How to Ensure Cost Predictability with a New ERP Business Management System – Evaluating a New ERP System Checklist Item #6

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Long-term cost predictability is one of the many elements that have to be taken into consideration before acquiring a new financial management system such as Microsoft Dynamics GP. In one of our previous articles, we discussed the main differences between on-premise and cloud deployments, which generally offer different payment structures. As such, they must be taken into consideration to better manage the various costs related to the implementation, operations, scalability, maintenance and updates of your system according to your organization’s available budget.


Costs to consider with an on-premise deployment

Typically, an on-premise installation includes a one-time license charge and maintenance fees based on a percentage of your solution price, which are usually payable on a yearly basis. Since your organization own the infrastructure and hardware, updates may be eventually necessary to ensure that your system keeps running smoothly.

To better predict your long-term costs, ask your implementation partner whether your renewal fees are based on a protected system list price. As such, your maintenance costs should remain stable even if the software list price increases, unless you make substantial investments or modifications to your system. By keeping your solution up to date, you ensure that your expenses remain predictable and manageable in the long run.


Costs to consider with a cloud deployment

In the case of a cloud-based solution, you are essentially renting access to your solution, usually on a monthly basis. Maintenance, hot fixes, and upgrades become available automatically via the cloud, ensuring that your solution is constantly up to date. Maintenance fees are usually included in the monthly price.

Since the provider is in charge of the infrastructure and hardware, a cloud-based deployment offers a predictable payment structure with very little variation from one month to the next. Different possibilities in terms of contract length also ensure that you can keep the same monthly price over a longer time period.


How to ensure cost predictability

In order to best establish the long-term budget for your solution, you must consider more than just the initial purchase and license costs. Your budget should include fees for services such as the implementation, integration and training, not to mention the maintenance of your solution as well as hot fixes and updates. It’s also important to have a budget in place for any technical assistance or support in case of issues or configurations that might be needed following the initial implementation.

By identifying your expectations and requirements, your implementation partner will be in a better position to provide you with an accurate estimation of both short- and long-term costs. JOVACO also recommends not skipping the analysis phase prior to the implementation, even though it may be tempting to do so to reduce costs: in the long run, you will save both time and money as clear objectives and guidelines will have been put in place for the entire project.


In short, your choice of ERP system has an impact on the predictability of your costs. As such, it’s an important factor to consider before purchasing any new business management solution. This way, you can ensure that fees, price fluctuations and unforeseen increases will be reduced as much as possible, while also improving your net income. To find out what other elements you should consider before taking the leap, download the eBook for the complete ERP software implementation checklist.


By JOVACO Solutions, Microsoft Dynamics GP integration specialist in Quebec

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