The first thought most people have when considering a major purchase is, “How much does it cost?” – and we bet you asked yourself when considering a new ERP system. It’s a reasonable question, but, as they say, sometimes you get what you pay for. What if you were buying a parachute, for example? You’d be willing to pay more for a parachute that opens 100% of the time – you wouldn’t even entertain the idea of paying 15% less and buying a parachute that opens only 80% of the time.

Apply this analogy to choosing an ERP – who wouldn’t pay a little more for a robust, well-structured, easy-to-use, reliable business management software solution? Cheaper equals a higher risk of failure.

Your ERP is your company’s parachute because, without a solid business management solution, you will plunge to your death. When you evaluate ERP software, put functionality over price; further, view ERP system cost in the context of lifecycle cost or total cost of ownership, not as a one-time deal. There are up-front costs for hardware, software, and implementation but also ongoing operations, support, and maintenance costs for the life of your ERP.

There’s no one-size-fits-all ERP, so here are three things to consider when evaluating ERP systems and their costs.

Type of Business and Number of Users

Most ERP systems are priced on a per-concurrent-user basis and have dozens of applications available, so it’s critical to assess your requirements to avoid buying unnecessary modules. For example, a small to medium-sized business might not require as robust a finance module as a Fortune 500 company.

Implementation Costs

This cost can vary wildly depending on who does the implementation. Is the ERP provider running the implementation? Your IT department? A combination of both? Remember, you’ll need to factor in the cost of your IT department resources to ensure you’re properly calculating the total cost of ownership.

Maintenance

Unless you purchase a cloud-based ERP solution, your system will require ongoing maintenance – especially a cheaper one. You need your ERP solution to work properly and stay up to date to ensure smooth operations.

While purchasing an ERP solution is a significant investment, a wisely chosen and properly implemented system will quickly pay for itself. So when evaluating possible ERPs, remember the parachute, and don’t just focus on price.

Are you in the market for a new ERP system? We can help you choose the right one for your business; contact us today.