There is a defining moment in the journey of all companies on the road to SAP nirvana. This moment comes just after the company has concluded that it want’s SAP, it needs SAP, it’s gotta have SAP … then comes the question ‘so what does it take to implement it’?

This is the question which separates those who are ready from the wannabees.

Before being accused of being too negative, let me remind you that at the heart of every good business decision lies a cost benefit analysis. If this cannot be complete with a positive outcome, the initiative (whatever it is) should probably not be launched. Same goes for a SAP implementation.

Implementing SAP is expensive. No doubt about it. But the potential rewards can dwarf the costs (and have for many existing customers already). One customer reportedly made enough savings on the procurement of a single raw material to pay for the entire enterprise-wide SAP implementation! Of course these are hard to substantiate, but visit SAP’s website and take a look at the customer testimonials.

SAP sells it’s R/3 product on a ‘price per user basis’. The actual price is negotiated between SAP and the customer and therefore depends on numerous factors which include number of users and modules (and other factors which are present in any negotiation). You should check with SAP, but for a ballpark planning number you could do worse than starting with $4000 per user. There is also an annual support cost of about 10% which includes periodic upgrades. Again, check with SAP.

Then there is the implementation cost. Yowser. It is about now that you need to get the business case out again and remind yourself why you need to do this. The major drivers of the total implementation cost are the Timeframe, Resource Requirements and Hardware.

1. Timeframe - The absolute quickest implementation we have ever heard of is 45 days … but this was for a tiny company with very few users and no changes to the delivered SAP processes. At the other end of the scale you get the multi-nationals who are implementing SAP over 5 to 10 years. These are not necessarily failures … many of them are planned as successive global deployments (which seem to roll around the globe forever). Of course the really expensive ones are those we don’t hear about! For the most part, you should be able to get your (single instance) project completed in a 9 to 18 month period.
2. People – The smallest of SAP implementations can get done on a part-time basis without outside help. The largest swallow up hundreds of people (sometimes over a thousand) and include whole armies of consultants. This adds up fast. Again, get that business case out. The types of people you will need run the range from heavy duty techies to project managers.
3. Hardware – The smallest of SAP implementations probably use only three instances (boxes) … one for the production system, one for test, and one for development. The largest implementations have well over 100 instances, especially if they involve multiple parallel projects (otherwise known as a program).

Adding all this up, your SAP project can run anywhere from $400,000 to hundreds of millions of $$$’s. As you can see, SAP can be all things to all companies … so it’s best to talk to them (or your consulting firm) about your specific requirements.

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