Mike on Manufacturing

Why is ERP Implementation so Costly for Small Business?

By Mike Hart 

An ERP system is a massive investment, not only in software, but in implementation services.   Implementation costs typically exceed the software cost and can be ruinous to a small business.  Why is ERP implementation so costly?  Let’s examine the various service costs that are likely to be incurred.    

Consulting Costs  

The ERP software industry relies on services for much of its revenue and profits.  As a consequence, software companies avoid offering self-implementation tools that would threaten this revenue stream.  Implementation services are provided by in-house consultants, resellers, or contractors.  Consulting is either billed by the hour or by a flat fee, neither of which is cheap.  While you may be able to finagle a discount on the software, you almost always pay the full rate for services. 

How I Got Started in the Manufacturing Software Business - Part 3 of 4

By Mike Hart

As Hal Holbrooke said to Charley Sheen at the end of Wall Street, “Man looks in the abyss, there's nothing staring back at him. At that moment man finds his character. And that is what keeps him out of the abyss."

My father and I were staring into the abyss.  The product we were representing turned out to be a technical failure and our inability to keep up with our computer payments and other obligations forced us into personal bankruptcy. 

How Do ERP Software Companies Survive?

By Mike Hart

You cannot operate an ERP software company out of your garage.  Overhead costs are substantial and are primarily people-based.  You need marketing and sales people, implementers and trainers, support staff, programmers, and administrative personnel. 

In my blog's Manufacturing Software Directory, I've compiled a list of 45 "mid-market" ERP systems.  With so much competition and high overhead costs, how do all these ERP software companies survive?