The Hidden Costs of ERP Software

The following blog comes to us from Aniruddh Parmar of Software Suggest. 

ERP software provides some amazing benefits, but the cost of these platforms goes well beyond what's on the price tag. Even the most low-cost option promises to saddle Procurement with a number of additional charges. Unfortunately, many organizations neglect to factor these into their budget discussions. These groups find themselves sadly disappointed when the low-cost ERP they've invested in begins to put a serious strain on their resources.

While Marketing teams and salespeople might convince you that their ERP is well within your organization's budget, it's important that Procurement take time consider any secondary costs. Some of these - implementation, for example - are easy to plan for. Charges for upgrades and maintenance, on the other hand, might prove more unpredictable.  Here are a few of those hidden costs you might want to think about before selecting a new solution.

Implementation
Organizations adopt ERP systems to reduce costs as well as their own workload. Ironically enough, implementing an ERP tends to require a lot of both money and effort. The more complex the ERP, the more potentially costly and time-consuming the implementation process. That's why it's so essential to carefully assess your team's actual needs before making a commitment. No one waste time and resources implementing a solution that their organization can't or won't leverage.

Training
You can't realize the benefit of ERP software if your team can't use it. For Procurement professionals, embracing a new ERP often means learning a lot of new concepts and processes to gain an understanding of the tool. Not everyone will need to understand the software completely, but it's important that those who need to do. Training Magazine reports that companies spend more than $90.6 billion developing their employees - new technologies account for a large chunk of that sum.

Customization
One of the best things about world-class ERPs is the customization options they provide to users.  If the features present in the software don’t suit the business, administrators often enjoy the option to customize them. While helpful (and possibly necessary), the development fees associated with tailoring the system can add up quickly. Some organization might even find that this process leaves them spending double or triple what they intended.

Software Upgrades
Don't forget that investing in a new solution means investing in support, maintenance, and periodic updates too. A new update might even mean re-training employees to leverage new features and understand new functionalities. When evaluating providers, it's crucial to identify those who'll offer value adds like consultation to eliminate as many of these costs as possible. You'll also want to look for vendors who offer customer support without tacking on additional charges. If these charges aren't covered by your annual package, your organization could find itself paying for each and every issue it brings to customer support.

Integration with other software
If you want the ERP system to show its full potential then it is important to integrate it effectively with your Procurement team's other business software. This is rarely an easy process. Depending on what solutions your organization leverages, integration mean navigating a protracted implementation process and even breaking the bank. Once again, you can mitigate these costs with proactive research during the selection process.

These are just some of the hidden considerations that Procurement often overlooks while navigating the market for ERP software. Don't forget to give them some thought before your organization makes its next big investment.

Author Bio:
Aniruddh Parmar is a Blogger and Software Analyst at SoftwareSuggest. He loves to dig deep into various ERP Software, Payroll Software and Project management software. He's also ready to grab a cup of coffee anytime, if you want to talk about tech, cars, business, or cricket.