Essay On ERP System

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Introduction ERP Systems Costs: In order to be more productive and accurate, most of the companies depend on use of technology, with the help of enterprise resource planning (ERP) systems. (Olsen, and Saetre, 2007). “From early on the ambition of ERP-systems has been used to integrate all transaction systems within the one system which combines all information and practices across full organisation, and gives proper information for decision-making in real-time” (Bjorn-Andersen & Johansson 2007) Many organization have developed and adopted ERP system and most of them do not have the exact idea of the total cost, everytime when a new organization has to be setup the question arises “How much is the total cost of ERP system ? “ this question can only be answered by careful assessment of the requirements because the cost of ERP system depends on the complexity of implementation and demand and needs of the organistion.Furthermore it also depends on whether new ERP system has to be purchased as a whole with hardware or the organsation will continue to use the old infrastructure.ERP systems are charged on a user basis depending on how many users are going to use the system which can be somewhere around $ 1500 to 4000$ per member.The number of user relates directly with the cost for instance if we talk about small to medium business they sometimes do not require Master Production Scheduling Module or some different complex tools which is at the same time required by big multinational company for more accuracy and flexibility It is said that as the number of users increases it results in the decreasing the total cost furthermore the implementation costs would increase as the degree of customization increases It is mentioned by “Ven... ... middle of paper ... ...mpany to indulge itself in a competitive world by minimizing the cost incurred. ERP systems cost may directly affect on the point that the purchasing of the license is the only main implementation cost, but in reality if we check the whole scenario it is twice or thrice the cost of software license While small and large companies fit into the interval suggested by Bingi, Sharma, and Godla, (1999) for software license, the percentage in mid-sized companies was significantly higher.If we talk about the cost of hardware it is viewed that the organization with the preinstalled IT department invest less amount by 25 % as compared to other companies without IT setup as they also spend hardware cost (Mabert, Soni, and Venkataramanan (2001a).If hardware cost is removed then only difference between big and small organization the percentage of the software and its license.

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