There are several significant factors to be considered when negotiating for the best price quotes for an Enterprise Resource Planning (ERP) solution, which is essentially a software program with a database engine, server, and selected modules, accessible to and shared between a diversity of departments—ideally all of them—within an enterprise. There are a number of hidden costs which should be elucidated and accounted for at the time of price negotiation, as well as facets of installation, implementation and use which directly affect the particular price quote of a vendor. These factors are generally enterprise specific and vary considerably between businesses.
Number of Users
The specific number of users, both current and projected, plays a large role in the determination of a price quote for ERP, as prices tend to be lower for less users and increase accordingly with greater amounts of users. Greater numbers of users tend to increase the expenditures for software and service, particularly when utilizing concurrent user access plans offered by certain vendors. It is best to have a firm idea of the projected number of users for at least two years in advance to avoid future unforeseen costs and to get the best price quote.
There are essentially two types of ERP modules (which are generally department-specific): standard and advanced. Advanced modules offer a greater number and variety of features, which may not be necessary for certain enterprises, particularly those new to ERP software and service and which may be small or mid-sized. Larger and more sophisticated businesses may need the more advantageous features associated with advanced modules. Regardless of the selection, this choice will greatly influence a vendor’s price quote, which is why enterprises should research what particular capabilities they’ll need.
Training, Customization, and Upgrades
Training can oftentimes be an overlooked cost when budgeting for an ERP solution, although there are a fair amount of vendors which include a degree of training in their service and in their price quotes. It should be remembered, however, that training for ERP requires employees in various department to gain a greater understanding of the scope of work done in other departments, which could also affect inter-office training outside of that specifically related to the ERP solution. Negotiating the amount of training and exact degree required for a specific enterprise should be completed along with that for the other facets of purchase considered in a price quote. Additional factors to be considered include upgrades and customization implementation, both of which can be allotted for in the price quote and which should be determined in advance of purchase.