What does an ERP system cost?
28 Jan

How much does an ERP system cost

The pricing policy for the purchase of an ERP system is a very opaque matter. The word "purchase" alone is wrong at this point, as it is more of a buying process. In order to avoid over- and underestimations, here is an illustration of what the Compile costs for an ERP system like SAP Business One. However, the various factors that ultimately influence the price of an ERP solution are so variable that it is impossible to set a single "true" price.
Generally, a distinction is made between internal and external cost factors incurred by the company when purchasing an ERP system.

Internal cost factors when purchasing an ERP system

This refers to the costs that are incurred during an ERP implementation in the company itself. These costs are often forgotten and are also difficult to calculate. On the one hand, the entire ERP project some of the employees take on project management alongside (or instead of) their day-to-day business. On the other hand, the future Users trained in the system become. Of course, this lowers productivity in the company itself. These are the costs that are difficult to foresee and are also not captured in the prices of the ERP providers.

External cost factors when purchasing an ERP system

The external factors refer to the ERP providers. Important cost points here are, for example, the possible purchase of hardware, user licences, data migration and system adaptation. It often happens that maintenance and support are not yet included in this price calculation by the provider. However, these are particularly important as they allow the follow-up costs of the ERP project to be estimated for the next few years. Here is an overview of the three main external costs:

1. user number

The costs for a user are incurred per user of the software. The price per user varies depending on the ERP system. The size and popularity of the system often influence the price. For example, the user price for a small industry solution can be much lower than a licence from a software giant. The licence costs are also influenced by the number of modules used by the company.

2. module scope

Many business processes can be mapped with the simple standard modules of the software. However, for some, more complex work steps, other modules are required, which trigger additional costs. For smaller companies, a functional scope of about 30 applications is usually sufficient, for larger companies it is often several hundred.

3. adjustments

It is almost always necessary to adapt the chosen ERP system to the structures of the company. While there are many specific Add-onsbut nevertheless these often need to be individualised. Often this need for adaptation only becomes clear in the course of the introduction. Therefore, the costs are difficult to estimate.

Because of this, it is sometimes advisable to leave behind processes that are not optimal anyway and simply adapt to the system. For many work steps, the providers often have good suggestions that have been proven in practice. Of course, at the beginning this also means getting used to the system and spending the corresponding amount of time. But new processes nevertheless usually bring about the efficient work that the company hopes for from the introduction of an ERP system. In the end, this is also more cost-effective than the - often cost-intensive - adaptations.

These three main cost factors result in the following recommended steps for companies:

  • Calculate the number of users through a precise analysis.
  • Project planning, including specifications, limits the scope of functions in the ERP system to the most important.
  • State the company's target cost framework from the outset. This allows you to calculate the possibilities right at the beginning and to identify and weigh up cost-related outliers.

Three tips on how to better estimate internal costs:

1. include references in your selection
The experiences of other companies in the same or similar industry can be very useful for you when buying an ERP system. On the one hand, you can get initial ideas on the choice of provider and, on the other hand, estimate how long such an ERP project can take. In addition, these companies may have tips on how to put together a project team or how long the user acclimatisation phase will take.
2. seek advice from the provider
If you have already shortlisted an ERP provider, ask what they think about the implementation and staff training. Here, too, you can ask for the opinions of their references.
3. involve your employees
Through the Selection procedure and the ERP implementation, when the ERP system is presented to the users, you are already familiar with its processes. Therefore, do not underestimate the time it takes to find your way around the system. It is best to involve some employees from different departments during the project.

ERP_Digitisation_Medium-sized Businesses

German SMEs focus on digitisation - "step-by-step" and in the long term

Digitalisation seems to have slowly arrived in small and medium-sized companies as well - at least that's what a ...

Business Intelligence: A Guide for SMEs

You hear it all the time from us too: Data and its analysis are the be-all and end-all for every important decision...
Digitisation_Middle class

Are German SMEs missing out on digitalisation?

Digitalisation has become the all-encompassing buzzword by which to understand the transformation of our society in terms of information technology ...

IFRS - Rules of international accounting also for SMEs

Companies from the SME sector are increasingly having to deal with the rules of international accounting. The advantages of IFRS lie ...

Configuring instead of programming: Module ERP for medium-sized companies

No company today can do without the support of ERP software. And that's not just good for the manufacturers...
Wird geladen ?