Digital Transformation: How much does an ERP system cost?
There are many factors involved in the purchase of a New ERP system, such as:
- Infra equipment: Network, Servers, PCs
- On-going Infra equipment and software maintenance
- Implementation resources
While the above Cost will need to factor in the Total-Cost-of-Ownership over the life-cycle of the ERP System, what is also equally important is to understand and calculate your the Return on Investment (ROI) on your acquisition of a New ERP system.
There are several methods to help you to calculate your Total-Cost-of-Ownership (TCO) vs Return-on-iInvestment (ROI), such as:
- Total-Cost-of-Ownership (TCO)
Estimate of all direct and indirect costs associated with an asset or acquisition over its entire life cycle. it would include cost for Software, Implementation, Infra, on-going maintenance and resource-people cost
- Return on Investment (ROI)
A ROI for ERP project represents metric of completed due diligence and a time phased plan that define when money will be needed and what for it will be used. While it is easier to calculate the expenditure for an ERP project, it is difficult to determine the gain, as several gains from the project are intangible and not quantifiable. Typically, ROI involves a pay back period, which is the length of time taken for the cumulative expenditure equals cumulative cost of investment.