Annual Maintenance Cost - AMC for ERP Packages

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Every organization should select the ERP packages after a perfect analysis of the direct, indirect and hidden costs of ERP implementation. The annual maintenance cost varies according to the ERP features and its usage. Maintenance of hardware, software, license renewal, customization, up gradation and introduction of add-on applications all contribute to annual maintenance costs in different amounts. Proper evaluation of the annual maintenance costs is important for regular checking and up gradation of the software system. An organization cannot run on a third party application paying heavy annual maintenance costs neither it can keep away from the latest up gradations. This may lead to freezing of data seriously affecting the business growth.

An organization cannot avoid the AMC of ERP packages as a measure to reduce IT expenses. Most of the organizations are able to use 70-80% of the ERP software features and therefore the necessity of future assistance always remains. Annual maintenance costs for ERP mounts, as the database gets old and servers get outdated with the advent of latest operating systems every year. The life cycle of every system application is limited that requires replacement at some time. New replacements may need new support system resulting in a very expensive deal.

An organization running on ERP cannot sit back and rely on the old ERP infrastructure. In order to keep pace with the recent developments and up gradations, the AMC plays a very important role in financial planning to maintain the upside graph of business performance. The current versions of ERP always provide better ways of solution in different business operations and these are often quite expensive. The excessive annual maintenance cost may not be worth the service provided, but an organization can optimize this cost through negotiable deals.

Many ERP vendors include annual maintenance costs within their ERP packages. An organization can select the package after careful analysis of future requirements and historical data. Based on these findings the organization can go for a suitable bargain. According to a research report released by Meryl Lynch, more than 50% of the organizations can succeed in bagging suitable bargains negotiating with the ERP vendors in order to minimize the annual maintenance cost. The ERP vendors also negotiate the deal keeping in mind the long term earnings from their packages. More or less it is a win-win situation for both the vendor and the buyer. This saves the organization from a huge expenditure on ERP renovation. The organization can reap the benefits of the current technological developments and maintain its growth rate.

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Jhon Napier has 669 articles online

Read about ERP Benefits. Also know about SAP ERP Review. Read about NetSuite ERP Review.

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Annual Maintenance Cost - AMC for ERP Packages

This article was published on 2011/07/06