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How to justify the cost of ERP software

It’s no surprise that asking how much ERP costs is like asking how long a piece of string is, so
purchasers’ heads might quickly spin. Setting a budget for a new ERP system necessitates planning
and consideration, as well as a full grasp of your company’s specific requirements.

What is the price of ERP software?

According to 2019 ERP research, the average ERP project budget per user is $7,200. Considering how
many users your system may have (especially for larger firms) and other fees, an ERP deployment for
a mid-sized business can cost anywhere from $150,000 to $750,000.

This is a somewhat broad benchmark, so you’ll need to consider your company’s individual needs to
establish a more appropriate budget. In this in-depth post, we’ll go over how to build a budget for an
ERP system that’s right for your company, as well as how much an ERP system costs on average.

Methods:

1. When putting together a case for ERP costs, start with your own company. Take the time to find
out who on your team has previously gone through the ERP selection process and ask them for any
advice that can assist you to win senior management approval. If your present squad is short
inexperienced, it could be preferable to hire a consultant with experience with ERP systems in your
industry.

2. It can be costly to do nothing at times. Because of the rapid pace of change in the technology
business, newer and better ways to supply services are constantly changing. When companies fail to
update their legacy ERP systems, they pay an opportunity cost: the expense of not upgrading to a
newer, more efficient system. This could be observable, such as the additional costs of hiring
personnel to manually transfer data across systems.

3. One of the most common comments they receive from clients is how easier it is to operate with a
centralized ERP system, where all data is collected in one location and accessible in real-time.
Continuing to use different software solutions that aren’t fully linked influences employees’ ability to
accomplish jobs promptly, adding hours to each week that could be spent on revenue-generating or
value-added activities.

4. The price of your new system’s permissions vs continuing support and grant restorations for your
legacy software is a simple ROI calculation. As software becomes older, it becomes harder to
maintain.

Conclusion:

With so many possibilities for building out your business processes, side-by-side
comparisons of your options will provide the most significant insight into how ERP works – and
which one makes the most sense for your firm.

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