The decision to replace an outdated legacy system with a modern ERP system is one businesses have to face. Improved technology, tighter competition and savvy consumers all play a role into the necessity for an organization to evaluate their ERP True Cost and foster the decision on whether they should choose a modern system or stay on a legacy.
Our Partner, Acumatica, has developed a tool to do just that. Acumatica’s ERP TCO & ROI calculator can help determine the true ERP system cost and also is a tool to help choose the right ERP system for you and your business.
Modern ERP solutions offer security, scalability, adaptability, and mobility. These features are obviously desirable, but the concern most people have is the cost these benefits come at.
How much will a modern ERP system cost? This question alone can cause businesses to continue to rely on their existing legacy system. But perhaps you should be asking, how much is maintaining my legacy system costing me?
The answer to that question comes from defining the “ERP True Cost”.
What is the True ERP Cost and why is it important?
Businesses that are looking to upgrade an existing ERP or implement a cloud-based one may already recognize that cloud applications can deliver an impressive ERP return on investment (ROI). But you must also understand the need to calculate the Total Cost of Ownership (TCO) of a system to determine all costs associated with implementing a new system.
TCO isn’t calculated by just the upfront and obvious costs such as hardware expenses, software license fees, IT staff, and initial implementation costs. It also includes hidden costs such as employee’s time and effort to implement the system, future system customizations, retraining, and upgrades to name a few.
The ERP ROI and ERP TCO, when calculated correctly, form the components of what we like to call the “true cost” – or ERP true costs – of implementing a typical, modern ERP system for SMBs. True cost is your ROI minus your TCO over five years.
True Cost = ROI – TCO
Because the 5 year TCO and ROI estimate are essential for making the right choice of ERP system, Acumatica came up with their own ERP TCO calculator to help with decision-making.
While a similar type of calculator may be available through other vendors, our ERP TCO calculator gives you the opportunity to compare the offerings of all ERP systems, not just Acumatica’s. Plus, it is interactive and you can change the assumptions and variables to fit your unique situation. If you are struggling with concerns about implementing a new ERP system, the calculator can help ease your fears with facts.
Your ERP true costs, based on ROI and the information you provide for the ERP TCO calculator, are important; it gives you a clear picture of what to expect when you choose between maintaining your current system and purchasing a modern system.
Benefits of implementing a modern ERP system
The intent of the ERP TCO calculator is to ease your concerns about the expense of a modern ERP system and to give you the chance to look at the benefits of all cloud-based ERP systems.
Here are a few of the many benefits of a modern ERP system:
- Adaptability to change business process to match a changing business
- Increased productivity by reducing data entry into multiple systems
- Streamlined processes by eliminating manual processes
- Integrated front and back office procedures for a complete view of the company
- Mobility to work anywhere, anytime on any device
- Customization of dashboards and reports to provide information for better decisions
- Collaboration with stakeholders outside your organization (supplies and customers)
And with SaaS there are two more:
- Lower upfront costs with new deployment options such as SaaS
- And the system will grow with you, at your pace.
The cost of doing business: letting go of legacy systems
Legacy systems have certain restrictions that can no longer be ignored. The maintenance costs alone can be 16% – 20% of the current list price of the software, which means you’re buying it again every five or six years; or worse yet, your system becomes discontinued and is no longer supported. Constant IT staff and support needs, aging hardware, and lack of mobility hinder your potential to grow your business.
Is the idea of implementing a modern ERP system becoming less overwhelming? Understanding ERP true costs through ERP ROI and TCO will help you with this decision. Use the free ERP TCO calculator to assist you. Please also feel free to contact us directly with any questions you may have about the true cost of a modern ERP system. CompuTec Integrated Solutions has been an ERP vendor for over 21 years! We love helping our customers grow and succeed!