A realistic framework for the estimation of actual Cost-of-Ownership of a pervasive enterprise resource planning (ERP) system across an organisation

Abstract

Purpose: This dissertation's purpose is to create a framework, a module delineating and estimating all the costs incurred in the implementation and ownership of a pervasive enterprise resource planning system across an organisation. Management Accountants and Project Managers need a useful tool when implementing an ERP system. Design: The foundation of this dissertation is provided through an extensive Literature Review and Qualitative Research in the form of interviews with concerned parties. Findings: A framework depicting a full set of categorised costs incurred on investment and others that recur. Distinction is made between those that are quantifiable and those that are not, with the quantifiable being systemised in a set of percentile estimates. Attention is given to cause and effect relationship between cost drivers and all the costs. Certain cost areas that were previously hidden or unaccounted for are highlighted. Conclusions: The framework provides managers with a tool, a form of scorecard with which to approach an ERP implementation by making estimations and being aware of internal costs and other crucial factors. Implications: There are numerous variables within each niche market and company such that each one will face an exclusive situation resulting in a unique ERP system implementation. The actual total cost of ownership depends on what the company wants and where it wants to go.