Calculating ERP Implementation Costs. Get the complete pricing picture as you choose an ERP system. The license fee is just one part of the cost. Consider all the factors that contribute to your ERP project’s success to ensure your software investment delivers value. This demands full transparency when preparing the budget for the entire project scope. According to a Software Path analysis, the average ERP project budget per user is $7,200. however, this figure fluctuates based on the size of the firm and the number of users.
Keep an eye out for these implementation expenses throughout this tutorial, and we’ll show you how to get a grasp on Calculating ERP Implementation Costs.
How to to calculate ERP Implementation Cost?
Let’s begin calculating ERP implementation costs. The average cost of enterprise resource planning (ERP) software is $7,143 for small firms, $8,542 for medium firms, and $7,257 for large firms.
Over five years, a mid-sized company with one hundred users can expect to spend about $170,840 on its enterprise resource planning (ERP) system, excluding the initial investment to build the system.
To what extent should ERP Implementation Cost be a part of your overall budget?
The general range for Enterprise Resource Planning software costs typically falls between one hundred percent and two hundred percent of the licensing charge. Moreover, the software license can change at any time. You might be considering perpetual licenses or subscriptions, and several factors can influence that licensing fee. I understand how frustrating it can be to search for the best deals online—I’ve experienced it myself.
Since ERP software doesn’t come in a universal package, I will equip you with a solid foundation to ask suppliers the right questions. By doing this, I hope to help you avoid overlooking any key factors.
Returning to the significant implementation cost of up to 200%, you may wonder: why is implementing an ERP system so expensive? First and foremost, the license is just a small part of a much larger equation. The following factors, depending on your specific needs, will contribute to the overall cost of ERP implementation:
- License fees
- User numbers
- Training
- Features and modules
- Customization
- App integrations
- Data migrations
- Training
- Testing
- Maintenance plans
- Upgrades
So that you may better assess the expenses associated with ERP adoption, let’s examine some of these factors in more detail.
The top ERP implementation cost to consider
To help you better assess the expenses associated with ERP adoption, let’s take a closer look at some of these factors.
ERP user numbers
One of the most crucial aspects of your ERP installation budget is the anticipated number of users. However, your chosen range should align with your expansion goals. If you plan to hire significantly in the coming years, obtain the lowest price quotes from each vendor you’re considering. Some ERPs may require a higher licensing fee if you start with a large user database. Conversely, you might encounter services that offer lower upfront costs but charge more as you add users.
Additionally, increasing the number of users often necessitates greater customization and more extensive training to ensure that each user group receives the necessary support for success.
ERP architecture options
When searching for the best enterprise resource planning (ERP) software for your company, you’ll find a variety of all-in-one solutions, pre-built modules, and feature bundles. Additionally, some vendors may offer to create custom features specifically for you.
Choosing an all-in-one ERP might make it seem like you’re getting more value. However, it’s easy to overspend when you’re captivated by tools you hadn’t considered before. Conversely, you risk purchasing the wrong product if your system requires many add-ons and modifications now or in the near future.
In-house vs 3rd party implementation
In most cases, engaging a third party to implement your ERP system is advisable. However, some companies may opt for an in-house solution due to their skilled staff, which can make internal project management feasible. Nevertheless, using your own IT professionals incurs costs, as they must also attend to other key projects and business-as-usual (BAU) IT services. Furthermore, managing the implementation internally can increase the risk of mistakes and slow down the rollout.
For medium to large-sized companies, hiring a third party with expertise in ERP systems, integrations, and processes is a smart choice. Investing in a professional who understands your chosen ERP system is especially beneficial for more complex organizations. According to Gartner’s “Market Share Analysis: ERP Software, Worldwide, 2016,” employing open API standards without robust data management and a strict governance strategy can lead to integration discrepancies.
A Step-by-Step Guide to Calculate of ERP Implementation Costs
Gathering pricing without reaching out to vendors directly can be difficult; however, there are important red flags to watch for. To assist you in making an informed decision about your ERP implementation budget, we’ve provided examples of top ERP prices. Additionally, remember that the total cost, including installation, will likely exceed 100% of the software price.
NetSuite ERP pricing
Prices vary depending on modules, add-ons, and the number of users. To get a price tailored to your specific needs, the best approach is to contact the vendor directly. If you seek an accurate quote, make sure to bring your requirements checklist.
SYSPRO pricing
Quote Pricing: The price of Syspro varies based on several factors, including the number of users, the size of the deployment, and the specific features required.
Oracle ERP pricing
Bundle of Features Determines Pricing: Oracle ERP Cloud offers three pricing tiers:
- Financial Reporting plan – $175/month.
- Advanced Financial Controls – $80 per user per month
- Advance Access Controls package – $150/user per month.
SAP S/4HANA
Charged According to the Number of Drops: SAP ERP prices are not publicly disclosed. To obtain a quote, you must visit the vendor’s website. Your plan and pricing will depend on the type of deployment you require.
Next steps: what to consider when comparing costs of ERP implementation
Calculating ERP Implementation Costs: You can’t accurately calculate ERP implementation costs without a clear understanding of what you’re purchasing. Implementation costs can be determined by:
- Appoint a team captain to serve as the committee’s point person, and assemble a group of individuals to assist in making important decisions.
- Next, create a comprehensive list of your needs, including features, integrations, user counts, and whether the solution should be cloud-based or installed locally.
- Afterward, distribute a request for information (RFI) to potential suppliers.
- Once you have responses, evaluate the suppliers and obtain quotes from them.
- Additionally, ask each provider for case studies that are comparable to your company’s and discuss the implementation costs.
- Finally, assess whether you can manage the implementation internally or if you will require vendor or third-party project management.
Assuming you have already identified the project scope and the ERPs that meet your company’s needs, the next step is to narrow the field. Consequently, you will be well-prepared to inquire about ERP adoption with pertinent questions. If you find yourself stuck on how to proceed, be sure to check out our ERP Buyer’s Guide for guidance.
