by Redhuan D. Oon
There is a distinctive concept in IT adoption called TCO or Total Cost of Ownership. It means that your cost in adopting a software is not just the license fee or lack of it (if you use Freeware) but the costs associated with it.
Such as the hiring or outsourcing costs to those who knows how to use the software and implement the solution for you. Yes information may be free and wants to be free to be branded but its people are not. You can learn Chemistry on your own but if you want to go to a teacher she is most likely paid through your college fees or your parents’ tax money. In fact freedom in USA means alot of security checks, surveilance, high taxes, critical healthcare issues and lots of bad debts. Freedom has an expensive price tag.
There are also hidden costs such as costs of long term support. What will you do if the guy who implemented your ERP migrate to Africa? Or what if the code he changed is only understood by him? Where are the standards or compliance of best practice to follow? In accounting we have standards and all accountants know them and apply them. So is it with Engineering, Medicine or Law. But not so with software or it is still unclear. Standards are mostly controlled by big vendors such as IBM, Microsoft, Oracle, and SAP. Open Source has standards but they are not as famous or matured as those dinosaurs.
The most expensive hidden cost is risk or assurance. Would you live with the fact that your software is free but no one knows how to use it besides your close friends? Or would you rather surrender your fate to a global company that has been around for 30 years and is the top ERP seller in the world? In fact many boasted that no one gets fired for choosing SAP. But if you choose a free software that is still obscure and equally complex, and it goes down, who can you blame? Whose neck will you choke? Yet more and more users are looking at alternatives. Why?
As stated in an earlier essay, some are choosing it due to the freedom to change. With proprietary software, you cannot possibly change the code. Yes, they do have advanced configurators to let users change formats easily but there will always be something that does not really fit your organisational process. But for many users, they may not mind living with some gaps in rules and not see that as a business stopper.
Some choose it due to trying to beat down the high cost of ownership. Or hope to do so. In fact if you try to use Linux for desktops you may end up with a higher TCO. This factor is only more meaningful if you displace more expensive softwares such as from SAP. But implementing ERP is not the same as setting up a desktop. To setup a dekstop software may take you only one hour. To setup an ERP may take you ages. To blame a bad desktop setup you can just blame the software. But to blame a powerful ERP system that crashed, you have to blame the people who defined and implement it. And people are expensive. Good people are even more expensive. Try to cut down the best people for the job and you end up with bad ERP. It is not SAP or ADempiere ERP that is bad. It is always the people and how much real experience or real passion left that they possess to make a good job out of it.
So ERP implementation is more about subject matter expertise and attitudes rather than software gizmos. In our next essay we shall look at how to recognise basic ERP risks and how to avoid them.