Cost of Business Management Software (ERP): 4 Tips on How to Determine it.

cost of business management software

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As a business software provider, we get this question a lot, what is the cost of business management software (ERP)? The question looks close-ended, but it is actually open-ended to software vendors, there is no straight forward answer. The costing depends on varying factors such as, what your needs are, what type of business management do you need, what is the number of users, is it going to be cloud-based or on-premise, etc.

In simple terms, the cost of business management software depends on what you need. So it is expected of you, to know and understand what you need. However, since there is no specific price, you’ll need a budget, it can serve as a benchmark.

Elements That Affects Cost of Business Management Software

Once you’ve decided to have a business software(ERP) and want to prepare your budget, find below elements you should consider.

·       Software License Cost (number of users, number of modules, etc) .

·       Server (cloud or on-premise).

·       Training.

·       Implementation

·       Post Implementation Support.

·       Data Migration.

·       Tailor-made customization.

I must state this, you might not need all mentioned above. Some might be combined, for example, In Softcodes, Implementation and Training (initial) are taking as one.

1. Ascertain The Need for The Software

It is expected of you to ascertain the need for the software, do you want to have real-time reporting, streamline your business processes, increase productivity, better customer relationship, increase the profit margin, etc.

Another way to justify the cost of business management software (ERP), is to choose the right pricing model and payment plan for your business, as well as the necessary specifications and modules that would be needed to deliver on the ROI of the software.

If you don’t know the specific modules that are peculiar to you or your industry, you can be oversold.

Example of some modules are,

·       Sales order

·       CRM

·       Inventory management

·       Job costing

·       Serial number tracking

·       Manufacturing

·       Supply chain

·       Multi-currency etc.

2. Software License Pricing Model

There are two types of pricing model when it comes to business management software (ERP), each has its pros and cons, they are

·       One-time payment.

·       Subscription model.

·       Hybrid pricing model.

One-Off Payment: In simple terms, it is when the software is purchased for a lifetime, you buy the license once and for all.

Subscription Model: It is when you continue to pay a rental fee for the software license on a monthly/quarterly/yearly basis.

3. Cost of Implementation

I should tell you this, implementation of ERP does take time. Nonetheless, below are factors you should consider.

Customization: If your business needs specific/unique requirements, your cost can increase significantly.

Consultants: Most of the business management software vendors, like Oracle, Sage, etc use business partners (third parties) to implement their software. The cost varies across the business partners, Softcodes is a business partner to Sage and have deployed Sage solutions to over 100 sites within 6 years.

Hardware: If your companies want an on-premise solution, there are additional costs incurred for servers and computer systems.

Training: Most times, the cost of training is included in the implementation cost. However, some vendors charge separately for specific training.

4. Continuous Costs to Consider

Another factor to consider in the cost of business management software is post-implementation. Factors like;

Personnel: Business Management can be complex at times, you might need to get a new hand to manage it.

Post Implementation Support: There might be a need for additional support on the software after implementation, basic supports might be free. But advanced support will come at a cost.

Upgrading: This comes in different forms,

·       Upgrade in terms of new updates (this is free for cloud-based and might not be free for on-premise based).

·       Upgrade in terms buying additional number of users or modules.

·       Upgrade in terms of moving to higher software cadre due to business needs or complexities.

Conclusively, there is no actual cost of business management software. What you can do most is to have a budget or estimate.

REFERENCE: Betterbuys

Tijani Olayiwola Ahmed:
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