There may be legitimate reasons for you to replace your ERP (Enterprise Resource Planning) System. For instance, if the publisher ends its support or if it’s not meeting your needs. However, reinvesting in training or looking at enhancements to your given ERP Solution may be a better economic decision.
There are many costs involved with replacing your ERP System, let’s take a look at these.
Time: If you have not read our blog on successful ERP/WMS Implementations please do so. Part of the success is to have a team take ownership of the selection process. This will take time out of their daily routines but is important.
Software Costs: Regardless if it’s on premise or hosted, there are costs associated with purchasing the new software. This could include a one-time license fee with ongoing annual maintenance fees, or monthly subscription fees. This will depend on the functionality your company needs, the number of team members who will use the software and what the software company’s pricing model is.
Hardware or Cloud Rental Costs: Your software resides on hardware that needs to be configured properly. These system requirements will also include the database, communications, printers, etc. Either you or your hosting provider will need to make sure the system requirements are met.
Implementation Costs: With every software project comes implementation expenses. These vary by the project but include your vendor’s project management, installation, configuration, trouble-shooting and training.
Data-Conversion: There are two types of data that can be considered for data conversion or data migration.
• Master Data: Master data does not normally change unless you decide to make a specific change based on your own internal decisions or if a significant event takes place (Customer Changes Name, Vendor is purchase by another company, Item is discontinued). Master data includes static information such as customer master, item master, vendor masters etc.
• Transactional Data: Individual events reported to the computer system, e.g., issues, receipts, transfers, adjustments, shipments, orders, etc.
When you implement a new system, you will have to pay to have your data converted. The costs will vary depending on how challenging it is to migrate your data, what data you want to move to the new system and how far back you want to move your transactional data. Keep in mind you may also have additional fields of data (User or custom fields) based on your business type.
Human Resources: Don’t forget your time. If you use your own team members, they may have to have other team members take over their duties. If you hire outside project managers, there are associated costs with that.
• The Corporate Owner: Is responsible for and provides, supervises, and reviews the allocation and application of all the Client’s resources required to complete the implementation in a timely manner.
• A Project Manager: Is responsible to facilitate and make daily project decisions necessary to meet implementation objectives.
• Internal Technical Team Leaders: are responsible to ensure that their operational departments needs are explained, understood and the processes are documented. They also need to manage their employees time and tasks.
Training: This is the most important part of a successful implementation. You absolutely should invest in training on your new solution. You will also need to determine if you want to train department heads and they train your other team members internally or if you need your vendor to train all of your team members.
Software and Or Report Modification: Ideally your selected ERP System should meet your needs close to 80% out of box. (From our 30 years of experience no ERP Solutions meet every company’s needs straight out of the box.) So most likely, you will need to pay for custom programming or software development.
3rd Party Applications: If you’re a distributor or manufacturer you probably need additional add-on software applications or services that are not already included in the ERP System. These include applications such as WMS (Warehouse Management System), EDI (Electronic Data Interchange), CRM (Customer Relationship Management), MRP (Material Requirements Planning), Shipping Solutions etc.
Please note, enhancing your existing system will save you time and money over switching to an entirely new ERP.
If you are on the Sage 500 ERP System, and want to streamline your processes and add new distribution and manufacturing capabilities, we’ve got you! Check out our completely integrated WMS and Shipping Solution, DCWarehouse.
If you need assistance from a seasoned and experienced team to help you as an unbiased consultant, we’ve got you! Please call us today!
