Enterprise Resource Planning systems, or ERP systems, are an essential part of many businesses today. A lot can be said about the cost of ERP systems, but there is more to it than just the price tag. This article will discuss what you should know about ERP system costs and how they work with your business budget. We’ll also talk a little about ROI and some other benefits that come along with using one. Not sure what ERP is? Read our ERP Guide to learn more.
What is the Cost of an ERP System?
If you are thinking about investing in ERP software for your business, you are probably wondering how much it will cost. To give you an idea for an ERP cost breakdown, the rate varies from $1000-10K depending on the ERP services, and added features like hardware, training, etc.
Taking that figure and factoring in how many people will be using your system and the associated costs, you’ll likely find that ERP implementation can cost anywhere from $10K to $100K for a small-sized organization and from $150K to $750K for a medium-sized organization.
Therefore, depending on the number of users who will be accessing your ERP system, the applications needed and the amount of customization required, the upper end that an average business can expect to invest in an ERP will be around $1 million or more.
As you can see, the cost of an ERP system can depend on several factors. Meanwhile, the average for one for a small business is closer to around $10K-$100K for a single-site installation with standard modules.
This number could be higher or lower depending on various factors, such as the type of deployment, business type, country, the number of users, level of customizations needed and which software packages you decide to go with.
As you can tell, the above is a fairly broad benchmark. So for a more accurate budget, you will need to consider several specific requirements for your organization.
Are ERP Systems Expensive?
If you are wondering if the cost of ERP software is expensive, the short answer is yes. Adoption and implementation during an ERP project can get expensive —but as mentioned earlier, it offers a lot in return on investment (ROI). Some other benefits of an ERP system include easier collaboration between different departments, streamlined operations and higher levels of efficiency.
This means that you will see a reduction in costs related to things like inventory management, order processing and more. Also, companies that can’t afford high up-front implementation costs should consider EPR systems that you can scale to size and grow with your business.
What are the Components of ERP Cost?
So what does $50,000-$100,000 get you for an ERP system? Well, that number is just a starting point because there are many factors to consider such as implementation cost, training cost, software cost, maintenance costs etc. In addition, other charges may occur post-implementation with some ERP providers, such as ongoing tech support and consulting fees.
Here is a breakdown of some of the other standard key components involved in planning the cost of ERP implementation:
- Perpetual license fees for software
- Additional network hardware and servers
- Data transfer and conversion to a new ERP system
- Any Customization needed
- Testing of the system
- Training to the system
- Vendor/technician consultancy support
The Cost Savings on an ERP
That’s a more complicated question to answer. For instance, it would be hard to quantify something that can save your business. However, to give us something that can be measured, an ERP can cut down business administrative costs by 22% and operating costs by 23% on average. Those add up to be considerable savings after a while.
And while those savings may drive you to explore ERP adoption, they can do more than just save money. For example, 95% of businesses improve most or all of their business processes and entire supply chain by the implementation of a robust ERP program.
Likewise, the right ERP system for your business can also pave the way for growth, especially when it comes to ERP systems that are easily scalable.
What is the ROI of an ERP Solution?
The return on investment (ROI) is the amount of money that you could expect to get back from your ERP implementation after a predetermined amount of time passes. This figure can be affected by a few different things, including how much time it takes for an ROI to appear and whether or not there are any problems during implementation.
On the other hand, industry experts estimate that the typical time to see an ROI on an ERP system is typically three years or less. So if everything goes as planned with an ERP implementation the ROI could even be as little as a year or two.
The exact time it takes to see that kind of return will depend on your company’s individual situation, but you can expect cost savings from an ERP system to accumulate very quickly. However, if there are problems with deployment and/or customization, then those costs could outweigh the benefits. It is important to keep in mind that ERP systems are complex, and although you can expect an ROI based on your company’s specific situation it may take some time before you see results.
Choosing the Right ERP is Especially Critical to the Apparel Industry
The ever-changing world of fashion is particularly sensitive to change, and response times need to be fast to stay competitive. In the apparel industry, having the best-suited ERP provides needed visibility into operations. It’s really the only way to manage your operations and recognize inventory levels that are constantly in flux.
Moreover, the fashion industry is different in the way they handle apparel manufacturing, receiving, storage, production, fulfillment, working with retailers and even down to the level of sales representative commissions. As such, having the proper ERP solution can help fashion companies with these aspects, along with accounting for variances and eliminating any need to load your existing systems with additional software.
Lastly, fashion firms that plan to work with larger apparel retailers will need to ensure their ERP system is interoperable —able to exchange and utilize the stream of information between the systems— in other words.
N41’s ERP system solutions for the fashion industry are built with this diverse landscape in mind.
N41 ERP System Solutions for the Fashion and Apparel Industry
The N41 Fashion-ERP Solution is designed to help businesses implement a scalable, smart retail solution that will provide you with real-time information on inventory and sales across all channels of business.
With our flexible approach, N41 can ensure that your business has a fully integrated ERP system from the ground up, or we can work with you to integrate N41’s fashion-specific modules onto existing infrastructure.
We’ll also work with you to control your costs by understanding your existing technology investments, while also maximizing the value of every dollar you spend.
One thing is for sure—with N41’s help, it’s likely you’ll see a better bottom line resulting from an investment in our fashion ERP system. For more information about our Fashion-ERP Solution for the apparel industry or any of our other N41 ERP System Solutions, please contact an N41 representative today at (213) 738‐1010.