Looking for system migration costs estimate going from proprietary manufacturing system to ERP?

I am looking to migrate a legacy system to a newer system that can handle a manufacturing company with raw materials through finished goods. Employee size is less than 200. I know I have not provived much information, but I am looking for a rough estimate on what it would cost to migrate from the current system. I am indifferent if the system is cloud based, but would prefer a very limited on premise existence of any software.

Lastly, I do not belive the requirements will reach a robust ERP level. I am looking at a fully integrated AR/AP/Inventory/ Sales/Order Entry/GL/PO/etc. package.

Again the current system was designed by a now defunct company and is managed by a former employee of that company. It works well but is basically time to pull the plug.

Thanks in advance

Rick

Answers

Vernon Reizman CFO • December 7, 2011

Rick, my experience says this is not a one size fits all answer. So much depends on the amount of data you wish to migrate, the training and procedures needed based on your people and company and how close of a fit you can find in systems before you buy. The complete systems implementations I have been involved with ranged from next to nothing in my current company where we purchased industry tailored software and hired a project manager with experience with the software to drive the implementation to our divisions to over $3 million spent implementing Oracle in a distribution and assembly company with very complex needs. I would be very careful to strategize this before you purchase a system and be prepared for some unexpected surprises once you start implementation.

Jordan Krizman Marketing Manager • December 7, 2011

Rick,

Vernon hit it spot on. You need to have your requirements laid out to get an accurate number.

Here is a short checklist of things to consider for your replacement system:
-Amount of historical data to migrate
(how many years of data, account balances vs transactional history)
-Amount of customization / development work
-Business process analysis / consulting
-Training
-Support (after implementation)
-Integration costs with other software applications
-User licenses needed

Also, a popular fully integrated package is NetSuite. We are a Solutions Provider for them and we have seen costs at roughly a 1-to-1 ratio for licenses to services. Meaning, for every $1,000 you spend on the software, you will spend $1,000 on services. This is in no way written in stone.

I can put you in touch with other manufacturing companies who implemented ERP from a legacy system to see what their total costs were. Let me know.

Rick Bigelow C0O • December 11, 2011

Jordan - thanks for the input. I will take you up on your offer to put me in touch with other manufacturing companies who implemented ERP from legacy systems. Let me know how you would like to make the introduction and we can go from there.

Regards,

Rick

Len Green Performance Improvement Consultant and ERP Strategist • December 11, 2011

Rick
Building on the earlier suggestions, it's worthwhile to strategize first.
Some aspects of your business model may disqualify certain solutions: process or discrete/make to stock or to order? How complex is your BOM? Do you own your manufacturing sites or do you have contract manufacturers/sub-assembly suppliers?

Do you sell via multi-channel (e-commerce, sales force, direct, distributors) and how does that affect sales processes and order management?

Use a 5 year cost model to get some order of magnitude estimates. Consider using a hosting provider if you want to avoid on premise solutions.

You should talk to a mix of vendors: NetSuite (as mentioned above), PLEX, QAD, Epicor, to get some answers your questions. That will help you decide what you can afford to do when you move to the next stage: Conducting a formal software evaluation and selection project.

If you have any questions, feel free to contact me.

Regards
Len

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