“Cradle to Grave.” It’s a business concept. Also referred to as Womb to Tomb, Whole-Life Cost, Lifecycle Cost, or Total Cost of Ownership (TCO). It’s far from a new concept – dating as far back as the early 20th century – and yet it’s often overlooked when companies are making major purchase decisions.
Selecting an ERP (Enterprise Resource Management) solution is a case in point.
In the parlance of the software industry, TCO is the most commonly used phrase. But cradle to grave is so much more graphic, visual, powerful. It connotes the very beginning to the very end. And it encompasses so much more than the upfront cost of the software.
If a software provider emphasizes only the initial costs of ERP manufacturing software and hardware, then caveat emptor (let the buyer beware)! Because it’s tantamount to the kind of bait and switch that gives car salespeople a bad rep. The cradle to grave costs of ERP software are many times greater than the upfront costs.
What’s more, a typical TCO calculation may include all of the costs of purchasing, implementing, supporting, and using a product over its lifetime, it does not take into account the benefits and cost savings that the software brings you. It is, therefore, not a definitive analysis of cradle to grave cost.
Among the many factors that should be included in a true lifecycle calculation, beyond the original software and hardware purchase price, you need to understand these costs as well:
- Data migration
- Implementation and deployment
- Planning, including internal subject matter experts (SMEs)
- Custom development
- Annual maintenance fees
- Number of full-time employees required to support the system
- Support plans
- System failures and outages
- Diminished performance incidents
- Security breaches (including loss of reputation and recovery costs)
- Disaster preparedness and recovery
- Floor space
- Quality assurance
- Product usage costs over the expected lifespan of the software and hardware
Balanced against both the tangible and intangible benefits and cost savings, such as:
- Reduced staff
- Increased productivity
- Reduced IT costs
- Improved customer relations
- Improved operational efficiency
- Increased visibility
- Reduced accounting and auditing costs
- Improved financial management
- Improved compliance and therefore lower compliance costs
The benefits and cost savings factor into the Return on Investment (ROI) calculation. Thus the cradle to grave analysis combines both TCO and ROI. That’s what you should be looking at before making a purchase decision when evaluating ERP manufacturing software for your company.
For the last 25+ years, Strategic Systems Group (SSG) has focused exclusively on offering our clients a choice of several ERP manufacturing software solutions. SSG supports every aspect of these ERP systems from cradle to grave. Based on this experience, we can help you avoid the bait and switch by providing comprehensive, transparent insight into both the TCO and ROI of your investment.
Our best clients are informed buyers.