The average ERP implementation cost varies depending on the type, size, and location of your organization; as well as the number of users and user types. Costs to consider include: product (license) costs, vendor costs, as well as hosting and maintenance costs. It is certainly a significant investment, but a properly implemented ERP system will pay for itself quickly.
Product / License Costs
The type of the product you choose is the main factor determining your ERP system implementation price. When looking at ERP Open Source system such as Odoo, the base license cost is zero. Odoo average cost is flexible, and based per module, per month, and per user. Odoo pricing is the same as an ordinary online service, but with a full Cloud ERP software product range instead. Odoo is more cost effective; the price is per app once and per user once; which means that one app can be used by multiple users.
In the case of a paid license, the cost will depend on the number of users making use of the software. On average, SAP commercial enterprise One-starter package licenses are $1400 as a one-time cost, and $420/user/year.Microsoft Dynamics GP and NAV charge $650-1450 as base price + $65/user/month, while Microsoft Dynamics AX: $249/user/month while Odoo average cost is as low as 6$/user/month and starting 4$ per module per month.
Vendor Costs
If you decide to implement ERP software in your firm, you will have to consider the various costs of your implementation process. An Odoo cost estimation shows that it is more more cost effective than others such as NetSuite implementation cost, and SAP implementation cost.
IMPLEMENTATION
ERP systems are complex software applications; which means that you will likely need to change operating systems, upgrade or change servers, and change other hardware and software you use in order for the ERP system implementation to run properly. You may also need to set up a test environment as part of the implementation so you can test the ERP system before you start using it.
TRAINING
ERP system is a complex software application that your employees will need to be trained on how to use. Your ERP vendor, or ERP Implementation partner, can also provide you with additional training upon request later on, in the case of specialized content or when you need to solve specific issues. In any case, you will need to factor these additional costs into your analysis.
DEVELOPMENT
The out-of-the-box functionality of an ERP system is not enough for effective operation of your business. You will need to incur some expense while developing customized reports and functionalities so that your employees can perform their daily and monthly tasks with ease. Therefore, you may need to have IT staff dedicated to and skilled in ERP customization for various departments in order to ensure that business processes and analysis are performed on time.
DATA MIGRATION
If your company is upgrading from an existing software program to an ERP system, then many of your current processes will need to be redesigned. The acquisition of an ERP system also means that many of your currently un-automated tasks will need automation by the software to increase both accuracy and efficiency in performing these tasks. Moreover, data migration between both old and new systems, and the change required to incorporate your existing data into the new system are to be taken into consideration when factoring in your costs.
UPGRADES
ERP systems require periodic upgrades like all software programs, to avoid becoming obsolete. You should consider how often you expect to upgrade your ERP system, in order to predict future costs, and the additional hardware or software upgrades you may need for your system to run smoothly.
SUPPORT
It is very probable that your employees will run into trouble using the new program, or that you may have to take care of a number of bugs with your new ERP system or enhancements to implement some new business changes. You must ensure that your vendor provides you with adequate technical and functional support to keep you going. Ask your vendor if support is included in the licensing fees.
Hosting and Maintenance Costs
HOSTING
There are two main options when it comes to host your ERP software:
Private Hosting
You maintain the solution and it comes thru two options:
- On-premises through a resident server
- Private cloud: where you reserve a virtual machine on the cloud where you deploy your open source erp solutions
Both have associated costs. You need to have your dedicated team or outsource to an eligible ERP partner who is willing to manage development operations (dev-ops), deployments, backups and high availability.
Software as a service, like Odoo.com or Platform as a Service like Odoo.sh
Cloud hosting can be shared using the SaaS model like Odoo.com or a shared VM using the PaaS model like Odoo.sh,
In the case of cloud ERP software based solutions, the management of the platform or the service is done by the provider of the service thus no need for team to keep maintaining it. However, in the case of SaaS ERP for small businesses model it won’t provide full flexibility to change the software while in the case of PaaS it incurs slightly more charges for the shared VM cost and billing is done by CPU, RAM and storage usage.
MAINTENANCE
As for maintenance you will need to maintain your ERP system, which means that you will need to factor in these costs. ERP costs can include hardware, network, and labor costs from IT and other departments to ensure the system runs properly (in case of private hosting) and functional and development of new features in general. ERP maintenance costs typically run between 15-20% of the initial purchase price. When it comes to maintenance, it is best to work with a partner company that has low turnover. This ensures that the same people who understand the ins and outs of your product, continue serving you.