If you manage technology for a mid-range or growing business and you’re about to start investigating integrated business solution options, ERP and MRP cost considerations will certainly play a major role in your final decision making process. But ERP and MRP cost comparisons will be based on several complex factors. And it’s worth noting that in a rapidly changing marketplace, MRP cost structures vary widely and cost does not always correlate with value.

ERP System Implementation

ERP and MRP Cost: Can System Implementation Lead to Long Term Cost Benefits?

In the early days of enterprise resource planning, when the first systems appeared on the business technology landscape in the late 1980s, ERP systems consisted of a standardized software platform built around an in-house single or multi-tier server architecture that was typically owned and maintained by the client company.  ERP and MRP cost structures had to account for the upfront cost of implementation, and also the ongoing costs of hardware ownership, including maintenance and occasional repair. Implementations alone could cost millions of dollars, and a drawn out process that could take months or even years often led to productivity slowdowns while system transitions were in progress. Even after new systems were in place, long term ERP and MRP cost calculations had to account for the hiring and retention of a full time IT staff.

In spite of their benefits, early integrated business solutions were typically far out of financial reach for most businesses below the fortune five hundred level. MRP cost requirements could be prohibitive, especially since implementations also entailed a certain level of risk and could sometimes fail even under the best of circumstances.  

This circumstance stayed in place for several years. As ERP popularity grew among large firms, providers could afford to ignore growing interest at smaller business levels. MRP cost restrictions were especially prevalent as the new millennium approached and demand for ERP implementations reached a fever pitch at the high budget level. But soon after the transition, market saturation set in and high budget implementation rates began to cool. At that point, established providers began turning their attention to downstream markets in order to stay competitive. MRP cost prohibitions began to drop as products and services were scaled and customized to reach lower budget users. Back office management tools were offered in product suites that ranged from basic economical packages to streamlined intermediate suites, to advanced, comprehensive products with cutting edge features for a large number of users. MRP cost considerations played a much more crucial role in product development, and as new features were rolled out, cutting edge options were increasingly considered standard. At this point, the ERP marketplace is still in a state of constant change and rapid evolution. Even as products become more streamlined and cost effective, they become more sophisticated, offering industry specific options that vary in value from one are of the marketplace to the next.

One of the most important changes has been the rise of offsite infrastructures. Cloud computing and remote hosting have become commonplace. These options dramatically alter MRP cost considerations by allowing users to sidestep expensive ownership and maintenance concerns.

Written by :

Amy Cruz