"What can an ERP system like SAP Business One cost?" - This is a question we are asked time and again. The answer is often a fixed amount or a calculation based on turnover. However, no company should be satisfied with this. The value of an ERP system should rather be measured by how the company uses it. While there are companies that use their ERP software as a data store, others define their entire processes about this system. This turns the question "What should an ERP system cost?" into "What do we want to achieve with an ERP system?" and therefore "What is it worth to us?".
Measured against one or two software licences, the amounts that a company invests in a software licence seem horrendous. ERP system has to invest. It is therefore much more important for decision-makers to answer the question: "What are the benefits?". Because if the desired effect does not materialise, the company has to cope with a very noticeable deficit. In order to make the investment calculable, a Return on investment - ROI for short.
ERP systems and external costs
In a return on investment, the expected added value is set in relation to the investment to be made. In the case of a pending Investment in an ERP system The assessment of the service life is particularly important here. This is because the costs of ERP software, such as licences, are incurred in the short term, but the benefits are more noticeable in the long term. This makes it most difficult to make realistic estimates for the future. This is why ROI is part of the ERP evaluationwhich in turn should be an integral part of every ERP implementation or should precede it. By precisely defining the initial situation, requirements, demands and goals, unpleasant surprises can be avoided and the investment can be calculated in a more targeted manner. To do this, the company must familiarise itself and its but know the processes accordingly wellto make corresponding statements. However, the right project team in combination with the right provider can work with foresight here and precisely the external costs can be determined quite closely by means of the ROI method.
ERP systems and internal costs
A greater challenge is the determination of the internal costs an ERP implementation is a challenge. This is because during the project, internal work will arise in the company for which employees must be held responsible. It is difficult to determine in advance where and when this will occur. The subsequent costs will depend on the company's capacities. The planning of the ERP implementation also plays an important role here. If the relevant employees are involved at the same time, it is easier to calculate the costs.
A return on investment should also take into account the costs that are incurred after the system goes live and that need to be invested in further development, for example. It is often difficult to split these costs and those incurred for apps or interfaces to other programmes.
The measurable benefits of ERP systems
The biggest challenge of return on investment, however, is still the definition of the final return. measurable benefit or added value. Because this is always made up of two components: On the one hand, the benefit that comes directly after the Introduction of the ERP system by automating tasks, for example. On the other hand, there are also improvements that are far more complicated to capture. These include, for example, the transparency that ERP software creates or reduces sources of error. It is therefore very difficult to establish a concrete measurable value here.
One option is to choose between a "guaranteed" and a "possible" value. While the "guaranteed" value is realised immediately with the use of the new ERP system, the "potential" value often has to be implemented with additional measures (e.g. through appropriate technical expertise). The respective value that flows into the ROI calculation therefore always depends to a certain extent on the internal circumstances in the company.
Also of interest on the topic:
Government funding for your ERP projects
Monolithic ERP systems in SMEs: challenges, solutions and risk management
From data tomb to think tank: AI in ERP systems
Software validation in medical technology
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SAP Business One Partner - the right one is important
