Total-Cost-of-Change and Why It Matters

Managing change is challenging. What worked perfectly well before in the past, now no longer fits the needs of your growing organization. You may find yourself having to either implement an ERP system for the first time, or modifying your existing system to meet new requirements. Understanding the factors that influence the overall cost of owning an effective ERP system is critical and goes beyond the initial cost of licensing fees, services and third-party add-ons. This is when it’s time to think about the “Total-Cost-of-Change.”

The up-front costs associated with licensing fees and the initial implementation of an ERP system is just part of the purchase consideration. Of equal importance, but often overlooked in the budget process, is the ability to modify an ERP system to meet changing business requirements. This is an area where unexpected and significant cost increases can occur, especially when system customization is involved.

A 2013 survey conducted by market research firm IDC reported that “a substantial amount of system change is required to keep the ERP system in sync with changing business needs. Changes are driven by different business factors such as emerging competitive forces, enhanced customer expectations, regulatory requirements, new or changed business processes, changing technology, or mergers and acquisitions. Here is a look at some of the key findings.

What is evident is that the initial implementation of the ERP system was not sufficient to meet evolving needs; change is inevitable. The survey goes on to say that 42.5% of the respondents stated cost as the major obstacle to successfully modifying their ERP system and that a high percentage of companies experienced a disruption of business operations and financial processes.

As your company and your business environment evolves, so do your business requirements. When selecting an ERP system, look for a solution that offers the functionality, integration and customization tailored to your unique business needs today and in the future. Your ERP system should have the ability to easily and quickly implement changes, including the seamless transition of all customized functions, without incurring significant costs or business interruptions. Simplicity, functionality and productivity are what it’s all about. Check out abas ERP Software and see how we can make a difference for your business.