There is no hiding it, purchasing an ERP system is an investment for any organization. Before signing on the dotted line, make sure that you have asked all the right questions to make sure that you are not surprised with any additional costs once you have purchased the software portion.
Something to keep in mind, is that there are some differences in the licensing structure depending on whether you decide to go with an on-premise or a cloud-based installation. Here is the breakdown of the different costs associated with a new ERP installation.
1. Software Costs
It is important to keep in mind that software costs may not only include those of Microsoft Dynamics GP. If you have specific business needs or processes, there may be some third party (ISV) products that will be able to help you meet these needs without costly developments.
- On-Premise installation: This will usually be a one-time licensing charge and there will be maintenance fees associated with this cost.
- Cloud installation: This is usually broken down to a monthly charge and there will be no additional maintenance fees since the system will always be up to date.
2. Maintenance Fees
Maintenance fees are an annual charge that will give you access to hotfixes as well as updates to new versions of Microsoft Dynamics GP. This will allow you to take advantage of new features that have been added to the application as well as conserve your system list price in the case where there may be inflation in the price of your application with future versions.
- On-Premise installation: Typically, these maintenance fees range anywhere from 16 to 25% per year depending on the application. Currently Microsoft Dynamics GP’s fees are 18% for the first year and 16% for subsequent years.
- Cloud installation: If you have opted for a subscription basis, there will be no additional maintenance fees since you are renting your software solution on a monthly basis.
Regardless if you have an on-premise or cloud solution, there will be service costs associated with getting your solution optimized and configured to meet your specific needs. This can be broken down into different types of services:
- Analysis: This is to help understand, align and optimize your business processes. This is usually the first step once you have decided to implement a new ERP system. This is the blueprint for your project where everyone will work together in have a clear understanding of your company’s needs and requirements. This is also where there will be an identification of any gaps between your needs and the system. If there are gaps, there is where additional research may be required to see if there are any third-party applications or if there are any custom developments will be required prior to going live with the system.
- Development: This will be required if there were any initial gaps that were identified in the analysis phase or potential integrations to other systems. Developments may include; additional fields, reports or business processes not available with the solution out-of-the box. Although this may seem as costly, this could be the difference of users adopting the new solution since it will be adapted to their specific needs.
- Configuration: This is when the system will be configured to meet your specific company requirements and business rules. This portion becomes more technical and forces your organization to make key business decisions on the specifics of how the solution will operate. For example; which fields will be required, security of your different users and business process flows.
- Training: Typically overlooked or underestimated is the importance of ensuring that you have training documentation and that key members of your organization have been trained on the solutions. There are different levels of training that can be offered; the implementation team can train the end-users or there is the concept of training the trainer. The advantage of training the trainer is that internal trainers will be able to add additional insights and personalize the sessions for their particular company which may resonate better with the end-users and can help keep your external costs down.
- Support: After you have gone live with this new solution, you should plan on requiring some support for post-implementation questions that may arise.
- Technical: This is a service that should not be overlooked as you will want to ensure that you have the proper equipment in place and that it has been correctly configured for the software applications that will be installed. By having this optimized it will in turn help with the performance of your overall system.
If you decide to go with an online solution, you can skip this step. One of the main advantages of going with cloud-based installation is that you are able to reduce your infrastructure and hardware costs since there is no need to purchase servers.
With an on-premise installation, you will need to purchase a Microsoft SQL license. It is best to work with your Dynamics reseller to ensure that you have the proper specifications based on your anticipated number of transactions and the number of people who will be using the system.
5. Other costs to consider in the future
If you decide to go with an on-premise installation of your system, you will also need to consider migration costs approximately every 2 years. This is to ensure that you continue to benefit from your investment and that you stay up-to-date. This will most likely only be services, but it is important to keep in mind that hardware requirements do evolve as well and it will be important that you review these technical specifications before proceeding.
Although this may seem like a lot to think about and will add to your overall project cost, these are all important steps to ensure the proper use of the system and in turn, will help with user satisfaction. These different factors will also help you ensure that you are optimizing your ERP system such as;
- Paying your maintenance fee will ensure that you are receiving the latest updates and new features.
- Investing in services will make sure that your company’s processes have been taken into consideration. Training will help assure that you are using the system to the best of your abilities.
- Staying up to date on your infrastructure and hardware will help with the speed of the system and reduce downtimes.
An ERP system like Microsoft Dynamics GP is an investment that offers your employees a robust system that will help make them more efficient and allows you the reporting capabilities management will need to make informed business decisions.
To receive a more detailed quote on potential implementation costs, contact JOVACO Solutions at [email protected] or by phone 888-988-3535 at extension 120.
By JOVACO Solutions, a Microsoft Dynamics GP implementation specialist in Quebec,