What are the costs and processes of an ERP?

Enterprise resource planning systems are very useful tools for managing a large number of business processes on a single platform. Discover their advantages and also their costs

ERP stands for Enterprise Resource Planning, which can be translated as Enterprise Resource Planning System. An ERP is a set of information systems that allows companies to integrate different operations within a single program; we are referring to production operations, logistics, inventory, accounting and even human resources.

An ERP works as an integrated system, a single program with a central database, although there may be modular menus. What are the advantages of having an ERP system in your business? On the one hand, the automation of processes with the ERP increases, and with it the savings in time and costs. You have a great availability of internal information agglutinated in the same platform; it helps you to give order and form to all the data that your business generates. In addition, there is an integration in the ERP of the different databases of the company.

All types of companies can benefit from ERP, not only large multinationals. Small and medium-sized companies can also make use of the different modules, customize the tool as much as possible and adapt it to their needs. There are different ERP vendors that specialize in a particular industry or company profile, so you can shop around to find the ERP that best fits your workplace objectives.

ERPs are flexible and for a more efficient management it is recommended to integrate them with the rest of the solutions that the company is already using and wants to maintain, because they work well. An ERP can be combined with other software, for example invoice management, or expense management, such as Captio, which offers the possibility of integrating with any ERP or CRM: Salesforce, Sage, Qlik, IBM and a long etcetera. The advantages of an ERP are clear, but acquiring one also has economic costs, which we explain below:

Costs of an ERP

First of all, there is no single answer to this question. It depends on the characteristics of the company, its available budget and the ambition and expectations it places on this system. It should be borne in mind that the costs of an ERP are mainly divided into 3 variables: software, hardware and services. This graph from TIC Portal shows how the costs of an ERP are distributed in the first year:

Hardware costs refer to the physical equipment, e.g. computers, servers or infrastructure to be adapted. At this point it is worth noting the differences between two types of ERP: on premise and in the cloud. A cloud ERP system is hosted on the ERP vendor's servers and accessed through a web browser; in the on-premise case, the ERP is installed locally on the company's servers and workstations. The cloud system does not require investment in hardware, for example. There are also hybrid solutions, which combine both systems and are becoming increasingly popular.

Software is another major cost of ERP. There are many different packages and brands competing in the same market, so we recommend that you compare prices and functionalities before deciding, or find a reliable supplier who knows how to guide you. Regarding services, this term includes ERP implementation, maintenance, consulting and training. The cost at this point no longer derives from the ERP you have chosen but from the degree of customization of the system and the processes and functions you want to integrate into it.

On-premise ERP systems require a greater economic investment in their installation, due to the hardware and infrastructure conditioning. On the other hand, if you opt for a cloud system, the implementation is cheaper and all the costs of maintenance, technical support and updates are included in the monthly fee paid to the provider. We hope this article has been of help to you to know what an enterprise resource planning system is, why it can be key for your company and what aspects you need to take into account to choose your best ERP.