The document discusses the importance and cost analysis of ERP (Enterprise Resource Planning) software for businesses, highlighting its role in integrating various business functions. It outlines the factors determining implementation costs, including product selection, number of modules, licensing, infrastructure, consultation, development, training, and maintenance. Additionally, it emphasizes the benefits of ERP, such as improved efficiency, reduced operational costs, enhanced customer relations, and better data management.

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ERP Implementation Cost Analysis

2. INTRODUCTION
 An ERP software has turned into an indispensable tool for businesses as it caters to all business needs and
functions. An ERP scales across the different business from Manufacturing to Sales, Accounting to Human
Resource, Customer Relations to Trading and many more. For example in the manufacturing industry, the
absence of ERP forces the business to deploy multiple applications to handle the internal business
communication, which turns out to be costlier and chaotic.
 A powerful integrated ERP can ensure a comprehensive and structured business run for no doubt. It enables
with every kind of interactions like marketing, sales, accounting, quality control, processing, and human
resourcing to a single database eliminating the occasional loss of information like before. An ERP software
also automates the business processes by placing them into a useful format that is standardized and
common for the whole business industry

3.  An ERP software implementation is a dedicated mission investing ample time and effort. For this reason,
ERP implementation is bit expensive and may cost you from tens of thousands dollars for a small business
enterprise, to hundreds of thousands or even millions for larger enterprises

4.  Breakdown of ERP implementation costs
o Product selection
First and foremost factor that determines the ERP implementation cost is the product selection. There are
some smart choices to make as you’re selecting your product. This eventually helps you in reducing the cost
of your implementation project

5. o Number of modules
An ERP software typically comes with embedded modules serving different business processes. For example,
the common modules with any ERP include accounting, finance, sales, manufacturing, inventory, purchases,
and CRM. Depending on the business requirement, you can further make an addition to the number of
modules. The more modules, the more it costs. So before you decide an ERP implementation, make sure you
have the right business plan and choose the necessary modules wisely. One should also keep in mind that a
drawing a large benefit out of ERP comes from connecting the whole business.

6. o Licensing costs
Licensing costs often turn to be out of proportion for a business. In case of a proprietary
software, it comes with monthly/yearly licensing costs associated with the product. On the
other hand, if the business opts for an Open source ERP, there comes no license fee. One can
easily download the source code of the product, thereby investing the saved money in future
customization. Odoo ERP helps you in this case

7. o Infrastructure
There are two ways of doing, either hosting the software yourself or choosing a cloud service for hosting
the software. Self-hosting involves large upfront costs whereas cloud service lowers the initial costs. It
involves fees over time, but in the long run, this will even out.
Secondly is the implementation of deployment costs. It requires a large input of work and time on the part
of the implementation partner. Here are the costs involved within.

8. o Consultation costs
The consultation costs come during the phase of project initiation and gap analysis. On account of ERP
implementation, the implementation partner will do a business analysis and thereby create a business
requirement document. This process is charged under consultation cost.
o Development costs
Development costs come with the software configuring and customization add-ons depending on the business
requirements. The more in demand the customizations/integrations, the implementation costs go higher in
accordance with. If you have the right perspective of the business need and how an ERP implementation
should take place, one can make sure the costs don’t go overboard. Some customization will likely be
necessary so that the software fits your business

9. o Training
After the product is developed, users will have to go through training to make sure the software function
properly with respect to the described business workflow. This will involve the creation of documents outlinin
the software, as well as live training to teach them and answer questions they may have.
o Maintaining your system
Lastly the maintenance costs. There can be a maintenance fee involved in updating and upgrading the ER
system.
The costs should never the business down from implementing an ERP as it comes with tons of benefits i
business improving its efficiency and productivity.

10.  Have a quick glance at the ERP implementation benefits.
 Improves business efficiency via reducing the manual entry and repetitive tasks.
 Reduces the operational costs and also prevents disruptions.
 Enhances security and confidentiality via restricting access across various information layers.
 Better customer relation enabling quicker interactions with clients,
 Robust customer database, transaction history etc.
 Ensures mobility with easy access to the program from anywhere.
 Efficient reporting with better visualization and later customization options.
 Forecasting based on accurate business data and transactions
 Flexibility & scalability in tailoring all the elements and modules.
 Automates the business via saving time and costs.

11. Refer this link for more:
https://www.cybrosys.com/blog/erp-implementation-cost-analysis

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