ERP systems have become the backbone of modern businesses. They promise the seamless integration of all the information flowing through a company, be it related to supply chain, finance, human resource, customers, or more.

The primary goal of developing ERP software is to drive company profitability and boost operational efficiency by eliminating redundant processes and automating mundane tasks.

Modern ERP systems use the latest technologies such as machine learning and artificial intelligence to provide visibility and intelligence efficiency across every business unit.
It also empowers organizations to be adaptive to customer needs and optimize the customer experience.

When talking about the integration of ERP systems into business processes, the most common question that comes to mind is about the cost involved in the process. The expenses include keeping the software not only up-and-running but also secured and upgraded.

Factors affecting ERP software development costs

There are a number of different factors that carry a direct impact on the cost of developing an ERP system. These include implementation and training costs, location of developers, maintenance costs, and more. Let’s discuss each of these factors in detail below.

1. Number of users and features

When deciding whether an ERP system is affordable for your organization, you need to consider the number of users that will initially have access to the system. Many ERP vendors charge on a per-user basis. This means that with the increase in the number of users, the cost of ERP also increases. You also need to consider the cost of including new users and how that expense could increase in the future as you scale your business.

2. Add ons/customization

In order to offer a comprehensive range of services and functionalities to your employees, you can integrate several third-party add-ons like Enterprise IMs tool or social media logins. You can also include specific modules such as a supply chain management for increased functionality in your system. The cost of these additional capabilities will differ depending on what you decide to include and which vendor you choose.

3. Implementation 

ERP systems are complex software applications, so you will likely need to change operating systems, hardware, and software in order for the ERP system to run properly. If you are implementing ERP for the first time, it’s advisable to have professionals install and configure your ERP system.

This will make the process of implementing ERP software more simple and easy. But you will need to include these implementation costs in the total ERP price. Additionally, some vendors offer more consultative assistance, but this costs extra as well.

4. Maintenance

Until you are investing in a cloud-based ERP solution, your on-premise system will require frequent and timed maintenance to ensure that it system is up and running as expected, at all times. Maintenance costs of an ERP typically run between 15–20% of the initial purchase/implementation price.

5. Training

It might not be easy for your employees to start using a newly adopted ERP system right away. That’s the reason why they might require additional training on how to use such a system. Often, the ERP vendor provides training upon request at a standardized hourly rate. In such a case, you will need to factor these additional costs into your analysis when reviewing ERP systems for purchase or opting for a custom ERP system.

6. Upgrades

The moment a new version of your ERP solution is announced, you will have to start planning the upgrade. The last thing you would want is your system becoming obsolete and inviting issues and bugs. You’ll need to ask your vendor how often updates are made, and if the cost of these upgrades is included in the base price of the ERP system development.

7. Support

Over the lifetime of the whole ERP system, you will come across a number of issues and bugs that you will have to solve and provide support for, to your system’s users – something that will come with a cost.

8. Technology additions

The cost of your ERP system will automatically increase with the inclusion of technologies. The more technologies you add in to the system, like enterprise blockchain or artificial intelligence, or even IoT, the greater would be your ERP system cost estimate.

ERP Implementation Process and Timeline

The implementation of an ERP system in a business is the one factor on which both success and failure of the ERP system ride on. When done right, it can take your business to great heights but when implemented wrong, it can make your otherwise averagely planned processes complex.

Analysis and planning (1-2 weeks): At this stage, key people are identified who are most acquainted with the company or department where the project will be implemented. They will gather and formulate the goals and objectives of the project. Given that they have a thorough knowledge of the business process, they will help specify the ERP system to be built and provide up-to-date information.
They can identify processes that are less automated and thus need to be improved. At this stage, it is essential to understand how business processes are related to one another.

Designing (1-2 weeks): At this stage, the ERP system is designed by the project team. The enterprise architecture is selected, the hardware requirements are specified, the wireframes are developed and the organizational measures necessary for the implementation of the system are determined.

Development (3-12 weeks): During this phase, the development team builds the ERP system. IT architects analyze the connections between each tool, design, module, and design an appropriate architecture. Old data (from the current ERP or company documentation) is converted to the format required by the new ERP. The information and data needed in the new ERP are defined as well.

Testing (2 weeks-3 months): Following ERP development, it is essential to test the system before it goes live. The created software is checked for bugs, errors, and glitches. The performance of tools and functions and the convenience of the interface are also being tested. If the tests are conclusive, users are trained in the system.

Deployment (3 weeks): After the system is tested and staff learns to use the new system, the ERP is introduced into the work environment. First, it is done on a small scale. If everything is fine, the ERP system is integrated into all business processes of the company.

Support and maintenance (constantly): Once the ERP system is made live, the whole process of support and maintenance starts. This ongoing process looks into and takes care of the system to the T, ensuring that it is performing exactly as it was intended to.
This whole implementation process takes different times according to the different business sizes it is going to be deployed in. Usually, this is what the timeframe looks like –

  • Small businesses – One to three months
  • Medium businesses – Three to six months
  • Large businesses – Six months to a year

Final Thoughts

The benefits of implementing an ERP system far outweigh the initial ERP software development cost. When used correctly, modern ERP systems give you a competitive edge with a higher level of operational intelligence that allows you to be more agile and deliver more quality customer experiences like IKEA custom ERP solution.

So, if you plan to invest in ERP systems, it’s advisable to contact a trusted mobile app development agency. The experts will guide you through the entire process and help increase your operational efficiency.