What is the cost of incorporating ERP for an SME?

How can the cost of ERP for SMEs be defined?

First, we must say that calculating the cost of ERP for SMEs can be a very difficult task. By the very nature of this type of software, it is difficult to calculate. Indeed, its modular nature must be taken into account first and foremost. This modular character is an advantage that makes it possible to design ERP that is practically tailor-made for any company. However, this factor makes it (at the same time) difficult to calculate the cost of ERP for SMEs.

However: We can say that the cost of ERP for SMEs can be from €5000 to €30 000 per year, mainly depending on the size of the company and the complexity of its own organisation chart. There are, however, other factors and criteria that can also be taken into account when calculating the price of ERP.

These include the level of depth of data desired, as well as the degree of customisation required for the company. It is these criteria that we would like to discuss below.

What are the costs within ERP for SMEs?

In the following, we will discuss some of the costs for an SME in relation to ERP features and the different aspects that need to be taken into account.

1 .- Licence cost

The licence cost normally represents about one-third of the total cost. This licence fee is fixed, which means that it is more or less easy to calculate depending on the company we sign up with. However, it is also the one that varies the most depending on the characteristics of the ERP. This means, therefore, that there is a fixed price for each of the packages but that, at the same time, this price can vary greatly depending on these features. Normally, the price of a standard ERP license for SMEs is around €5000.

2 .- Cost of ERP for SMEs: Consultancy costs

In most cases, these are the bulk of ERP expenses. In general, they can be up to half the cost of the ERP. This is, as a rule, the most costly part of the investment; However, it is also the most crucial and the one that best justifies its cost. This is an essential part that consists precisely on the cost of consultancy and all the tasks involved in the implementation of the ERP in the company. These costs include all those that have to do with implementing the ERP in the company and, at the same time, doing it as efficiently as possible.

For example, the company that provides this software is responsible for adapting it to the nature of your company and also to that of your sector. At the same time, they are responsible for training your staff to use it. They are also responsible for importing all available data and making them synergistic. This is an essential process, especially given the ultimate goal of ERP. Although in some cases these costs may be reduced when externalised, the fact is that in some way or another, the intervention of the ERP developer will be necessary.

3.- ERP Hardware

Another basic aspect to take into account when pricing ERP for an SME is its hardware. This cost includes all the equipment necessary to deploy them and is therefore part of the basic infrastructure required to benefit from it. It represents approximately one tenth of the investment and is not expendable either.

4 .- Price of ERP for SMEs: Costs associated with ERP maintenance

Maintenance is another essential point to take into account. This usually accounts for less than 10% of the total cost of ERP for SMEs. However, due to the degree of specialisation of this IT solution, it is absolutely essential. This task will normally be carried out by the company that supplies us with the ERP. In some cases, this is included as part of the licence fee.

How soon can you recover the investment in your ERP for an SME?

Linked to the question of the price of ERP for SMEs is another crucial issue: The time to recover the investment. Firstly, it should be taken into account that this technology offers very good medium and long-term returns. Therefore, you will not install it and benefit from all its improvements straight away. On average, it is estimated that the investment will be recovered after a period of two years. This is a fairly short timeframe for an IT investment of this type. Especially since in many cases efficiency has been exceeded by 70% and in some cases even close to 100%.

Therefore, it can be said that it is well worth implementing an ERP for SMEs if you want to make them more competitive. Nowadays it can be said that (increasingly) ERP is becoming a requirement to be able to be competitive. The reason is that this technology is at the heart of the so-called Industrial Revolution 4.0. A question not so much about the future, but about a present which, in the light of all, is becoming more and more pressing. At SEIDOR we can offer you solutions adapted to your needs. Taste for yourself the way of working in the 21st century.