Purchasing a Traditional ERP Software

Purchasing a Traditional ERP Software

Traditional ERP solutions are software packages that are purchased as a whole and implemented

and managed by a team employed by your company. In addition to purchasing the software, the

company must either already have the hardware necessary to run the software or purchase, setup

and maintain the hardware. There are several factors to consider when deciding between a

traditional ERP implementation or a SaaS implementation. The initial costs of deploying a

purchased ERP software is much greater than a SaaS method. These costs include the servers

and hardware necessary to support the software. The cost of the software itself as well as the

cost of hiring a technical team or training the current staff to implement, configure, and maintain

ERP software and hardware. Purchasing an ERP software can offer more flexibility and control

for the company. SaaS method is generally less flexible than a purchased ERP software.

Midsize to large companies will often find a greater level of flexibility and control advantages to

their business needs.

Accessibility to the software and data are especially important for companies that their processes

are extremely time sensitive. SaaS is a cloud based solution, it relies completely on an internet

connection. With purchasing an ERP software, we do not necessarily rely on an internet

connection. If the internet goes down the company will still have access to their data and

software. In case issues occur with the company’s hardware or servers, the company has direct

and immediate access to fix the problem. In SaaS method the company has no control over

fixing outages and getting the software up and running. Information security can also be a

concern with companies that use SaaS method since there is a third part that keeps the data



In analyzing the pros and cons of both purchased ERP software and a cloud based SaaS, the best

solution for Tesla is to purchase a traditional ERP software. For several significant advantages

like higher security, faster bandwidth/response time, more flexibility, no frills, and more business

focus, the most ideal option will be purchasing the ERP software as opposed to the SaaS method.

Cost and Time Estimates for the ERP

Based off the complexity of the legacy system and the wide reach of Tesla across the globe, we

predict the project to cost roughly over 75 million. The figure below displays our cost

breakdown, displaying how the funding is being allocated. Since Tesla plans to reinvent the car

buying experience along with revolution the world with the rest of its product line, we want to

future proof the hardware as much as possible. With that being stated, we plan to finish having

the project completed in about a year, from start to end.

The hardware for the modules will be quite costly since we are going to use the latest in

components to future date their SAP up to the extent that we can. The software will be the next

costliest option of the project, it will require a solid amount of the time. Followed by the

customization of the modules and the expense for consultation to make sure everything fits

Tesla’s business needs. Further financial information is shown below with the cost benefit

analysis of the project for the next 5 years.

The return on investment diagram above, projects the break even point is at year 5. At this point,

we can also start to see the company benefiting from an integrated system within Tesla. After

year five we expect Tesla to have a gain of over 11 million. We expect the benefit to increase as

more time passes beyond year 5.

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