ERP (Enterprise Resource Planning) software is currently trending among large organizations as well as the SMEs. With the changing technology, globalization, internet marketing and mobile implementations, the ERP systems are rapidly becoming mandatory for competent businesses. Most of the organizations now understand the importance of data analytics and the need for ERP systems within the organization which provides the same to the management. More and more organizations in Singapore are approaching the top ERP vendors in their respective industries to adapt the most competent and affordable ERP software system. Every organization’s workflow may differ and hence, many organizations find the existing ERPs not flexible enough to accommodate their workflow. Those who can afford a new ERP specially made for their business are opting for a custom-made ERP solution to be implemented within the organization. This is feasible only for large organizations with multi-location facilities as it will improve their work-flow and increase their credibility. Even though ERP solutions are in the market for more than 20 years now, cost still remains a major obstacle for many organizations to adopt an ERP implementation for their organization.
Shared ERP solutions
With the invent and popularity of cloud solutions, cloud-based ERP solutions are also getting popular. This has made the ERP software solutions more accessible to the SMEs. Since the cloud ERPs share valuable resources like infrastructure (IaaS), software (SaaS) and the platform (PaaS), they become more affordable to the multiple SMEs using the shared resources. Here the major concerns are data security and low levels of customizations that cloud ERPs offer in the shared platform. Another issue is that all the required modules may not be available with the same vendor. Currently, multiple ERP vendors are yet to come under the same umbrella for sharing. So if there is sharing of popular modules between the ERP vendors, the SMEs can benefit further. These shared ERP solutions are offered on monthly or yearly subscriptions. The charges depend on the type of technology used, type of sharing chosen and the modules subscribed for. These expenses form a part of the operational expenses of the organization as against the convention ERP which is usually a capital expense for the organization.
What are the major factors that influence the pricing of ERPs in Singapore?
Modules, technology, and implementation methods; all these aspects are important in determining the rate of the ERP quoted for an organization. Some of the major factors that affect the pricing of ERP software systems in Singapore are:
- On-site or Cloud implementation
This is one of the main factors that decides whether the ERP will cost to the capital or the operations of an organization. On-premise ERPs are intangible capital assets to an organization. It is equivalent to buying an office space where the office will function for a long time. The software can be customized extensively to follow the workflow of the business. Unique modules to address unique processes can also be identified and added to the ERP. High-level data security is possible in this type of implementation as the data is created and maintained within the organization. This will be the most expensive method for implementing an ERP in an organization. Supporting resources and maintenance will also add to the implementation cost. Cloud-based ERPs will add to the operational cost as the service is offered to the organization on a periodic subscription. Though the data security is the vendor’s responsibility, very limited customizations are allowed in this type of implementation. Cloud ERP is a better choice, especially for SMEs in the startup stage as the risk and cost involved are comparatively low
The technology used for creating and deploying the ERP system is an important factor that determines the price of the ERP. Quality and competency of the ERP solution come at a price. An efficient technology will cost more and so will the resultant ERP.
The number and functionality of the modules subscribed to or purchased will also be a major factor affecting the price of the ERP. Organizations can avoid subscribing to the rarely used modules but make sure they can be integrated at a later stage. The start-ups can concentrate on the essential modules identified by an in-house industry expert. Since all ERPs are modular in nature, the most wanted and the most complicated modules like Accounting, MIS and Inventory management will usually cost more than the subsidiary modules like Purchasing and POS.
- The level of customization
This is relevant more in the case of an on-premise implementation of the ERP solution. The product will cost more depending on the type and level of customizations. Usually, the ERP vendors charge for customizations based on the number of changes, its complexity and where all it affects the integrated modules of the ERP. In the case of cloud ERP, if at all the customization is allowed, it will be charged one-time.
- Type of sharing
This is relevant for cloud ERPs. Cloud-based ERPs work in 3 ways; sharing the software (SaaS), sharing the infrastructure or the server (IaaS) or sharing the platform (PaaS). Depending on the type of sharing chosen, the subscription charges will change.
- The number of users
The number of users allowed to operate the ERP is also relevant when it comes to shared ERPs. The shared ERPs are usually allowed a basic number of users per subscription and charged extra for each additional user.
- The number of implementation
This is relevant in the case of on-premise implementation involving multiple locations. If a separate instance has to be implemented in each location of a particular organization, each implementation is charged separately depending on the implementation location.
- Additional services opted
The ERP vendor will usually provide some additional services like data backup, additional data security, dedicated server, dedicated network etc. for on-premise implementation, the vendor usually agrees on AMC and charges extra on the updates and upgrades periodically. For cloud ERP also, a technology upgrade or a functional upgrade as a part of a government mandate may also attract additional charges.
- Experience and Brand
Last but not the least, the brand name matters. The price of the ERP will profoundly depend on the brand names attached to it such. An experienced and well-placed ERP vendor will charge more than a startup ERP vendor. The competition is usually in the middle and lower level of ERP vendors. The big players know their worth which they have made over the years of experience in the market.