What Does ERP Implementation Cost Include? Is the Risk High? ERP is an information management software system that helps managers better run their enterprises. The cost of purchasing an ERP system is one-time, but various expenses will continue to arise during its use. This means that the cost of using ERP is far higher than the purchase cost. So what does ERP implementation cost include?

What does ERP implementation cost include:

I. ERP implementation fees.
There are implementation fees when software is deployed. In some software sales contracts, the software fee includes implementation fees, while for other software products, the implementation contract is signed separately. ERP system implementation can be handled by a professional implementation agency or by the implementation consultants of the software provider. It is generally recommended to let the software provider take charge, because they are more familiar with the software they developed themselves, making it easier to get started and reducing problems. Therefore, enterprises need to take implementation fees into account as part of ERP costs.
II. Hardware investment.

After an enterprise purchases software, hardware investment is inevitable. The enterprise needs to purchase servers, individual terminals, build the company network, and so on according to the software's hardware requirements. Investment costs in software and hardware are relatively direct and easy to calculate, so users often treat them as the final cost of ERP system application.

III. Labor costs.
Implementing an enterprise ERP system requires the participation of many people and involves personnel from various management areas. This adds another category of expense for the enterprise: labor cost. Enterprises need to consider labor cost investment from the following aspects.
1. System training cost. Once the system goes live, employees need a large amount of training, requiring participants to put aside their current work to attend. The greater the training workload, the higher the labor cost consumed;
2. Special skill requirement cost. If the system is too complicated to operate and places high demands on operators, the company may need to hire specialists or adjust positions, which increases cost;
3. Daily time cost. Complex functions, difficult operations, and an unfriendly interface all increase operating time. Even if a small amount of time is wasted each time, the cumulative total across many people becomes a huge number;
4. Retraining cost. When employees leave and the system is difficult to operate, newly hired employees cannot learn to use it immediately, requiring the enterprise to train them and clearly increasing costs;
5. Daily system maintenance. A dedicated system administrator is needed, so the enterprise must add this position, which inevitably increases labor costs.
IV. Software upgrades and updates.

The environment in which enterprises operate is constantly changing. Product categories, product life-cycle stages, planning models, marketing models, business processes, and more are all constantly changing. This requires ERP upgrades and updates to adapt to these changes, which adds the cost of secondary software development for the enterprise.

ERP implementation risks:

I: Risks before ERP implementation
1. Planning risk
Project planning risk refers to the lack of ERP project planning or the mismatch between ERP project planning and enterprise strategic planning, causing ERP implementation to lack clear objectives and making the final implementation effect impossible to evaluate.
2. Decision risk
Before formally implementing an ERP project, an enterprise faces three important decisions: ERP software selection, implementation organization, and selection of consulting and service partners. Each of these decisions contains a certain degree of risk.
II: Risks during ERP implementation
1. Process change risk

ERP represents advanced modern management concepts and methods. Therefore, ERP system implementation is a revolution in enterprise management and will inevitably collide fiercely with traditional management models. Traditional mindsets, the breaking of vested interests, and the business process changes triggered by ERP implementation can all bring resistance at different levels of the enterprise, causing the ERP project to become bogged down or even fail.

2. Project management risk
Project management risk refers to the risk brought to ERP implementation when there is no effective project management organization, no strict project plan, or no effective cost control during ERP project implementation.
III: Risks after ERP project implementation and control strategies
1. System security risk
System security risk broadly refers to all possibilities that prevent the ERP system from operating normally after it has been put into regular use because of improper security management.
2. Accidental disaster risk
Accidental disaster risk refers to destructive disasters such as earthquakes, floods, and fires that may affect the ERP system, thereby causing interruption or loss of enterprise business transactions.
ERP implementation is a long-term process, which undoubtedly increases enterprise usage costs. Therefore, when selecting a system, enterprises need to examine cost factors from multiple angles and strive to find the ERP system with the best cost performance. Only in this way can the software system support long-term development. Guangdong Soonfor Furniture Software Co., Ltd. is a leading domestic provider of furniture ERP software, MES systems, and CRM software. It is a driving force behind the information-based and intelligent transformation and upgrading of the furniture industry. With more than twenty years of focus on the development and promotion of furniture enterprise management software, management consulting, intelligent manufacturing, and intelligent marketing, it provides comprehensive and mature solutions for information management in the home furnishing industry.
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