Post by Admin on Oct 15, 2014 15:53:39 GMT 5.5
If you’re in the initial stages of the ERP evaluation process, you’re probably wondering, “How much is it going to cost my business?” This is a fair question, yet unfortunately there is no simple or precise way to answer it. Estimating the total cost of an ERP software solution requires careful assessment of an array of variables that can vary wildly from one company to the next. The size of your businesses, your unique requirements and your scope of use all play a critical role in determining the cost of your system.
Understanding the factors that influence the cost of ERP will help give you a better idea of how much your business can expect to pay. Moreover, it gives you the knowledge to carefully evaluate estimates that fall significantly below or above industry standards.
Here are a few of the key factors that influence the total cost of ERP manufacturing software.
Type of business and number of users – Most ERP systems are priced on a per user basis. Specifically, the number of users that will be using the system at the same time and the level of access they require. You can roughly expect to pay anywhere from $1,500 to $4,000 per concurrent user. The number of users and the functions that are included are factors that affect the price. For example a small-to-medium-size job shop may not require a Master Production Scheduling module or sophisticated warehouse management, and a large multi-national company would probably require more financial management applications than a make-to-stock manufacturer. Most robust ERP offerings have 30-45 applications and it is critical that you assess your requirements so that you do not purchase unneeded modules up front. An ERP supplier should be ready and willing to sell you what you need and when you need it. In addition, most ERP suppliers will take into account the number of users purchased and provide volume discounts as the number increases.
Third-party software add-ins – Many ERP vendors integrate software from other companies to boost functionality or add value to their ERP systems. For example, ERP vendors offer third-party software add-ins that allow users to create customized documentation and reports, generate barcode labels and perform custom data extractions. Because third-party products are usually designed by a specific vertical market, their functionality is often first-rate. You can expect third-party software licensing to be about 10-15% of the overall software cost.
Implementation costs – Implementation costs are a significant consideration because you as the buyer can dramatically influence this expense. First and foremost, carefully consider who will be supporting your implementation. Some ERP suppliers have their own implementation resources, others have 3rd party implementation consultants that they bring to you, and some just sell the software and leave you to find your own support. It is important that you speak with the person who you will be dealing with to ensure that he or she has knowledge of your business processes, knows the software application, and is a good match with your company culture. Implementation costs cover planning and organizing your project, training, prototyping functional areas of your business, installing the software, configuring the system, implementing process changes and completing conversions. Typically, an implementation to software cost ratio of .75:1 to 1:1 is considered a good planning goal but a ratio of 1.5:1 or 2:1 is not uncommon for more complex or customized ERP initiatives, especially if the implementation will cover multiple sites and/or companies.
You can significantly reduce your out of pocket implementation costs by staffing and supporting the project with your own internal project manager and a core team of functional area representatives that work with the ERP consultants and assume some of the tasks such as business process development and training the end users.
The Bottom Line? Small-to-mid-sized businesses can expect the cost of software and services combined to range anywhere from $150,000 to $750,000. Certainly a significant investment, but a properly implemented ERP system will pay for itself quickly.
The ERP systems that Endasys providing costs very less than what has give above. For one user licence it costs about $100 per month as the number of user licence increases the price goes down and for development it cost $50 for a developer per day. if your development completes very fast the development cost will be low.
Understanding the factors that influence the cost of ERP will help give you a better idea of how much your business can expect to pay. Moreover, it gives you the knowledge to carefully evaluate estimates that fall significantly below or above industry standards.
Here are a few of the key factors that influence the total cost of ERP manufacturing software.
Type of business and number of users – Most ERP systems are priced on a per user basis. Specifically, the number of users that will be using the system at the same time and the level of access they require. You can roughly expect to pay anywhere from $1,500 to $4,000 per concurrent user. The number of users and the functions that are included are factors that affect the price. For example a small-to-medium-size job shop may not require a Master Production Scheduling module or sophisticated warehouse management, and a large multi-national company would probably require more financial management applications than a make-to-stock manufacturer. Most robust ERP offerings have 30-45 applications and it is critical that you assess your requirements so that you do not purchase unneeded modules up front. An ERP supplier should be ready and willing to sell you what you need and when you need it. In addition, most ERP suppliers will take into account the number of users purchased and provide volume discounts as the number increases.
Third-party software add-ins – Many ERP vendors integrate software from other companies to boost functionality or add value to their ERP systems. For example, ERP vendors offer third-party software add-ins that allow users to create customized documentation and reports, generate barcode labels and perform custom data extractions. Because third-party products are usually designed by a specific vertical market, their functionality is often first-rate. You can expect third-party software licensing to be about 10-15% of the overall software cost.
Implementation costs – Implementation costs are a significant consideration because you as the buyer can dramatically influence this expense. First and foremost, carefully consider who will be supporting your implementation. Some ERP suppliers have their own implementation resources, others have 3rd party implementation consultants that they bring to you, and some just sell the software and leave you to find your own support. It is important that you speak with the person who you will be dealing with to ensure that he or she has knowledge of your business processes, knows the software application, and is a good match with your company culture. Implementation costs cover planning and organizing your project, training, prototyping functional areas of your business, installing the software, configuring the system, implementing process changes and completing conversions. Typically, an implementation to software cost ratio of .75:1 to 1:1 is considered a good planning goal but a ratio of 1.5:1 or 2:1 is not uncommon for more complex or customized ERP initiatives, especially if the implementation will cover multiple sites and/or companies.
You can significantly reduce your out of pocket implementation costs by staffing and supporting the project with your own internal project manager and a core team of functional area representatives that work with the ERP consultants and assume some of the tasks such as business process development and training the end users.
The Bottom Line? Small-to-mid-sized businesses can expect the cost of software and services combined to range anywhere from $150,000 to $750,000. Certainly a significant investment, but a properly implemented ERP system will pay for itself quickly.
The ERP systems that Endasys providing costs very less than what has give above. For one user licence it costs about $100 per month as the number of user licence increases the price goes down and for development it cost $50 for a developer per day. if your development completes very fast the development cost will be low.