Any company considering implementing an ERP system should be concerned with the costs of doing so. ERP systems can be expensive and prices will vary greatly with the how vendors price the software, how it is hosted, the number of users and the complexity of any custom development required.
Many companies either sell a perpetual, one-time license for the software or charge a subscription fee per user. The prices vary a lot but the range is around $40 to $100 per user per month for subscriptions. Perpetual licenses can be in the $5,000 to $10,000 range and vary by module implemented.
ADempiere is free open-source software licensed under the GNU Public License. You are free to use the software in a commercial setting. There are no costs for the license, no per-user or seat fees, no upgrade costs and no module costs. It is free software.
While you do not pay a license fee, there are other costs that you have to consider that are similar to every ERP system:
- Software development and support costs - you will either have to have the internal resources to manage the software yourself or pay for this service from a contractor such as mckayERP. If you do want to build the internal capability, a team of one to three software developers who are familiar with the software should be adequate - it depends on how much customization you require.
- Database costs - mckayERP recommends PostgreSQL as the preferred database. Like ADempiere, it is free open-source software and an excellent choice for an enterprise database. If you choose a commercial database such as Oracle, you may have to consider the costs for that license and the support required.
- Hardware or infrastructure costs - depending on your installation and requirements, the costs of hardware to support your system can be significant. Recent developments in cloud computing are reducing these costs quite a bit, changing the capital infrastructure costs to operating expenses that are in the range of tens or hundreds of dollars a month - almost insignificant. There are the peripheral computers, point-of-sale systems, scanners and printers to consider as well.
- Implementation costs - no ERP system works out of the box. There is a significant amount of configuration required to setup the system for your business. You can trade effort for money here by performing the implementation yourself or pay for support from a contractor such as mckayERP. If you do implement the system yourself, you will need, at a minimum, one person on staff with the training and capabilities to administer the system.
- Training costs - the users of the system will need training initially and on a recurring basis, especially for critical operations.
- Maintenance and upgrades - once implemented, the system needs regular maintenance to ensure it is operating efficiently. Again, you have the choice to manage this yourself or hire a contractor.
- Ongoing Support
mckayERP can assist with all the above. Our prices vary with the extent of the service required. Please contact us to discuss your requirements so we can quote appropriately.
To provide an example to illustrate the scale and scope, below are several case studies that breakdown these costs for companies of varying size and internal involvement.
|Software License Fees||$0||$0||$0|
|Database License Fees||$0||$0||$0|
|Hardware and Infrastructure||
Internally hosted on small server $2500. Internal network equipment $1500.
|Cloud hosted single server - Digital Ocean between $40 and $80/month
A few extra peripheral scanners and computers purchased in the range of $20,000
Cloud hosted multiple servers - Amazon AWS ~$500/month
$50,000 in additional infrastructure required
|Software Development||Limited number of customizations required. Performed internally over the implementation period of six months.||Several custom modules developed. Software development performed by the contractor $15,000.||Extensive customization and interfacing with external systems. $50,000|
|Implementation||Managed by a single person internally - roughly six months of effort.||
Implementation performed by a mixed team of company staff and contractor experts. Software development by the contractor. Four to six months of time. Costs, including planning, approximately $30,000.
|Full implementation by the contractor with staff involvement for change management only. Four to six months of effort. Costs approximately $50,000.|
|Training||One week per user - mostly on the job.||Varies with task complexity from a few hours to a week per user. Training material provided by the contractor but delivered by internal staff. Cost $2000. Recurrent and update training delivered by staff.||Training developed and delivered by the contractor: $15,000 initially and $2000 per year on-going.|
|Maintenance and Upgrades||Performed internally - several days worth of effort per upgrade.||
Database maintenance performed internally. Upgrades performed by the contractor $600 per year.
|Performed by the contractor and included as part of the On-going Support|
|On-Going Support||Provided internally with contractor support purchased on a call-by-call basis. $50 each call.||Contractor provided support at $250/month for 10 calls. $50/call additional.||Full contractor support for $1000/month. Includes system monitoring, all maintenance and upgrades. Unlimited calls.|
|Total||$0 plus $3500 in capital expenses.||$47,000 to implement the system. $380/month in recurring costs. $20,000 in capital expenses.||$115,000 to implement. $1830/month recurring. $50,000 in capital expenses.|
Again, every company is different. Determining the costs in your particular case does require a conversation. We'd be happy to discuss this with you.