Chapter 3

Benefits and Cost of an ERP System

LEARNING OBJECTIVES

After reading this chapter, you will be able to understand:

  • Benefits of an ERP system

    –  Strategic benefits

    –  Operational benefits

    –  Managerial benefits

    –  Organizational benefits

  • Intangible benefits
  • Cost of an ERP system
  • Cost-benefit analysis
3.1  INTRODUCTION

In the previous chapters, we learnt that an ERP system is a semi-finished product that has to be configured for the host company. We also learnt that an ERP project costs between 1 to 3 per cent of revenue of the host company if all modules of the ERP system are implemented. A company spends money on the ERP system because it expects to benefit from the system. An ERP system may deliver strategic benefits, operational ...

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