ERP PRICING AND COSTS EXPLAINED

You may have noticed that it’s nearly impossible to find Enterprise Resource Planning (ERP) pricing online.  Why is that?  The short answer is that ERP pricing is complex and depends on a number of factors including the number of users, licensing model, deployment, required functionality, and complexity of the solution, implementation services, and more.

We touched on some of the hidden costs of ERP implementations in our post, “How to Calculate the True Cost of ERP Implementation Projects.”  In this post, however, we’ll do a deeper dive into Vendor Pricing models and service costs so that you can gain a better understanding of all of the costs associated with ERP projects.

Licensing and Deployment Options

Software-as-a-Service (SaaS) Subscription (also known as Public Cloud)

SaaS subscriptions allow you to pay an annual or monthly subscription to have your ERP installation and maintenance performed by a full-time hosting or IT organization such as Amazon Web Services.  Your system can be accessed from any web browser on any internet-connected device.  Hardware, server, and IT maintenance become the responsibility of the software vendor, and associated costs are included in the subscription fees.

Private Cloud Subscription

Like the SaaS model, Private Cloud subscriptions allow users to pay an annual or monthly subscription.  However, this model allows users to deploy on premises on a web server or with a preferred hosting provider.

Private Perpetual Licensing

Pay a one-time, upfront cost for the perpetual license along with recurring annual maintenance fees.  The software can be deployed on-premises or at a preferred hosting provider.

Number of Users and/or Resource Consumption

Most ERP vendors charge on a per-user basis, more specifically the number of users who will be using the system at the same time and the level of access they require.  Some vendors, like Acumatica, offer unlimited user licenses and instead of following a consumption-based pricing model. In this case, the client is charged on the resources required for anticipated transactions and can be adjusted as needed.

Functionality, Add-Ons, and Customizations

Most Postmodern ERP systems are modular or application-based, meaning you can pick and choose the functionality that will best serve your organization, without paying for unnecessary modules. In addition to these modules, third-party applications can be integrated to boost functionality or provide additional value to the system.  In some cases, out-of-the-box functionality may not be enough and it may be necessary to customize reports and/or systems to specific organizational requirements.

Hardware/Infrastructure

Depending on your chosen method of deployment, your new software may require hardware and infrastructure investments.  For on-premises deployments you’ll need servers, networking, workstations, operating systems, SQL server software, and the necessary manpower to maintain it all.  For most cloud deployments, some or all of these requirements will be included in the subscription costs.

Implementation, Data Migration, and Training Services

Implementation costs cover planning and organizing the project, training, testing, installation, configuration, process changes, and conversions of the software.  Even so, implementation service costs can be greatly impacted by the amount of necessary training, and data migration necessary to successfully meet project goals.

Maintenance and Upgrades

Typically, annual maintenance is included in SaaS subscriptions, but for on-premises deployments, your system will require ongoing maintenance to keep your product up-to-date and working properly.  Costs associated with ongoing maintenance include any additional hardware needed, network fees, labor costs, and additional fees associated with regular maintenance.

Another way to make sure your system stays up-to-date is to upgrade when new releases of the solution are released.  When these updates become available, you’ll need to pay an upgrade fee and may need additional hardware or software to ensure the system doesn’t become obsolete.

Support

Your team will inevitably run into issues with the new solution after implementation.  You’ll need a partner that can provide you with adequate technical support to resolve these issues and minimize downtime.

Estimating the total cost of implementing a new ERP solution requires careful assessment of an array of variables including the number of users, functionality and customizations, deployment, hardware, implementation services, upgrades, training, and ongoing support.  The unique requirements of your organization will determine the cost of your implementation project.  Understanding the many factors that influence this price will help you to calculate the true cost and ROI of ERP implementation,  set a realistic budget, and better evaluate estimates.

Contact one of our representatives today to schedule a call to discuss the factors outlined above and we’ll put together a customized quote for your implementation project!