Is it worth the cost of ERP software?

Enterprise Resource Planning (ERP) software can be used for a variety of applications in multiple departments. It is intended to improve efficiency, maximize the use of current resources and improve ROI per project, but it also costs thousands of dollars to implement it, even for small businesses.

Entrepreneurs and business decision-makers must evaluate this relationship and decide whether the benefits of the software exceed the manifest costs of purchase and implementation, but how can this decision be made objectively?

Software costs ROI and ERP

To calculate the relative "value" of your ERP software, you must consider your ROI, or the comparison of how much money you save or make compared to your costs. So, what costs will you have to consider for its implementation?
Hardware and updates. You may need to update your services and / or devices to support your ERP software, but this is not always the case.

Software licenses or subscription fees. If you buy your ERP software completely, you will pay a flat fee, usually several thousand dollars. You can also pay a monthly subscription fee, between hundreds and thousands of dollars, according to your needs and the number of users you have.

Personalization and consulting. If you can not use a ready-to-use platform, you may have to pay for the customization, and if your team has problems implementing it, you may need external advice to clarify things.

Continuous costs. There will also be constant costs, which include maintenance, training and updating to consider.



How ERP software saves money

Because ERP software affects many areas of your business, it can save you money in many ways:

Organization. First, your software will help your company keep everything organized. Being able to recover a specific invoice or a project file in a matter of seconds, instead of minutes, will cumulatively save your organization hundreds of man-hours of work, especially over the course of months and years.

Prioritization of the project. ERP software will also help you prioritize your projects, giving you the opportunity to work on the most profitable projects before your secondary projects, and helping you to execute those projects faster focusing on the most important priorities. Ultimately, this will help you work faster and more profitably, ensuring more revenue for each hour that passes.

Inventory tracking Most types of ERP software track inventory, which will help you minimize losses and streamline the efficiency of your shipping and logistics departments. Depending on the size of your operation and the system you currently use, that could mean thousands of dollars in savings.

Automation. Depending on how you customize your platform, your ERP software probably automates dozens of different employee tasks that used to be manual. This will save you dozens, if not hundreds of hours a year.

Cost control ERP software helps you track and analyze your expenses, from office costs to ongoing operational expenses. With that kind of transparency, you can probably make cuts and switches that make your business much more efficient.

Financial agility Most ERP platforms include financial integrations that speed up the processing of all transactions, including billing and receipt of payments. That means you'll have access to faster cash, and you can stay agile with your financial decisions.

Infrastructure costs If you already use multiple systems to manage your organization, switching to an ERP platform can drastically reduce your infrastructure costs. You will pay and manage one platform, instead of several, and you will reduce all other subscription costs of your budget.

Important variables to consider

It is also important to realize that your costs and benefits can vary significantly, depending on several variables:

Details of the platform. Not all platforms are created equal. Some are more expensive, others have more functions and some manage tasks more efficiently.

Implementation. Your implementation costs will also vary depending on how intuitive the learning platform is, your current hardware configuration and if you need any integration.

Employee factors The way your employees use your software will also take into account your eventual cost savings. Will your team actively work to make the most of the platform?

So, is it worth the cost of ERP software? That depends on your company, the platform you choose and the way you want to use it. Fortunately, this Article should give you all the tools you need to make that determination for yourself. For most companies, ERP software is a worthwhile investment, at least in the long term, so do not cancel it prematurely.