McGladrey has released a new white paper providing typical costs and considerations related to deciding which ERP platform a client should purchase.
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McGladrey’s “Apples to apples: Comparing ERP costs accurately” paper explains how ERP platforms can have similar functionality but different fundamental technology and licensing models and, moreover, companies should have a forward-looking timeline to define current and future needs, as well as expectations for their ERP systems.
The white paper also 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 platforms: On-premises 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.
“When evaluating their platform options, organizations often overlook the hidden costs. We created this checklist as a handy reminder,” said McGladrey principal Matt Kenney. “This comparison guide takes the guesswork out of choosing an ERP solution, walking you through the different platform and licensing fee options, to identify the best fit for your organization. License costs are just the tip of the iceberg when it comes to total ERP costs.”
For more information or to download this white paper visit the McGladrey site.