Top 8 ERP Software Cost Factors for a New ERP System Acquisition
Enterprise Resource Planning (ERP) software is a critical tool for businesses, managing various functions such as finance, HR, and supply chain management. However, deciphering the costs associated with ERP systems can be a confusing but crucial component in making the right ERP system acquisition decision. This guide, supported by data from Software BattleCard vendors, describes the 8 key factors influencing ERP costs.
1. ERP is an Investment
ERP systems integrate various business processes, ensuring seamless data flow and improved decision-making. Their role in optimizing operations makes them an essential investment for modern enterprises. But making the wrong ERP choice can lead to unnecessary costs, downtime, diminished business performance--or worse. In other words, choosing the wrong ERP system can inflict the biggest cost to your business. See our analyst-vetted ERP BattleCards to evaluate and compare ERP systems for your organization--and reduce the risk of choosing the wrong system.
2. Factors Influencing ERP Costs
- Number of Users: The cost often scales with the number of users. More users typically mean higher costs.
- Add-Ons and Customization: Custom features or integrations can significantly increase costs.
- Implementation Strategy: The approach to deploying the ERP system (in-house vs. consultancy) affects costs.
- Deployment Method: Choices between on-premise and cloud-based solutions have different cost implications.
- Training and Support: Effective user training and ongoing support are crucial but can be costly.
- Maintenance and Upgrades: Regular updates and maintenance are necessary for the smooth functioning of the ERP system.
3. Non-Monetary Costs
Beyond direct financial costs, consider the impact on time and productivity during the implementation and adaptation phases.
4. Pricing Models
ERP vendors typically offer two pricing models: perpetual licensing (one-time fee) and subscription-based (recurring fees). Each has its pros and cons, influencing the overall cost.
5. Top ERP Software Pricing
Different vendors have varying pricing strategies. For instance, some popular ERP solutions like Oracle Fusion Cloud, SAP S4/HANA, and SYSPRO have unique pricing structures, which should be carefully evaluated.
SYSPRO ERP Pricing Example:
For example, SYSPRO requires a one-year minimum commitment and offers subscription-based pricing models. Custom quotes and free trials are not available. It also offers on-premise, cloud and mobile deployment. (Data from SelectHub).
On-premise deployment types range from $25,000 to $500,000 or more. Pricing varies depending on the number of users:
| One User | $12,100 |
| Five Users | $14,400 |
| 10 Users | $16,800 |
| 25 Users | $25,000 |
| 100 Users | $29,600 |
6. Hidden Costs
Be aware of additional expenses like ongoing maintenance, security measures, and potential needs for additional hardware or software.
Develop a comprehensive budget that includes all potential costs. Ensure the planned investment aligns with the expected return on investment (ROI).
Consider how the ERP system will improve productivity, supply chain visibility, and customer satisfaction rates. A well-chosen ERP system can offer substantial ROI across various business aspects.
Conclusion
Selecting the right ERP system requires a thorough understanding of all cost factors. Businesses should weigh these factors against their specific needs and budgetary constraints. For more detailed insights and comparisons of different ERP solutions, get a free ERP Software Pricing Comparison report from Software BattleCard.
