ERP Hidden Costs Revealed

By Neil Zawacki
Updated: September 26, 2011

ERP Hidden Costs Revealed

Small businesses that adopt an ERP solution often fail to take into account a variety of hidden costs related to the system. This can send the project over budget and sometimes even derail the whole implementation.

Here are several hidden costs of an ERP solution to consider:

Training

Many small businesses underestimate how much the training for the ERP solution is going to cost. This is mostly because the employees need to learn a full set of processes instead of how to use a different interface. Some individuals will quickly grasp the concepts, while others may take a long time before they can operate the ERP solution without difficulty.

Testing

The ERP software will need to be thoroughly tested before it goes live. This can take a great deal of time since the links between the ERP solution and other software will have to be created on a case-by-case basis. This can be mitigated somewhat if your employees run actual purchase orders through the system instead of using fake data.

Data conversion

You’re going to need to transfer corporate data from the old systems to the ERP solution. This can take a great deal of time, and a lot of the information may be outdated or unnecessary. The data may also need to be modified in order to match the processes of the ERP solution.

Travel expenses

Travel costs are another potential hidden cost to consider. The person in charge of the ERP implementation will need to visit manufacturing sites and other branches when setting up the solution. If they’re located nearby, it probably won’t be that much, but if these locations are far away you’ll need to pay for things like flights and hotels.

Design of business processes

An ERP solution provides an excellent opportunity to create a standard business model for all the different branches of a company. It can take a fair amount of time and money to do so, however, since the software will probably have to be heavily modified.

Consultants

It’s often a good idea to hire ERP consultants who can answer your questions about the software. They’ll be able explain in full detail how the solution works and provide ideas about how to streamline the system. They don’t tend to come cheap, however, so you should take into account their fees when planning out the overall budget.

Backfilling

Many of your employees will not be available during the ERP implementation. They’ll be installing the product, testing it for issues, and learning how to use the system. You’re thus going to need to hire temporary workers to fulfill their duties while all this is taking place.

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