TCO for ERP. Total Cost of Ownership

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TCO for ERP.  Total Cost of Ownership

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TCO of ERP project is based on all of the following, and not only on the cost of the ERP software.

Use this checklist to ensure that ERP implementation does not experience any hurdles.

 Prevent ERP failures during ERP implementation by allocating enough budget for the ERP project.

  Let us know if you would like to discuss on 'how to maximize your ROI and slash TCO'.

It is necessary to allocate money for the following Investment / Expenses:

1.      Computer Server.  For example, high performance computer with Xeon CPU, fast Hard disk drive, etc.

2.      Network:

a. LAN components such as Switch, Wi Fi, LAN Cables (CAT5), Patch cord, etc.

b. Management may think of wireless LAN to connect some laptop with ‘wi-fi’ connectivity,

in which case wireless router, etc. may be required.

c. In case multi-location units consider cost of Wide Area Networking - WAN.

For example, broadband internet connections, or Motorola canopy to connect two factories, etc.

d. Nodes: Computer used by ERP users, called ‘Client PC’,

 as many required as the number of users that are expected to be using DNS ERP.

  You may add Laptop PC.  However, more than one person if necessary may share the same PC.

  DNS controls access by login id and password.

3.      Licensed software:  Most management conveniently thinks that the same is free.

 Well, one has to plan carefully and phase out the pirated versions ASAP.

a. Sever Operating System: Microsoft Windows 2000 Server OS with minimum five user licenses

 and more depending on the concurrent number of users.

b. Operating System on nodes (client PCs).  Microsoft Windows XP or MS Win2KP (but not Windows 98, please).

  As many copies required as many computers.  Usually this comes preinstalled with the PC (as OEM copy).

c. Database or RDBMS software – Microsoft SQL 2000 Server with adequate number of concurrent users.

d. MS Office (MS Excel spreadsheet software).  As many copies are required as many number of user

 who would require using MS Excel.

e. Antivirus software on each node and Server version for the ERP Server.

 This needs to be updated from the website regularly.

f.   Firewall software

4.      Adequate electric power failure backup such as Gen. set and a UPS with capacity

to support THE SERVER and the switch.  Separate UPS for ERP users computers.

5.      Peripherals and accessories such as Laser Jet Printer/s or Inkjet (need-based),

 or Dot Matrix Printer for continuous stationery printouts (for multipart stationery,

 or check printing, or for Spread Sheet Reports), etc.

a. Modem and internet connection (with fixed IP address if multi-location remote access is required).

b. CD writer for taking backup.

c. A separate telephone landline to connect to a PC for remote access support.

6.     The ERP software package itself.

7.      Implementation cost paid to programming / implementing professionals.

8.      Consultant fees paid to IT Consultant who not only understands I. T.,

but also has functional knowledge of various business processes.

This may include training charges or make separate provision for training budget.

9.      Essential Customization Charges.

10.  Additional Customization Charges.

11.  Anti-virus software and upgrade cost.

12.  A separate budget for ongoing expenses such as

a. Consumables like CD or ink cartridges, etc.

b. Annual Maintenance charges to be paid after the CRP run on ERP software to the software vendor.

  That is after ERP ‘go live’.  Usually it is conveniently assumed that one-year service is free.

  Well, it is necessary to pay for the changes that are done after the system goes live.

c. AMC (Annual Maintenance Contract) charges to be paid to the hardware and network support vendor.

d. License software upgrade charges.

This is not an exhaustive list.  Only major items are mentioned in the above list.

Please consult your IT manager or computer hardware supplier for accurate list.

You may need some of the items or all of the above depending on the size and need of the organization.