Source: Exposing the hidden costs of TCO (PwC study)
Scope creep – design & configuration along with initial customisation costs that are not factored in initially due to lack of solution familiarity.
IT staff efficiency – additional IT costs for skilled staff; admin training and user training costs due to knowledge gathering and transfer for new solution.
Customisation costs – often necessary, they have long-term risks and implications for ongoing system maintenance. These might require 3rd party support involving substantial costs due to limited in-house knowledge (e.g., new reports, workflows, data imports).
Seams costs – cost associated with activities organizations must undertake to integrate various business processes of new solution with existing landscape.
System upgrade and update costs – to incorporate constant innovation coming from vendor that can be tailored to business needs.
Data conversion costs – the business data in your old systems needs to be transferred to the ERP system. Time will be engrossed in removing outdated data records and modifying them to match new processes.
Solution infrastructure costs – extra data security & encryption backup, disaster recovery, audit costs that get uncovered during/post deployment.
Change management costs – process re-design, dealing with employee resistance and keeping a check on employee turnover rate.
Ongoing functionality costs – companies must respond to business changes such as:
- Regulatory requirement changes - Company reorganizations and restructuring including M&A - Financial management-driven changes (e.g., meeting new accounting rules)