Factors influencing ERP price

ERP cost is an important issue that companies look forward while deciding on ERP. ERP calls for a voluminous investment. By and large this step is not a cakewalk for any company.

It is not possible to give a comprehensive price structure for all companies implementing ERP.ERP pricing varies even among companies based on requirement, facilities, size and nature of the business and so on. Above all it is dependent on that particular factor which the company banks on or in other words the root cause for the company to decide on ERP. ERP implementation cost is not the only cost to the company.

Some of the well known factors which influence the cost of ERP software product are as follows:

Execution of ERP

This term will include all the exercises from business process engineering to gap analysis to actual restructuring and training. Above all this the process of modifying and transferring data and systems from the old form to new form is another costly affair. The manpower and time spent may also be taken into account to know the nonmonetary costs precisely.

The company needs to calculate this though not for accounting purposes as it will help be estimate the Regular work that was not carried during the regular course of business (due to ERP intervention (some even call it as interruption?!).Again these costs are solely dependent on the company's workings.

If the company engages the services of an ERP consultant then the costs will be quite different, if it goes ahead with the process with the help of In-house IT staff (which is not encouraged during the initial stages).These alone don't constitute ERP implementation cost. A host of other charges will be included in erp implementing cost.

Consultation by ERP Expert

These factors also influence ERP cost to a considerable extent. The professional charges payable to the outsider also depends on the extent of the services availed by the company.

If the company is restricts his service merely to training and implementation the fees will be different from seeking his expertise for the entire process which includes staying with the company to rectify practical difficulties after implementation, conducting refresher programs and so on. This is important component of ERP implementation cost. However this is not the only issue in ERP implementing cost.

Training

This is also a crucial determinant of ERP costs. There are two modes of training offered in companies. Companies hire trainers to update their IT staff on the nitty gritty of ERP. They in turn train the user to get acclimatized to ERP's functioning. This method has lot of drawbacks but still many companies go for it not only because of the comparative low costs but doing away with the need to train everyone in the company. In spite of the drawbacks this method has claimed relative success in some companies.

The other methods is training the users and the IT staff as well .In this method the IT staff will be trained on technical parameters while the users will be trained on usage. But for the exorbitant costs this method is highly successful. ERP implementing cost is very important. Similarly if the company wants to seek the trainers service only for particular facets if it believes that the pool of In-house It staff are competent to handle other areas, then ERP costs will be different.

Conclusion

These factors are non exhaustive. The above discussion gives an account of the common factors. Many more can crop up in due course of time and as per the organizational environment.

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