Any ERP implementation attracts expenditure on account of Operating System (OS) and Relational Database Management (RDBMS) for hosting the system. Networking issues also assumes importance particularly when the system is rolled out at different locations. Additionally, licensing options associated with ERP packages need to be carefully evaluated during final contract negotiation.

Operating System and Database

Unless a system is implemented from scratch, it may be a better option to integrate the chosen ERP system with existing OS and RDBMS of the organization, which will reduce upfront expenditure of implementation. Therefore, the important consideration is that whether the preferred ERP system is compatible with current hosting platform.

Another important consideration is how robust and scalable is existing platform. Most popular players of RDBMS market are Oracle, IBM, Microsoft and Sybase, constituting about 90% of market share. In the OS sector (for mainframe and server segment), there are offering of various flavors of UNIX (IBM, HP, Solaris etc), propriety OS from IBM and Microsoft windows (Linux OS is also used to run some open source ERP package like Compiere but yet to be popular for commercial applications).

The chosen ERP package should conform to one of the popular OS and RDBMS. If the existing platform of OS and RDBMS does not belong to mainstream offering, it may be prudent to explore an alternative. Off course, there may be exceptions, such as an organization selecting QAD solution, may consider use of “Progress” RDBMS with which this package is most compatible.

Another important factor relating to ERP platform is whether the ERP system to be hosted in house or hosted remotely. If hosted remotely, all upfront cost relating to hardware, OS and RDBMS are eliminated. The vendor may then charge an additional hosting cost periodically.

Networking Issues

Important networking issues relating to ERP implementation are- network topology, detailed networking design, networking printers etc. Setting up new or leveraging existing Local Area Networking (LAN) and Wide Area Networking (WAN), constitute an important part of pre-implementation/implementation process. This includes cabling to planned workstations, laying fiber optic backbone, provision for sufficient bandwidth to remote sites ( particularly hosting distributed application/database). Mode of sharing networked printers in various functional divisions such as warehouses, accounting offices and sales units need to be planned beforehand.

Licensing Issues for ERP products

Implementation of an ERP package necessitates entering into a software license and support agreement with vendor. This agreement constitutes a complex legal document containing details of license and maintenance fee and formula for escalation thereof. Before finalization of this contract, following issues should be given due consideration:

• If the licensing agreement covers only the core ERP products or contain additional business software like report writer, interfaces and middleware.

• What are the user type definitions? User type may be a i) power user with full access to development tools, ii) Informational user meant for management with access to dashboards, MIS and approving role of a workflow. Iii) Normal user with transactional roles and limited access.

• There are other user categorizations like named users, where a license is needed for each user of the system and concurrent users indicating maximum number of users with right to access the system simultaneously.

• It is, imperative that a proper assessment is made for types of licenses to be procured as license fee varies for type of users. Price should be negotiated before entering into the agreement when the vendors may be willing to offer significant discount over their list prices.

• It is also important to decide when to buy the licenses. Agreement may be made to procure only a few licenses at the commencement of project, for training, development and testing and rest during go live. It is also important to secure fees for additional licenses that may be procured during next couple of years.

Conclusion

Though not considered as direct cost, OS and RDBMS may impact final cost of implementation substantially. Licensing issues will not only impact current cost but also future cost as yearly maintenance fee is normally based as a percentage of license fees.