How much should I budget for the ERP that I am going to purchase? This is a very familiar question I hear often. However I hear the question in a different way. The question being asked is for what price should I buy the ERP. This question is normally asked before you have decided on an ERP package. Once you have finalized the vendor, the budgeting will only be adding up the costs. The price range of ERP’s available is wide, hence the confusion is understandable. It is like buying a car. The real question should be which car(ERP) is right for me?

This leads to more questions like, do I want to transform my business to fit a best practices ERP, or do I want a ERP that will best fit into the way the business currently runs. Or a combination. Once you have settled this, you can begin your search for the right ERP. Off course you have to watch the price/wallet also.
 
Budgeting for an ERP should not end with the initial cost of acquiring the software package. There are implementation and maintenance costs also. These cannot be ignored especially if you are customizing the software to fit your needs. Also do allocate a decent budget for training your employees in how to use the system. This will safeguard against implementation failures, better acceptance and the long term benefits are a lot. Some organizations even budget for the time that your employees spend during the implementation.
 
Ultimately your ERP budget will tie in to your IT or Systems budget. You may have to create new job positions like ERP Administrator to ensure that the system is looked after. You may be able to capitalize some of the ERP costs and hence get depreciation benefit on your balance sheet. Depending on the type of ERP, like Cloud ERP, some this cost heads may not be required. Hopefully this article gives you a holistic view to create and manage a budget for your ERP.
 
Do write to us, if you have any comments or questions.
 
The author Vispi Munshi is Founder of ERP India and has vast consulting experience with various ERP Softwares. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..