The total cost of ownership for ERP software involves more than just licensing. There are a number of other implementation-related costs that are involved. Unfortunately, many companies make the mistake of only budgeting for licensing while neglecting the other costs that will invariably arise. In reality an organization looking to venture into enterprise resource planning (ERP) should consider the following four elements of ERP cost:
- Software licensing fees – For on-premise implementations, this will likely be a per-seat license, and you will need to allocate capital funding to help pay for it initially. For cloud implementation, you will need to budget operational funding on an ongoing subscription basis, but you may not need upfront costs.
- Maintenance – You should add 18 percent to the cost of the list price to account for the first year maintenance fee. For cloud services, this will be included in the monthly, quarterly or yearly payment.
- Hardware/Infrastructure – Your new software will need servers, networking, workstations, operating systems, SQL server software and people to maintain all of it for an on-premise implementation. Again, for most cloud implementations, this will be included in the list price.
- Implementation Services – Far beyond installation and setup, true implementation involves planning, training, customization and much more. If you purchase ERP software through a Microsoft Partner, they will give you an idea of what services you will need and how much they will cost.
While ERP implementation involves far more than simple software installation, the total cost of ownership need not be exorbitant. With careful planning and budgeting, you can make it happen for small, medium or large businesses.