What is the cost to implement a new ERP software solution?

Okay, so you know the software, annual maintenance or subscription and hardware or hosting costs, do you know the cost to get the software up and running?erpcost

LBSi has been selling, implementing and supporting ERP software solutions since 1989. Our experience has been primarily with manufacturers and wholesale distributors. A fair amount of our customers also do service work either at their facility or on-site at customer’s location. We have customers with as little as 1 user all the way up to 250+ users. Our average customer has 19 users of the ERP software solution.

The following information is based on manufacturing and wholesale distribution companies, since that is our experience and we have a lot of actual history. It does not include the internal time a company spends in meetings, training sessions, self-training and additional things like configuring the software (forms, reports, queries, etc.). This also does not consider add-on’s like Payroll, EDI, Human Resources, Data Collection/WMS, bar code labeling and others.

Plan on 1-2 times the cost of the ERP software. And not the discounted price, the list price of the software. A manufacturer is typically closer to the 2-times amount because of routings, bills of materials, production orders/jobs and scheduling.

We suggest you plan for and track the following activities, at a minimum:

  • Software installation (on the server or cloud), including every workstation
  • Technical configuration such as connecting to your email server, scanners, printers, backup plans
  • Databases: Production and Demonstration at a minimum. Periodically copy production to demo to test out transactions, g/l accounts and processes.
  • Data conversion: is usually done a couple of times, once to get test data and then to go live. This could be very time consuming and expense. See our data conversion points to consider blog post.
  • Plan for general custom development of reports, queries and forms
  • “Significant” customizations should be planned for and tracked separately
  • Project Management
  • Pilot Process with a core team
  • General end-user training (which really should be done by your core team members)
  • Go Live support: plan on a few days right a go live and then another couple days at month-end
  • Consultant travel time and charges
  • Any ‘new’ activity that wasn’t quoted still needs to be tracked: data cleanup, other system interface/integration

 

Your professional service provider billing

  • Be able to identify on the invoices you receive each of the above activities
  • You professional services provider should be able to give you a summary of time and costs related to each activity on the quote during the project
  • We would suggest weekly invoices so that the tasks you are being billed for are fresh in your mind and issues can be immediately addressed
  • Monitor the first month of invoices very closely, so you can understand how you are being charged
  • Get the cost reporting requirements identified up front, don’t wait until your midway or at the end of the project

 

Additional comments

  • Adding new activities isn’t going to reduce the cost
  • During the pilot process with the core team, you will be learning the current business processes and optimizing them as you go
  • Keep the core team small, empower them to make decisions and make sure all business areas are represented
  • Sometimes adding time or steps up front save an enormous amount of time downstream
  • Don’t always go after the most difficult processes first, it is better to get victories and to get people using the software as soon as possible. You can go live with parts of the software along the way, such as CRM which doesn’t affect accounting. If you current accounting solution is not integrated, you can go live with A/R, A/P and G/L pretty quick as well.