Many assume that implementing an enterprise resource planning (ERP) program will cost an arm and a leg. While some of the top ERP systems chosen by large enterprises that need elaborate ERP systems are pricey, there are plenty of affordable options that can be tailored to meet the budgets of small and mid-sized businesses.
Factors That Affect the Cost of ERPs
Number of Users and Location
Some ERP systems charge on a per-user basis. The more people given access to the software, the more expensive the fees will be. The price can also fluctuate depending on the number of locations where the ERP platform is implemented–if you operate in several places, you may have to pay extra.
Purchasing Method
You can purchase an ERP by licensing the software or by buying a subscription. The perpetual licensing method allows businesses to host the software on their onsite servers, which is cost-effective if you already have the right infrastructure in place. Payment is done upfront, allowing ongoing use of the license without recurring costs.
The subscription method is used by cloud-based ERP users. It doesn’t require any hefty infrastructure investment by the user, and it offers lower upfront costs. It is also more flexible than licensed systems and is upgraded only as needed.
Add-Ons
While some ERP systems like SAP Business ByDesign come with a trove of built-in functionalities, you may need additional configurations or integrations to meet your business needs.
For example, how ERP systems are used in retail is most likely different than how they are used in other industries. You might need more content management capabilities, which may mean having to install add-ons that incur extra costs.
Implementation
ERP is advanced software; it is not something that a novice can figure out just by reading an instruction manual. A company will need a technical professional to manage the installation, transfer of data, and adoption of the system. Some ERP companies provide training modules, while others recommend consultants. Onboarding users can be expensive depending on the number of features you’re employing and the number of people that need training, but it’s an essential step.
Maintenance
You’ll want to keep your ERP system up-to-date at all times. Some ERPs include updates with the purchase of a subscription, but others don't. Check with your vendor to avoid any surprise expenses along the way.
How to Maximize Your ERP Budget
Proper planning is needed to ensure that you’re getting the most out of your ERP investment. Here are some tips to maximize your budget:
Determine Your Needs
Nail down the features your business needs before paying a premium for a full-blown ERP system with capabilities that aren’t necessary and won’t be used.
Choose the Right ERP
Pick the best ERP for your company. For example, if you have annual revenue of $25 million to $500 million, more than 150 employees, and an evolving business model, SAP Business ByDesign is the right ERP for you as it’s designed specifically for rapidly growing businesses such as yours. Growth-focused and mid-market organizations should look into SAP S/4HANA Cloud ERP.
Forecast Your ROI
The initial costs to implement an ERP system might be more than you were hoping for, but if you compare the investment to your forecasted return of investment, you’ll see that the profits generated by the ERP sy
stem will outweigh the investment in the long run. Run the numbers and see which ERP system is best for you.
SAP Cloud ERP: A Cost-Effective ERP System
SAP is a global leading ERP software provider, and SAP Cloud ERP is one of its best solutions. SAP enables fast-growing, mid-market businesses and subsidiaries to scale without complexity and unnecessary costs. Learn how to implement SAP Cloud in your business today!
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