Advice from an ERP Consultant- How to Evaluate the Cost of ERP User Licenses

When you set out to begin an ERP implementation, you know there are going to be expenses, but do you know where they will come from or how to keep them to a minimum? Many companies, especially those who are implementing their very first ERP system, don’t always know what to expect when it comes to the cost of ERP.  In this article we’ll take a look at one area where you should absolutely ask your ERP consultant questions and know your options- user licensing fees.

The very first thing you need to figure out is how many people will require access to the ERP system, this is your number of users. Think about the various areas of your business and what kind of information they need to be effective. Your accounting department will most definitely require access to the system, but so to might your sales people, shipping department, manufacturing managers, etc. Your ERP consultant will be able to help you think through this process and decide who needs access and why kind of access they will need.

Related Reading- ERP Budget & Cost Considerations: Moving from QuickBooks to ERP

When it comes to cost and pricing structure, be sure to as your consultant if pricing is user based, where you’ll pay one license fee per user, or module-based, where you would pay for the module (s) you need with a small per user fee.

Neither of these pricing structures is better than the other, it’s purely dependent on your specific needs. If you need only a simple functionality set now and into the future then a module-based pricing structure may be more cost efficient for you, but most companies prefer a user-based pricing structure as it (typically) gets you more for the money you spend.

Another thing to ask your ERP consultant about is concurrent vs. named users. Concurrent licenses are usually more cost effective if, for example, you had 20 people who use the system but only 10 who need it at the same time, you could just buy 10 licenses.  Named user licenses are more restrictive and do not allow this kind of flexibility.

Related Reading: Roadmap to A Successful ERP Implementation Project

The Takeaway- As you work with your vendor or evaluate the cost of your potential ERP system, always ask these questions when it comes to user licensing fees:

  1. How many users do we need?
  2. What kind of access will each of those users need?
  3. Are licenses concurrent?
  4. Is pricing module-based or user-based?

There is a lot more to learn about ERP pricing, so be sure to check back as we cover more critical areas of consideration! Have questions right now? Contact us and an ERP consultant would be happy to help. In the meantime, pick up a few ERP selection and implementation best practices in the white paper below.

ERP Consultant

Related Posts