Cost Optimizations for ERP Systems

Cost Optimizations for ERP Systems

In any project scenario, the triple concern of cost, time, and scope has always been a consistent theme. Achieving these three vertices successfully results in a high quality implementation, which ultimately leads to client satisfaction. However, in reality, according to Gartner, approximately 75% of ERP projects fail. Failure does not necessarily mean it does not go live. In this instance, failure could mean the project was not delivered on time, exceeded a specified budget, or did not include all the initially intended features.

ERP implementation and maintenance can be a significant financial investment, but is also often a very necessary project for many organizations. Many companies have tried cost-saving ideas but often fail to realize the expected savings due to bad execution; they end up limiting the potential of the ERP system by inhibiting core functionality. This blog shares how to maximize value by minimizing cost in an ERP implementation without causing detriment to an ERP system’s core programs.

According to Gartner, some of the best ERP cost optimization ideas include:

Move Core ERP Functions to SaaS Solutions

On-premise solutions usually have higher short-term costs due to purchasing licenses, data center infrastructure and other initial startup costs. Shifting to a SaaS would only incur recurring subscription fees, which could even costs out. However, this scenario could depend on the type of ERP solution at hand.

Automate ERP Application-testing Activities

Software-testing automation tools may incur short-term implementation costs, but can provide an organization with great value. Due to the huge number of test cases that result from a big umbrella of ERP functionalities, automating this process can result in a much more efficient process that still maintains quality standards.

Remove Unused or Low Value Custom Development

Adding multiple continuous-improvement type ERP functionality may seem to add value, but does not help save cost in the long run. Revising older customizations to see if new standard functionality replaces them is a good start. Customizations that are not being used should be removed or replaced.

Outsource ERP Application Development or Maintenance to Offshore Locations

A traditional way to reduce in-house costs is to shift the above functional areas to another geographical area with lower labor costs. Multinational corporations as well as small to mid-sized businesses alike have all done it because it is effective. Offshoring workload could be done through a managed service provider, or by setting up offices offshore.

In conclusion, reducing the costs of an ERP system can increase the value it brings to the company, but that is not the only way. To begin with, one needs to select the right ERP system. For more information on how to determine how to select an ERP system, please visit our website. Be sure to subscribe to our blog to stay up-to-date on all things ERP-related.

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