Six focus areas when comparing enterprise resource planning costs

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McGladrey

Jan 16, 2014, 07:45 ET

CHICAGO, Jan. 16, 2014 /PRNewswire/ -- Deciding which enterprise resource planning (ERP) platform to purchase is complex. ERP platforms can have similar functionality but different fundamental technology and licensing models. Companies should have a forward-looking timeline to define current and future needs, as well as expectations for their ERP systems.

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McGladrey's Apples to apples: Comparing ERP costs accurately provides a detailed breakdown of the typical costs, which include:

  • Licensing. Costs are driven by how many people will access the system and your functionality requirements.  Some vendors use concurrent user licensing which allows an unlimited amount of users but restricts simultaneous access.
  • Maintenance. Most on-premise vendors charge an annual software maintenance fee, which supports ongoing development, patches and bug fixes. Thinking long-term, maintenance provides access to updates and new versions of the software with new features without repurchasing the product.
  • Supporting software. Large amounts of data are stored in database software, which requires operating system, antivirus and malware protection, and backup software. 
  • Computing hardware platform. On-premise solutions can include costs for servers, disk storage, backup systems and other items. Hardware is not a concern for cloud solutions but vendors who provide those solutions typically charge additional subscription fees for access to development and training environments. 
  • Consulting services. Implementing a new ERP system requires consultants with specialized knowledge of applications and business processes. 
  • Risk. Cloud models have a number of licenses that can be adjusted on an annual basis, while on-premise models have a more sunk cost based on the number licenses purchased. 

A careful analysis of the differing technology and licensing models and your specific needs will dictate the most beneficial ERP solution for your business. If you are looking into enterprise resource planning platforms, McGladrey's Apples to apples: Comparing ERP costs accurately can help you evaluate platforms and pricing.

SOURCE McGladrey

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