A cost-benefit analysis might be a useful place to start when considering whether to invest in an ERP system for your company. If done correctly, it will keep you from purchasing a system that costs more than it makes. When you start the analysis, you’ll discover it’s as much about the process as the final product you generate.
A frequent conundrum is whether to implement an ERP to replace outdated legacy systems. Technology develops, the level of competition rises, and customer expectations rise. However, how much will it cost you to maintain those worries? Think about the following before you let the numbers intimidate you.
Misconceptions About the Choice of Software
Before we begin, let’s do a short reality check to put things in perspective for you:
Misconception 1: The IT department should oversee the software selection procedure. Stakeholders and individuals who will utilize the new software daily should be included in the ERP implementation team.
Misconception 2: Price determines everything. ROI is about value over time, thus the optimal ERP system will satisfy your needs now and in the future. This may not be the least expensive solution.
Misconception 3: Consultants should be used for selection. The internal teams within your firm will use the software, and their understanding of the business will be crucial in choosing the best software.
Misconception 4: Better software always has more capabilities. Instead of being awed by the most feature-rich software, you might only need to optimize your operations. Consider what your company genuinely needs.
Misconception 5: After contacting a vendor, the research is complete. When it comes down to it, the program you select might not be the best option. Have an open mind because it happens far too frequently for ERP implementations to fail.
What are the costs involved in putting an ERP system into place?
1. The Purchase Price
This might be a one-time upfront price or a consistent monthly charge, which covers the expense of purchasing licenses to use the system.
2. Resources for Your Business Analysis
ERP solution providers are industry experts in their own systems but not in your business. You must document your company’s fundamental procedures and requirements, which require analytical individuals with the knowledge and expertise to lay the groundwork for your evaluation and selection procedures.
3. Analysis of Data
This will require a person or group that can provide the new system with accurate, clear data that adheres to its forms and requirements.
4. Maintenance
Updates and support are often included in the monthly charge for a cloud-based system (SaaS). But you’ll have to pay for continuing upkeep if you get a permanent license.
5. Infrastructure
If your system is not a SaaS, you must evaluate your server capacity and decide whether it needs to be upgraded or replaced. Think about desktop, mobile, manufacturing floor consoles, and networking. Every aspect should work with the system and meet your business requirements.
6. Personalization
Because the system settings will be tailored to the unique requirements of the organization in question, no two ERP deployments are ever the same. This can be time-consuming and labor-intensive, requiring the advice of consultants and your own employees who are familiar with how your business runs.
7. Examining
Once implemented, new systems need to undergo extensive testing. Technical testing can be handled by the provider, but more functional testing requires experienced personnel, and adjustments may be necessary.
8. Education
The new system must be taught to your teams, which can call for specialized resources. Every department must be conversant with the system before it is fully deployed to manage your
9. Handling of Change
A new ERP project is a change management exercise, and some workers might have to switch roles. In some circumstances, you could even need to hire some new personnel.
10. Extra Charges
They may consist of:
- Costs of transition include recycling used hardware and decommissioning aging systems.
- You might have to sign a maintenance agreement.
- You need to budget for additional unplanned expenses.
You are responsible for quantifying everything mentioned above and figuring out the overall monthly expenses in the short- and long term.
What advantages does an ERP system offer?
Although reading the section on expenses may have felt depressing, the truth is that the correct ERP system may eventually produce benefits that outweigh the costs.
- Enhanced effectiveness and financial savings: The organization’s operations can become significantly leaner and more efficient with a well-customized ERP. Labor costs can be greatly decreased by eliminating several manual processes and mistakes.
- Improved Inventory Management: Just-in-time delivery is advantageous in a production setting. As a result, you won’t need as much product on hand, freeing up funds to be spent elsewhere and lowering the expense of running your warehouse.
- Bringing in Business: ERP systems have intelligence built in that can increase the dependability of your business. This may draw potential partners as well as devoted customers. Remember that keeping customers is much less expensive than finding new ones.
- Lower Labour Prices: By hiring more low-cost people, you can lower labor expenses as you become less dependent on pricey skilled workers due to increased automation and system intelligence.
- Scalability: Your business can manage development and expansion with an excellent ERP system. In this approach, you can accommodate growth and seize new revenue opportunities without constantly developing connectors, coming up with workarounds, and hiring more staff.
- System Resilience: Systems in use today are built to be upgraded and to include new technology. You can benefit from ever-evolving automation and analytics to continuously optimize and improve your operations by combining data sources from disparate parts of the organization.
In a nutshell, taking Your Business to the next step can only become a reality if you have the expertise to deliver outstanding solutions. At Seibert Consulting Group, we provide modern solutions to businesses that fully utilize the NetSuite ERP, SuiteCommerce, Shopify, and BigCommerce eCommerce platforms. We always customize our solutions to meet Your Business’ requirements and goals. Let’s start talking about your project and find out how we can help Your Business grow. Contact us via our chatbot or email at hello@seibertconsulting.com and via our direct line at 760-205-5440.
