The mistake most people make when trying to find out “how much does an ERP cost?” is asking this question too soon. It is a relative question like when you ask how much a house costs. It is difficult to get an answer in any of the cases. Similar to a house, an ERP system is not a product with a shelf price, but a solution tailored to your personal or business needs. The answer is complicated because you can only get a price for your house or your ERP, and in order to get it you need to know what you want.
ERP systems are complex applications that cover all or almost all of the business operations in an organization. They don’t work on the same criteria as Windows or Office where you pay for a license, you install it and you’re ready to use it. If we keep the resemblance to the real estate project, imagine that building a house involves discussions and costs with the necessary design, raw materials, execution, finishes and adjustments, so that in the end everything is both aesthetic and functional.
For a better understanding, let’s analyze what cost categories an ERP system involves:
- Licenses. They cover the right to use the application and there is a paid cost per user. ERP licenses are perpetual and have multiple versions, thus providing access to various packages of features or roles in the organization, or they can be provided as SaaS. For example, SAP Business One is an application with a modular architecture, but the same software package is installed in any type of implementation, regardless of the modules chosen by the client. In order to optimize costs, from a commercial point of view, licenses are of two types: with access to all modules and functionalities (Professional) and dedicated to certain company roles with limited access to specific operations (Limited). From a role perspective, Limited licenses are of three categories: Financial – dedicated to users with a financial-accounting role, Logistics – for personnel who operates with stocks, CRM – for salespeople. During the operation of the application, these limited licenses can be modified/interchanged without additional costs. There is also the possibility of converting a Limited license into a Professional one at a cost similar to the initial price difference. At the project level, licensing is provided by combining Professional and Limited licenses. On average, a company uses 30% Pro licenses and 70% Limited licenses, but the exact split results after an analysis process.
- Implementation services. The actual implementation is the biggest variable of an ERP project. In an ideal world, it could have a fixed cost, but multiple conditions should be met:
- The customer initiates a pre-analysis process in which it optimizes business flows
- When contracting the solution, the client knows exactly how they want to map the business processes in the ERP system
- The client keeps the specifications provided in the pre-implementation stages throughout the project
- The client appoints a project manager who knows the processes of the company and has the authority to make decisions on behalf of all users of the application
- Users embrace the change and participate as planned in all activities that involve them (analysis, validation, training, go-live)
However, the reality is considerably different and there are many situations that lead to changes in the initial budget. Most of the time, the client changes the options regarding the business flows, which in turn changes the structure of the project. New requirements emerge, previously used data are not prepared, and the implementation team works more on processing and import tasks, certain activities are repeated, some users need more hours of training, etc. For these reasons, implementation has an estimated cost which generally includes days and hours of services provided to the customer.
- Services of integration with other solutions, add-ons etc. To provide an overview of a company’s business, ERP systems work best when integrated with other business solutions which manage customer relations (CRMs), stocks (WMSs), online sales (eCommerce), etc. Also, some particular or niche functionalities do not exist as standard and must be added. They can be developed from scratch, with a high volume of work and a related cost, or they can be provided by implementing an add-on at a reasonable cost. The SAP Business One platform is flexible and allows both integrations with other third-party systems (CRM, Document Management) and the addition of extensions: mobile WMS, Banking Integration, CRM for Outlook etc, developed by System Innovation Romania or imported from external partners. These operations involve additional services and costs which can only be determined after knowing all the details.
Check the list of available add-ons for SAP Business One at https://sysinconsult.ro/sap-business-one/addon-uri/
- IT infrastructure / Hosting / Security. To run a business application you need an IT infrastructure: servers, storage, etc. It can be owned by the customer or contracted to a hosting provider. System Innovation Romania is a software company with expertise in ERP system, to ensure the IT infrastructure and the necessary security and back-up services , we work with partners specialized in providing customized solutions. The costs in this category differ depending on the availability requirements, existing types of equipment, the resources and skills of theIT department, etc
So, what is the conclusion about ERP cost?
As you can see, it is difficult to answer the question How much does an ERP cost? because we are talking about a project with so many variables. Careful preparation and very close collaboration with the supplier are required for the most accurate estimate possible.
But beyond the costs, it is more important to understand how an ERP system helps your company, how fast the investment pays off. Especially, it is important not to look for the best solution but for the most suitable one for your business. For this, start by defining the requirements (what you want to get in the end, what features you consider necessary) as well as possible, evaluate the internal situation (who can be the person responsible, number of users, the need for training) or just give us a call. We have the necessary experience to guide you in the right direction and together to make the best cost estimate of the journey to digitalization that your company is about to start.
