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Something that is borne out in every survey of those who have implemented an ERP system, or those who are contemplating doing it, is that the three most important concerns are functionality, ease-of-use and total cost of ownership.

Functionality and ease-of-use are both purely technological issues that rely on a proper understanding of your requirements and how well the system or systems under consideration comply with and, hopefully, anticipate those needs. Total cost of ownership, on the other hand, extends well beyond the IT/user arena, into wider operations, finance, management, and even into sales and marketing as it can impact on profitability as well as efficiency. There are cases where a disastrous IT implementation has taken down the whole organisation, or at the very least severely damaged it, so you had better get your numbers right from the outset.

The emphasis should always be on the “total” cost, and this figure can be sliced and diced a number of different ways.

Firstly, the upfront or project costs are those costs related to the initial purchase & implementation. They include:

? Software licensing & hardware costs, although these can be deferred though leasing or hosting options.
? Implementation costs contained in the supplier’s proposal;
? Costs associated with any interfaces or system modifications;
? Costs associated with data conversion from the legacy system

Secondly, ongoing costs you will face during the system’s lifecycle (and don’t forget that this could extend up to a decade). These are:

? Leasing or hosting costs depending on the method of initial purchase.
? All costs associated with system communications;
? Costs associated with employing additional or specialised staff; and
? Annual costs for system upgrades and helpline support.

These costs are influenced by a number of factors, including:

? Number of users; and
? Amount of functionality implemented (i.e. number of modules).

Finally and most importantly, there are business benefits achieved, which should be incorporated into the cost equation as a positive, as they are influenced by functionality (and whether and how well you use it), ease-of-use and efficient and effective upgrades and customisation. These potentially include:

? Improved delivery performance percent on-time and complete shipments;
? Improved back-office efficiency due to order processing automation
? Reduced order lead time
? Reduced levels of inventory;
? Fewer number of days needed to close a month;
? Reduction in administrative costs.

Immediate cost issues.

The five immediate cost issues mentioned above can be dealt with through a variation of mechanisms.

Software and implementation costs

You should firstly avoid any ambiguity when communicating the specific requirements of your business. You should ensure that potential vendors are given every opportunity to understand your business processes and needs as well as you do. It also means avoiding big unknowns such as conversion, customisation and integration – activities for which vendors can legitimately say they are unable to give you a fixed cost.

You should also be aiming for, at least, a 5 to 10 years relationship with your vendor. A 2007 benchmark report on a survey by the Aberdeen Group on ERP in manufacturing found “the average age of implementations to be almost nine years, implying the longevity of these solutions often exceeds the anticipated life”.

With software and implementation, there is the opportunity of seeking a fixed price proposal, where the software vendor contractually accepts some of the risks associated with your system implementation.

Interface customisations and system modifications

Wherever possible, you should try to avoid any modifications or customisations. Modifications in particular should be avoided at all costs unless they are absolutely ‘show stoppers’ or business critical. This is particularly because modifications often prevent upgrades from being applied and you will be stuck with outdated versions of the software.

This is not as easy as it sounds, though. Aberdeen reports that only 11 per cent of respondents to its survey of organisations undergoing ERP implementations had zero customisation.

”If your business processes were developed over time – in an unstructured way – the possibility exists that no ERP system will match exactly.”

But it agrees that, while some customisation of software may be necessary, doing so does add expense and effort to the initial implementation and the complexity of future upgrades.

Rather it recommends you search out ERP solution providers with customers in your industry, evaluate the fit, and balance the need to adapt your business processes to conform with the software against aligning the software to your processes.

System communications

One area often neglected by many organisations is the significant disparities between different vendors when it comes to the efficiency with which their systems manage data behind the scene, i.e. the speed with which information is processed and transmitted around the organisation.

As surprising as it might sound, there can be a cost difference of 5-7 times between vendors for exactly the same transaction. Multiply that over the system’s lifetime and then by the number of users in an organisation and the figures mount up.

Additional or specialised staff

Implementing a new system can mean new recruits in your IT department, such as database administrators or systems analysts or additional training of existing personnel. This has obvious salary and employment costs, particularly as, in a competitive global environment, specialists are in high demand and regularly headhunted and enticed away with better salary packages and career prospects.
A key criterion in deciding which software vendor you choose should include whether you can implement your ERP system without having to increase the number of technical staff. The implementation of new technology should be seen as an opportunity to reduce the IT burden instead.

System upgrades and helpdesk support

This is probably the easiest cost to determine, because it is normally presented as an annual percentage of the vendor’s software pricing list.

One thing to keep in mind is that you are normally much better off if your support comes directly from the software vendor – agents do not qualify as part of the vendor’s organisation. There are too many cases where support has been outsourced offshore, with the service quality suffering accordingly.

Aberdeen points out that, very often, “the ratio of services to software costs is indicative of both ease of use and ease of implementation”.

Users and modules

It is a corollary of software implementation that, the larger the organisation the more users you have, and that means the total cost of software and services will rise as well.

However, it is not always a linear increase.

Surveys by Aberdeen of medium and large-sized ERP users shows that average maintenance cost per user might actually drop when you reach certain economies of scale, thanks to potential volume discounts.

The number of modules implemented will also impact on TCO, since the more extensive the implementation, the more services may be required.

Of course, the larger you are, and the larger the deal, the more bargaining power you may have over the TCO. But again Aberdeen warns that “with rising costs and weakening econom
ies, we see evidence that cost savings are becoming harder to produce”.

Ongoing business benefits

While later articles in this series cover in greater detail the potential business benefits you can achieve on an ongoing basis through an ERP system, in summary it is fair to say that, when implementing a new ERP system, you have a great opportunity to improve business processes. So it is important to not just simply re-implement existing processes. Not only may you may be able to save costs during implementation, but also achieve significant benefits from an improved business process on an on-going basis.

Aberdeen research has shown that those organisations which pay the closest attention to the ROI of a project reap far more rewards. “Yet few demonstrate the discipline to closely monitor this level of payback and performance.”

”While TCO has proven to be a significant factor in software selection, it is important to keep both costs and benefits in mind throughout the life of an ERP implementation and beyond.”

Whether you are an IT or operations manager, or a C-level executive, it is vital that you consider all elements that comprise an ERP system’s TCO. In addition to evaluating whether the ERP system fits your business requirements, you need to consider what the ongoing costs will be in the long run. If not careful, these may add up to significantly more than the initial capital outlay for the software and user licences.

In simple terms, you need to table a comparison of all of these cost elements for your preferred supplier and their competitors. What you will glean from this exercise is a clear insight into the true life-cycle costs associated with running an ERP system and a much better perspective on your ROI.

The next article in this series will look at “7 Essential Criteria For Selecting Your ERP Solution & Technology Partner”.

References:
? IBS, “5 things you should know about total cost of ownership (TCO) for ERP systems”, IBS Australia, March 2008
? Jutras, C., “The total cost of ERP ownership in mid-size companies”, Aberdeen Group, July 2007
? Jutras, C., and Barnett, R., “The total cost of ERP ownership in large companies”, Aberdeen Group, July 2008
? Jutras, C., Trost, J., and Dalle Tezze, H., “Taking the ERP plunge for the first time”, July 2007

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Depending on the value of the equity depends on how much can be borrowed but it is possible to take out a secured holiday loan from £5000 to £75000. Good credit history also determines the loan amount however because of the security of the collateral lenders are prepared to give a secured loan to borrowers with a poor credit history such as CCJ’s, arrears, payment defaults, bankruptcy etc. If the loan is not paid in full then the lender will seize the collateral, which could be your home, and sell it to recoup any money that is outstanding.

It is always advisable to compare the terms and conditions and also the interest rate of the loan with a number of different lenders or loan providers. The easiest, quickest and most convenient way of doing this is by using the Internet and visiting online lenders websites. By submitting your details on a brief application form the lender in return will give you a quote. You can then compare the quotes and select the loan and lender most applicable to your financial needs and requirements.

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When you intend to take out a loan without pledging anything or a valued property at stake, then such borrowed amount surely carries risks for the lenders and they charge interest at higher rates and overall costs also are kept on higher side. Thus, repayment of the amount becomes lot difficult on the limited earnings of the borrower. To counter the costs, however, a better way could be to first take out unsecured loan quote, which aims at comparing different lenders for the costs.

 

These quotes refer to the interest rates that are charged by the lenders on a particular amount of loan. As interest rate of the lenders vary from lenders to lenders in the competitive loan business, you can take advantage of it for comparing the rates in order to find a suitable and less burdensome offer.

 

You should apply for unsecured loan quote before applying for an unsecured loan. You will get a list of select bunch of the lenders from the quotes providers to whom you have to make the application. But it is not just a simple interest rate that you will be provided. You will be given the APR [Annual Percentage Rate] which includes the rate as well as additional fee charges of the lenders. Then, you can compare the APR in order to find an offer that matches with your circumstances.

 

One can say that the quote enables the borrowers to come across an offer of lower rates on the loan without offering anything for collateral. So, even bad credit borrowers also are able to lower their monthly outgoings towards the loan installments this way.

 

While comparing the rates after taking out unsecured loan quote, ensure that you keep your credit history, amount to be borrowed and repayment duration in mind. You should clearly mention your requirements from the loan to the quotes providers, whom you can find through online. Surely, this measure is a way to help you find an affordable loan.

While you make search for small business finance with a bad credit tag, one aspect that should be at the upper most on your mind is the costs. Any such loan that drains away larger portion of your finances towards the monthly outgoings will result in stress on your trade.

If you have a history of late payments, defaults, arrears or CCJs, then the loan approval will be harder to get. You should save money for making greater down payment, which gives a sense of security to the lender and the approval comes with ease.

One way to ensure a less burden some finance for your trade is to approach the lenders with an excellent or good credit rating. Make sure that your FICO rating is above 600 or in the vicinity of it. Get copies of your credit report to make it fully free of any misrepresentation of the facts about the payments you made in the past. In case of the rating being lower, then make timely payments for few months for improving it, before applying for the loan.

Ensure that you have made a convincing plan of repaying the finance. You would be using the loan for variety of purposes like buying the raw material; equipment, machinery etc. hence, keep a good amount of money in your bank for few months at least. This will give the impression that you can repay the loan installments, without depending on our business.

You can choose to borrow small business finance in secured or unsecured options. Greater funds can be accessed under the secured loan against your residential or commercial property. Lower interest rate is the main advantage of the loan. you can repay the loan in 5 to 30 years. The unsecured loan has no risks for the business people, as it comes without collateral. However, only smaller amount will be approved for 5 to 15 years, at higher interest rate.

First, apply for the rate quotes, so that you can have access to select Small Business Finance bad credit, which are of lower rate and few additional charges. Repay the loan on time for escaping any debt accumulation.