“How much is my ERP implementation going to cost my business” is a question that we quite often get asked, as we are an independent ERP consulting services company. A fair question you may think, but unfortunately it isn’t so easy for us to answer. There are a wide number of factors that can influence the final price of ERP implementation, and these will vary from company to company. Factors such as your business size, the type of system you want, and the functionality you expect from the system are just some of the factors that will affect cost.
Our aim at Greenbeam is to make sure you don’t spend a penny more than you need to. In this article, we have pulled together our guide to what the overall cost will be made up of so you have a rough idea of what to expect.
Over the course of a year, subscription fees for a cloud-based system will typically add up to about 20 to 30 percent of the cost of a similar system’s perpetual license.
Cost of ERP Software
The cost of the actual ERP software you buy will generally account for between 15 to 30% of the overall cost of ERP implementation for on-premise systems. The annual cost for a cloud-based system is typically around a third of the perpetual license cost. Most ERP systems tend to be priced on a cost per user basis so the size of your company may determine this – however it can help if you are clever about how many people will be using the system at the same time and what level of access they need.
The functionality you require of the system will also affect the end cost, and smaller businesses will not need the same amount of functionality as larger businesses. So, it is worth taking the time to really think about what applications you need your ERP system to have before you start looking at software, and then you can ensure that you are only paying for the modules you need. However, conversely, you may find that you need additional features that aren’t provided as standard and this can really ramp up the cost of the total ERP solution.
Cost of Database Management
A hidden cost sometimes that people can fail to think about is the cost of the licenses for the database management system of the ERP which is usually bought separately. These tend to be produced by a different company than those who create the software and so the cost of licences is not usually included in the cost of implementation.
Cost of Implementation
These are the parts of the overall ERP cost that you as the client have the most influence over. This area of ERP covers the planning and organisation of the overall project, the training of employees, the installation of the software, the system configuration, the implementation of process changes and ensuring all conversions are completed. Typically a software to implementation cost ration of 1 to 0.75 – 1 can be expected for a straightforward implementation, but it can be more like 1 to 1.5 – 2 if it is more complex.
Of course, as ERP consultants, our costs will also impact on the overall cost of the system since we will be supporting your implementation. Therefore, we prefer to work with your own internal team and train them up on the way to handle the process in the most efficient way, and this can save you money in the long run as you will rely less and less on us.
Cost of Training
One of the most important costs that can easily be overlooked is the cost of training. When you are implementing a new system into your business, whether it’s an ERP or other type of business management system, you need to take into account the learning curve that your employees will go through. Initial costs associated with this will cover in-depth training on the system as well as tips and tricks for using the system, but you also need to consider refresher training on-site as some employees may take longer than others to get to grips with the system.
Ensuring your ERP system continues to work properly and is kept up to date is essential. For an on-premise deployment, this means you will also incur annual support and maintenance costs that usually run between 10 and 20 percent of the original licensing fee. This work is normally covered by the monthly subscription charge for cloud-based systems. Additional costs will include IT and other staff time to install and test any changes to the system.
So, as you can see implementing an ERP software system can be a costly venture, but if it is properly implemented with the help of an independent ERP consulting services company, then it will very quickly pay for itself. If you are interested in getting a more personalised ERP consulting service, then please give Greenbeam a call on 0843 523 5630 or send us an email to [email protected]