Total Cost of ERP Systems Implementation in Danish, Slovak and Slovenian Companies

Implementation of enterprise resource planning (ERPs) systems is probably the most laborious and rather costly part of the ERP system life-cycle. In the paper, we provide a percentage structure of total cost of implementation (TCI) from the end-user company’s perspective. Having a grasp over TCI should be of interest to companies planning to implement ERP systems, since literature suggests that TCI can be three to five times higher than the software license alone. TCI is, in this paper, split into the following four parts: software license, programming of changes, organizational implementation, and hardware costs. ERP systems used to be a domain of large companies but at the moment, there is a still increasing number of small and mid-sized enterprises (SMEs) adopting them as well. Impact on individual parts of TCI of: company size, country, existence of formal information strategy, and IT department representation on the board level is analyzed. According to our data collected in Denmark, Slovakia, and Slovenia, the percentage spent on software license depends on company size, there is a significant difference between mid-sized and large companies, mid-sized companies spend about 45 %, while large companies spend only about one third of the TCI on software license. Probably an even better interpretation is that large compared to mid-sized companies spend much more on other parts of TCI. Programming of changes involves about 21 % and organizational implementation about 19 % of TCI regardless of our observed independent variables. The percentage of hardware costs on TCI depends on the country and on representation of the IT department on the board level. The percentage is lower in Denmark (10 %) than in Slovakia (24 %) and Slovenia (22 %); it is higher in companies with representation of the IT department on the board level (26 %) than in ones without (18 %).