Today's leading ERP systems group all traditional company management functions (finance, sales, manufacturing, human resources) and include, with varying degrees of success, many solutions that were formerly considered bolt-ons (product data management (PDM), warehouse management systems (WMS), manufacturing execution system (MES), etc.). ERP functionality has increasingly been tailored to support the specific needs of vertical industries, e.g. healthcare or automotive.

Recently, the functional perimeter of ERP systems began an expansion into its adjacent markets, such as supply chain management (SCM), customer relationship management (CRM), decision support systems (DSS), and e-business, making systems less inward looking. Other value-added aspects of the newest systems include product configuration, field service modules, and Internet self-service capabilities that extend system access to more users and/or business partners. Finally, ERP can be the means for business-process reengineering (BPR), increasing flexibility and responsiveness by breaking down barriers between functional departments and reducing duplication of effort.

(For more detailed information, see Essential ERP - Its Functional Scope)

ERP has earned the general perception of being exorbitantly expensive to license and implement. Users typically pay an up-front per-user (either concurrent, named or casual) license fee and an annual maintenance charge to use ERP systems (typically 12%-20% of the license fee). The per-seat price for ERP varies greatly depending on the number of users, the number of modules to be deployed and what "bells and whistles" are added, and the company's size and revenue. The per-user price range has been from $1,000 to $8,000 (typically higher values for larger companies), with a continual price decline trend owing to fierce competition and the reduced demand for software. Many vendors offer per-month per-user rental or outsourcing deals as an alternative to traditional up-front licenses. Fixed price, preinstalled, pre-configured ERP is also available and is particularly attractive for the lower-end of the market.

Implementation cycles vary from a few months to years depending on company size, organizational structure (single or multi-site, international or not), and the functional scope of the project. Full-scale ERP implementations generally take between 6 - 12 months on average. As a rule, every $1 of ERP software sales drives on average another $3-$6 of additional hardware, third party integration and consulting, and resellers revenue, although in some cases additional costs can reach $10-15 for each dollar spent on software. The most commonly overlooked or underestimated costs of ERP implementations come from: training, integration & testing, data conversion & analysis, staff turnover, post-implementation turmoil, etc. Total cost of ownership (TCO) as a percentage of company revenue generally ranges from 1.5% to 6%, depending on the industry and the company size (typically higher for smaller companies).

Many customers begin with implementing accounting modules, although manufacturing and human resources are also popular for initial implementations. ERP benefits come mainly from reduced inventories and order lead-times, increased production capacity, lower distribution and procurement costs, etc. However, the first tangible returns on investment (ROI) come only several months after the implementation (eight in the best scenario).

Today's leading ERP systems group all traditional company management functions (finance, sales, manufacturing, human resources) and include, with varying degrees of success, many solutions that were formerly considered bolt-ons (product data management (PDM), warehouse management systems (WMS), manufacturing execution system (MES), etc.). ERP functionality has increasingly been tailored to support the specific needs of vertical industries, e.g. healthcare or automotive.

Recently, the functional perimeter of ERP systems began an expansion into its adjacent markets, such as supply chain management (SCM), customer relationship management (CRM), decision support systems (DSS), and e-business, making systems less inward looking. Other value-added aspects of the newest systems include product configuration, field service modules, and Internet self-service capabilities that extend system access to more users and/or business partners. Finally, ERP can be the means for business-process reengineering (BPR), increasing flexibility and responsiveness by breaking down barriers between functional departments and reducing duplication of effort.

(For more detailed information, see Essential ERP - Its Functional Scope)

ERP has earned the general perception of being exorbitantly expensive to license and implement. Users typically pay an up-front per-user (either concurrent, named or casual) license fee and an annual maintenance charge to use ERP systems (typically 12%-20% of the license fee). The per-seat price for ERP varies greatly depending on the number of users, the number of modules to be deployed and what "bells and whistles" are added, and the company's size and revenue. The per-user price range has been from $1,000 to $8,000 (typically higher values for larger companies), with a continual price decline trend owing to fierce competition and the reduced demand for software. Many vendors offer per-month per-user rental or outsourcing deals as an alternative to traditional up-front licenses. Fixed price, preinstalled, pre-configured ERP is also available and is particularly attractive for the lower-end of the market.

Implementation cycles vary from a few months to years depending on company size, organizational structure (single or multi-site, international or not), and the functional scope of the project. Full-scale ERP implementations generally take between 6 - 12 months on average. As a rule, every $1 of ERP software sales drives on average another $3-$6 of additional hardware, third party integration and consulting, and resellers revenue, although in some cases additional costs can reach $10-15 for each dollar spent on software. The most commonly overlooked or underestimated costs of ERP implementations come from: training, integration & testing, data conversion & analysis, staff turnover, post-implementation turmoil, etc. Total cost of ownership (TCO) as a percentage of company revenue generally ranges from 1.5% to 6%, depending on the industry and the company size (typically higher for smaller companies).

Many customers begin with implementing accounting modules, although manufacturing and human resources are also popular for initial implementations. ERP benefits come mainly from reduced inventories and order lead-times, increased production capacity, lower distribution and procurement costs, etc. However, the first tangible returns on investment (ROI) come only several months after the implementation (eight in the best scenario).