How much does an ERP project cost?
- 31/10/2024
When considering an ERP project, it's easy to get caught up in the costs.
But let's flip the script from cost to value. A well-implemented ERP system
doesn't just streamline operations and boost efficiency—it lays the groundwork
for scalable growth that far outweighs the initial investment. Picture this:
improved data accuracy, happier customers, and smarter decision-making. Plus,
leverage artificial intelligence to save money over time.
But there's another key to saving money: choosing the right approach. We've all heard the horror stories of ERP implementations dragging on forever and blowing budgets, or worse, falling short of the organization’s needs at go-live. With hundreds of satisfied customers in the manufacturing sector, we have a proven track record of success eliminating these unexpected surprises.
Now, let's get to what you're here for: breaking down the cost components of an ERP project. In this article, we'll give you a clear and comprehensive guide on what to expect.
The components of your ERP expedition cost
1. Licensing fees
The base camp of your ERP investment, licensing fees, varies depending on the software you choose but it also used to vary based on the deployment model: cloud or on-premise. However, all modern platforms nowadays are cloud-based for a clear reason: you always have the latest and greatest tools available. This license fee is billed as a subscription that covers the use of software and the underlying platform (SaaS) in combination with the user count.
Corporate GTM & BusDev Director @ 9altitudes
The number of users doesn't always equate to higher costs
What matters is how well the solution matches your needs. The better the fit, the fewer add-ons required, which helps keep costs down. Choosing a suite adapted to a specific market is cheaper than building an ecosystem with different add-on solutions yourself.
Typically, fees are billed per user, per month. Different licenses meet varying needs: some employees may require access to specific functionalities, needing only a specific additional user license, while others might need full access to the comprehensive ERP suite. Certain users may also need multiple or attached licenses.
Most subscription models offer flexibility, allowing businesses to scale up or down as needed and where additional business applications can easily be attached to the primary application you work with.
Microsoft’s licensing guide for Dynamics 365 Finance & Supply Chain Management and Dynamics 365 Business Central is publicly available but your choice should depend on more than the licensing fee obviously. You should go for a strong, stable solution that is continuously developed. Microsoft’s Dynamics 365 platform is a strong solution that can support your business, not only today but also in the future.
2. Implementation services
The terrain of ERP implementations is often complex and requires a seasoned guide. This phase will include system configuration, setup of integrations, lots of testing, and user training that must result in a smooth transition to the new platform.
These factors will influence your climb:
- Variety in business operations: It could be that your manufacturing strategy is Make-to-Order (MTO) but that other divisions handle project-based work. This results in varied processes, introducing more complexity and increased implementation efforts.
- Matching best practices: Cloud-based platforms rapidly evolve, with new features being introduced approximately every two months to foster innovation. By aligning more closely with best practices to integrate standard functionalities, you can reduce both implementation and maintenance costs.
- Fit for purpose: Choosing the right platform matching your needs can reduce customization demands and lower overall costs. Specialized solution providers offer industry best practices in one package.
- Integrations: ERP systems often need to work with other systems, and custom integrations can increase complexity and raise costs. Opting for platforms within the same ecosystem makes integration easier and more cost-effective.
- Localization requirements: When implementing an ERP across multiple countries, all local requirements must be taken into account. This can lead to additional customizations and need for local support, which lead to additional costs.
Understanding your organization's processes is just as crucial as planning a route for a seamless transition. This emphasizes the importance of thorough preparation before starting your digital transformation journey. Often, companies spend significantly upfront for an external party to conduct a requirements analysis, followed by an RFI/RFP process. This method typically leads to higher costs and delays. The requirements usually don't match standard software packages, requiring extensive customization.
At 9altitudes, we offer a unique mix of industry expertise and best practices knowledge to support you from the outset. Unlike typical consultants who ask "What do you need?", our discovery phase is based on our industry experience. We assess what we can deliver out of the box, either with the standard solution or with our add-on solutions, and together identify potential gaps we need to solve specificially for you. By aligning your requirements with the platform's capabilities, you can move smoothly from your starting point to the best practices you aim to adopt, avoiding unnecessary delays and costs. Customizations are only suggested for truly unique requirements (usually max 15% of your implementation estimation). The discovery phase results in a clear roadmap, software solutions, and implementation budgets, ensuring clarity and trust to kickstart your transformation journey.
3. Internal costs
Introducing an ERP project is a strategic move towards boosting productivity and efficiency. With the backing of Change Management, you ensure that the system's best practices are embraced across the organization, rather than customizing the system to fit individual preferences. This alignment helps streamline operations and builds a cohesive work environment where everyone is on the same page. Through structured guidance and support, Change Management facilitates a smooth transition, equipping your team with the understanding, tools and training necessary to fully leverage the ERP system's capabilities. This approach not only empowers your team to achieve exceptional results but also drives long-term growth and innovation.
4. Ongoing costs
The journey doesn’t end at the peak; maintaining your position requires ongoing effort. Similarly, ERP systems need regular updates, user support, and possibly additional training. These costs ensure your system remains robust against the evolving landscape of business challenges. It might as well be that your business needs change, requiring further customizations. Think about enabling Copilot.
Find out your ERP cost with our tool
Our job is to simplify your journey to the summit, ensuring a smoother climb to new heights. That's exactly why we've made it possible for you to effortlessly obtain a high-level ERP implementation budget. Simply fill out our questionnaire with your business details and requirements, and we’ll send you a customized estimation within 2 business days.
Understanding what your company needs to get out of an ERP system is crucial as it directly influences the functionalities required and the overall cost. By clearly defining these needs, you ensure that the ERP system is tailored to support your business operations, driving efficiency and growth.
How can we help you?
At 9altitudes, we approach ERP assessments differently. Instead of lengthy evaluations, we bring together key stakeholders to define scope, budget, and business value. Leveraging our industry expertise, we showcase best practices, address typical challenges, and integrate the latest technology to keep you ahead of the competition.
As a top 1% Microsoft partner worldwide, we can also discuss partial assessment funding, ensuring you know exactly what to expect to reach new heights faster and safeguarded by proven expertise.
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