When it comes to figuring out the total cost of ownership of an ERP, many businesses only look at the software cost and subscriptions. There are many hidden costs of ERP system implementations that they miss, leading to budget overruns and extended timelines.
The average per-user cost for an ERP is $9,000. However, thatβs not the full picture. There are many hidden costs of implementing an ERP system that sneak up when the project starts. Navsoft has listed 10 of them, so you have a clear idea and realistic expectations of the real costs of ERP implementation.
Data Cleaning & Migration
Simply migrating data from your existing systems to the new ERP will allow the same problems to prevail. Thereβs a high chance that your data is messy, unstructured, and filled with duplicates, and needs to be cleaned.
The process of extracting, cleansing, transforming, and loading (ETL) this data is a massive, time-consuming sub-project in itself, making it a hidden cost in ERP implementation. It includes:
Specialist Hours: You need a team of data engineers whoβll manually clean the data, and the process can take many hours.
ETL Tools: For larger datasets, you may need to license specialized software to automate the migration.
Validation and Testing: Multiple trial runs are needed to ensure the data maps correctly into the new system, which means more billable hours from your implementation partner.
Customization & Configuration
An ERP out of the box is good, but customization makes it even better. In many cases, the standard ERP wonβt fit into your unique business processes and workflows. Thatβs when you need configuration (using the ERP’s built-in settings to adjust workflows) and customization (writing new code to change the software’s fundamental behavior).
The hidden costs of ERP system implementations emerge when your team makes requests like, βWe have this one unique report we run every Tuesday. Can you build it for us?β Fulfilling these requests requires:
Developer Fees: Custom coding is billed at a premium rate.
Project Delays: Each customization adds to the testing and deployment timeline, and youβll have to pay for the extended hours.
Integrations
Your ERP is the central hub of your operations and canβt be isolated. It needs to be connected with other business applications.
Making these connections becomes another hidden cost behind ERP implementation, which includes:
API Connectors: Many integrations require purchasing a pre-built connector from a third-party vendor, which comes with its own subscription fee.
Custom Integration Development: In some cases, you wonβt find pre-built connectors, and you may have to build your own API integrations, which come at a cost.
Productivity Dip
This is one ERP implementation hidden cost that is 100% likely to happen. Your teamβs productivity will plummet the moment you go live. Thatβs because your team will need time to get used to the new system.Β
Itβs like driving a new car. It might be better, but you still need time to adjust to the new handling.
The cost will be non-monetary:
Temporary Dip in Productivity: You must plan for a period of a few days or weeks where operational efficiency will decrease.
Employee Frustration: If not managed with empathy and support, this dip can lead to serious morale problems.
Extensive Training
The training session included in your vendor’s proposal is almost never sufficient. Your team needs more comprehensive and in-depth training on their day-to-day tasks. This becomes another hidden cost behind ERP implementation, which involves:
Lost Man Hours: Your employees need time for training, which will come from their daily tasks.
Specialized Training Fees: You may need to pay your implementation partner for additional, customized training sessions.
Change Management
An overnight change can be very difficult. You arenβt just installing new software but changing the way everyone works. Many leaders mistake “training” for change management. Training is showing someone how to use the new system. Change management is convincing them why they should.
Many businesses donβt account for change management, making it another one of the hidden costs of ERP implementations, which includes
Leadership Time: Senior leaders must spend significant time communicating the vision.
Communication Campaigns: You may need to invest in internal marketing workshops, newsletters, and Q&A sessions.
Change Management Consultants: For larger projects, hiring a specialist to guide the human side of the transition can be a lifesaver.
Opportunity Cost
During the ERP project, your key people will be involved, such as your Head of Finance, your COO, your Supply Chain Director, and your IT Manager. For the duration of the project, a significant portion of their brainpower is dedicated to meetings, process mapping, testing, and troubleshooting.
This becomes another one of the non-monetary hidden costs of ERP system implementations, which include:
- The new product line they aren’t developing.
- The new market they aren’t exploring.
- The cost-saving initiative they aren’t leading.
- The junior team members they aren’t mentoring.
Process Reengineering
A big mistake organizations make is trying to mold the ERP to fit their old, inefficient processes. Customization is important and beneficial only when you have unique, proven processes. Otherwise, itβs better to adapt to the best practices embedded in the ERP.
Reengineering your processes is a hidden cost in ERP implementation that you wonβt find on any vendorβs quote. You will have to allocate a budget for:
Workshop Hours: These are the hours of your senior team’s time locked in meeting rooms for mapping out the new processes.
Internal Resistance: You will face pushback from employees who feel the new system is too rigid or that it strips them of their autonomy.
Temporary Chaos: There will be a period of confusion as you transition from old processes to new ones.
Customer Dissatisfaction
While ERP implementation is mostly an internal project, the disruption and productivity dip can impact your customers.
The ripple effects create a bunch of hidden costs of ERP system implementations, which include:
Delayed Shipments: If your warehouse team is struggling with the new inventory module, it can affect shipment deliveries.
Incorrect Invoicing: A data migration error can lead to invoices with the wrong GST calculations or pricing.
Helpless Support Staff: Maybe the support agents canβt find customer records on the new CRM system.
Ongoing Maintenance
An ERP system isnβt a one-time purchase. The ongoing costs of keeping the system running, secure, and up-to-date are one of the most significant parts of your TCO.
The long tail of maintenance costs includes:
The Classic 22% Rule: If you opted for a traditional on-premise solution, 18-22% of your initial software license cost will be required for support and updates every year.
Cloud Subscription: Vendors often have price escalations built into multi-year contracts, or you may find that a crucial new feature is only available if you upgrade to a more expensive tier.
Summary
Understanding these hidden costs of ERP system implementations allows you to have realistic expectations and strategic control of your project.
While these are the hidden costs, there are still many more factors that come into play. Weβve covered them in-depth in our guide: How Much Does ERP Cost in 2025.
If you want a precise estimate of how much your ERP project will cost, feel free to reach out to our experts. We will analyze your requirements and current processes to provide you with a proper implementation roadmap.
