Deployment and maintenance costs

SAP ERP systems effectively implemented can have cost benefits. Integration is the key in this process. "Generally, a company's level of data integration is highest when the company uses one vendor to supply all of its modules." An out-of-box software package has some level of integration but it depends on the expertise of the company to install the system and how the package allows the users to integrate the different modules.

It is estimated that "for a Fortune 500 company, software, hardware, and consulting costs can easily exceed $100 million (around $50 million to $500 million). Large companies can also spend $50 million to $100 million on upgrades. Full implementation of all modules can take years," which also adds to the end price. Midsized companies (fewer than 1,000 employees) are more likely to spend around $10 million to $20 million at most, and small companies are not likely to have the need for a fully integrated SAP ERP system unless they have the likelihood of becoming midsized and then the same data applies as would a midsized company. Independent studies have shown that deployment and maintenance costs of a SAP solution can greatly vary depending on the organization. For example, some point out that because of the rigid model proposed by the SAP tools, a lot of customization code to adapt to the business process may have to be developed and maintained.. Some others pointed out that a return on investment could only be obtained when there was both a sufficient number of users and sufficient frequency of use. Deploying SAP itself can also involve a lot of time and resources.

Advantages and disadvantages of SAP ERP

Advantages:

• ERP allows easier global integration (Barriers of currency exchange rates, language, and culture can be bridged automatically)
• Updates only need to be done once to be implemented company wide
• Provides real-time information, reducing the possibility of redundancy errors
• Creates a more efficient work environment making it easier for employees to do their job which leads to effectiveness
• Vendors have past knowledge and expertise on how to best build and implement a system

Disadvantages:

• Locked into relationship by contract and manageability with vendor - a contract can hold a company to the vendor until it expires and it can be unprofitable to switch vendors if switching costs are too high
• Inflexibility- vendor packages may not fit a company's business model exactly and customization can be very expensive
• Return on Investment may take too long to be profitable
• SAP ERP implementations have a risk of project failure