERP implementation in your company. Here some of the things you have to consider:
What to consider in ERP implementation?
Setting a budget before using an ERP system has to be considered thoroughly. Not only that, you have to completely understand how the ERP system will help your company. You don’t want to end up wasting money on a system that runs as you intended, right?
Here are some things to consider:
Cloud or on-premise
One of the factors that determine the price of ERP software is its implementation model. Usually, there are two ERP implementation model, cloud and on-premise. Both of them have their advantages and disadvantages, but they have a huge gap in terms of price.
The cloud ERP system offers cheaper prices compared to the on-premise one. An on-premise system requires you to build a server infrastructure, which is quite costly.
Related article: What is Hybrid ERP System?
Every vendor has their own policy regarding the product they offer. Commonly, there are two types of licenses provided by the vendors, one-time license and subscription license.
ERP implementation price is also influenced by the license model. A lot of people prefer the subscription model since it’s cheaper. But in the long term, the one-time license is more sensible.
Number of users
Take notes on how much of your staff (and maybe yourself) that will have access to the system. The more user that have access, the more money you will spend on ERP implementation.
Luckily, there’s also an ERP vendor that offers unlimited user features for their ERP system. If your company has hundreds or even thousands of employees, this kind of ERP is the best choice for you.
The best ERP system is the one that complies with your company requirements, not the other way around. This is how the system will help your staff works efficiently. But, the more complex your requirement is, the more expensive the system will be in the end.
This is related to the first point. If you decide to go with the on-premise route, you also have to consider the server specification. The server has to be powerful enough to handle the system on a day-to-day basis.
There is also a security system to consider. If you want extra security for your system, you also have to spend more money on it.
Integration and third party devices
It’s a common thing that ERP implementation also requires third-party devices, such as barcode systems in the inventory system, or POS machine if you need a cashier software. More devices equal to more budget spent.
Not all ERP systems can be customized. A lot of vendors offers ready to use system that requires no customization at all. The problem if you choose this kind of system is, your business flows will be adjusted to how the system works.
If you want full control of your business and your ERP system, then choosing a customizable system is the best option. But please notice that the more customization you ask from the vendor, the higher the price will be.
Although an ERP system’s purpose is to make your business run more efficiently, your staff will need the training to use them. Your budget allocation also has to cover the training aspect.
Customizations and third-party devices used by your staff require training. More training means more money you need to spend later on.
Nothing is perfect. The same thing applies to an ERP system. There will be times when you have to contact the vendor to perform maintenance on the system or the server. Maintenance cost usually priced around 12% to 20% of the total price of the system.
You need to make sure the system can grow along with your company. Is the system support your distribution line or e-commerce later on? Can it help your company compete in the global market, and many other questions.
If your system is unable to support your business development, then it’s not the best ERP system for your company.
That was the ten consideration that you have to carefully consider before implementing an ERP system in your company. The big investment that you have to spend is the main reason for you to analyze its features, modules, and available integration for the system. You don’t want to regret it later because you choose the wrong system, right?