Enterprise Resource Planning software is a third party application. Any organization running on an old third party application which is not upgraded since implementation might suffer from several setbacks. The business operations of such organizations might get frozen, due to which they are bound to spend large amounts on non-profitable R & B department. Annual maintenance cost for ERP packages is the most common doubt that arises in the mind of the organizational head as soon as he decides to implement ERP. A good consulting firm would advise organization to perfectly analyze direct, indirect or hidden cost of enterprise resource planning software. The annual maintenance cost for ERP packages may vary according to the features of software.

There are many things that can affect annual maintenance cost for ERP packages. License renewal, up gradation, maintenance of hardware and software, customization, and introduction of add-on applications all can cost in different amounts. It is essential for organizations to properly evaluate the cost of maintenance for up gradation of software. Any organization has to suffer when business is running on third party application paying heavy cost of maintenance. Besides, organization can neither keep away from latest up gradations or else old system can freeze the data which is harmful for growth of business.

Avoiding annual maintenance cost for ERP packages to reduce IT expense is not suitable for organizations because; an organization commonly uses seventy to eighty percent of the features of software, due to this necessity of future assistance always remains. On the other hand, annual maintenance cost for ERP packages keep increasing, as the server gets outdated with the arrival of latest operating systems in the market and; old database of enterprise resource planning software is also inefficient to cope with the needs of the user, which also adds to the AMC of software. Every organization has to replace old system with the new system at some time. And, new replacement would need new support system which could prove to be an expensive deal. Many vendors often charge for every new user. On the other hand, AMC is sometimes based on number of transactions. In general, AMC is not more than 20% of the implementation cost but, some vendors may charge more than 20% for demand software.

Any organization running on third party application cannot afford to keep running on outdated ERP infrastructure. It has to levy annual maintenance cost for ERP packages and upgrade their system to improve business performance. However, the up gradation could be costly, but it could provide better ways of solutions for different business operations. Nevertheless, organizations can always negotiate the cost of upgrades with the service providers. Several vendors include maintenance charges in their packages which must be carefully analyzed by organizations to suite their future requirements. Thorough analysis of the packages would provide an opportunity for organizations to go for a suitable bargain. Also, it can be helpful for the organizations in bagging suitable bargains with vendors to minimize the annual maintenance cost for ERP package.

Read more about Cost of ERP Implementation. Also know Total Cost of ERP Ownership. Read about ERP Software Benefits.

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