Research commissioned for Scala Business Solutions has uncovered a huge disparity between the cost of deploying a Tier 1 ERP system globally compared with the lower costs of a globally integrated two-tier strategy.
The survey, undertaken by analyst Dennis Keeling identified that the key to lower costs was the ability to drive standardisation into the roll-out with a company-wide implementation template coupled with built-in localisations rather than ad-hoc customisations.
Keeling comments; ‘The typical implementation cost can vary from organisation to organisation dependent on the roll-out policy. However, my research shows the typical implementation cost of a Tier 1 system, such as SAP can cost between e15K to e30K per seat for the complete deployment including hardware, software, consultancy and training. In comparison a Tier 2 system can cost from e2K – e8K per seat.’
The research establishes that while Tier 1 systems can cope with the complex needs of centralised functions and huge number of users, they were not ideally suited to handling the less complex needs or localisation requirements of a branch or sales office in remote countries. This, combined with the total cost of implementation and on-going support of Tier 1 systems versus the ability to keep local costs firmly in control by using local implementation partners with a Tier 2 system, provides a case for a two-tiered strategy.
David Topping, senior vice president marketing for Scala says: ‘Corporations that initially approached ERP as a single tier strategy just haven’t implemented a one-size fits all solution. The survey shows that organisations that have adopted a two-tiered strategy have successfully managed to implement their Tier 2 products quickly, even in the most remote countries. At the same time they still achieved the control and standardisation they originally aimed for with a single tier solution.’
‘With the negative awareness of failed projects, expensive implementations and customer dissatisfaction, we were keen to prove that a new strategic approach to ERP could successfully deliver on the ERP dream of integrated IT systems,’ said Topping. ‘The results of this research show that a two-tiered ERP approach can undertake business processes both centrally and locally, whilst providing a compelling TCO justification.’