What are the costs of implementing an ERP system?

For organisations that want to implement an ERP system, there may be questions about the costs of implementation—what the costs are, what the organisation receives once it has paid, and how the organisation should prepare and allocate the budget for implementing an ERP system.

In this article, the author will present details about the basic costs of implementing an ERP system, in 3 parts, as follows:

1. The license cost for using the ERP system

2. The cost of training employees to use the ERP system

3. The cost of receiving other services from the ERP provider

The details of the three items mentioned above are as follows:

1. The license cost for using the ERP system

The license cost for using the ERP system is the fee for the license granting the right to access the ERP system. Each ERP provider charges a different license rate, for example:

• Charging the license fee once, after which users can use the system forever

• Charging the license fee annually, where the user enters into a contract to pay the license fee yearly to the ERP provider

• Charging the license fee based on the number of system users, and so on

The cost of purchasing this license depends on the ERP provider’s own policy, so each ERP provider company has a different approach to charging the ERP system license fee.

2. The cost of training employees to use the ERP system

For the cost of training employees to use the ERP system, the ERP provider charges the cost of training on the system by the man-day.

Example Suppose the rate for 1 man-day is 15,000 baht, and the ERP user wants training on the system where the ERP provider charges 2 man-days.

Therefore, the service fee for training on the ERP system amounts to 30,000 baht, and so on.

For the part of the service fee charged by man-day, there may be some negotiation with the ERP provider as appropriate.

3. The cost of receiving other services from the ERP provider

Costs in this part include, for example:

• The cost of carrying out the ERP implementation

• The maintenance service fee

• The cost of technical support in using the ERP system

The above costs are usually made into a service agreement between the ERP user and the ERP provider. The service agreement clearly states in which areas the ERP provider must support the user, such as:

• Implementing the ERP system successfully

• Updating the system for the user regularly

• Providing consultation on various technical problems that may arise when using the ERP system

• Looking after data backup for the ERP user, and so on

In summary, for the costs of implementing an ERP system, there is the license fee, the cost of system training, as well as the cost of receiving various technical support from the ERP provider. All of these costs are not wasted; on the contrary, these costs are an investment in using the ERP system, where the return on the investment comes in the form of higher efficiency in managing the organisation.