Expert Voice: Erik Brynjolfsson on Organizational Capital - ' Truth in Numbers '
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Truth in Numbers
Typical Start-up Cost Structure for an Enterprise Resource Planning (ERP) Suite
| Hardware |
$0.8 Million
- Application, Web and database servers, including storage
|
| Software |
$3.2 Million
- ERP application suite license (HR, financials, distribution)
- 1,000 regular trained users, 2,000 casual users
|
Implementation
and Deployment |
$16.5 Million
- 9 months to complete pilot site, including process engineering, apps configuration and testing
- 30 external consultants at $1,200 a day
- 30 internal staffers at an average salary of $100,000
- 3 additional external consultants at 9 sites for 3 months
- 9 additional internal staffers at each site for 6 months
- 5 days of user training at an average burdened user salary of $50,000
- 3 full-time training staff at an average burdened salary of $100,000
|
| Total Costs |
$20.5 Million |
Ratio of Total
Start-up Costs
to IT Hardware Costs |
26:1 |
Note: These figures do not include management time selecting, designing and managing implementation, including the modification of business processes, nor does it include staff time informally learning to use the system or modifying business processes to work with the system. Source: Forrester Research Inc. and Brynjolfsson's calculations.
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