Next Step In Buying ERP Software
Posted by Glen Mund on Wed, Jun 06, 2007 @ 04:59 PM
The below excerpts was taken from an article in The Bottom Line (Mid-May 2007), written by Alan Salmon:
"When organizations consider replacing their entry-level accounting software, they are often shocked at the price they will be required to pay for the "next level" of functionality. They are even more disappointed to discover that they will have to sacrifice some favourite features of their entry level product when making the move. Few people understand that the price of software is more closely tied to the sales cycle than to product features."
"Why would a business want to migrate from their existing software? Generally it's for one or more of the following reasons:
- Running old (DOS-based) software unsupported by the developer.
- Needing to add another user, or concerns about security.
- Wanting to use new technologies such as email & PDF's
- Reaching file size limits for customers or inventory items
- Limited reporting flexibility for financial statements
- Difficulty in training new users
At the next level, software is sold by firms specializing in business process implementation. They will spend time making sure that the product they recommend will fit the needs of an organization and they will suggest effective implementation strategies. This requires a significant investment in time and resources, resulting in a much higher price for this level of product."
"The recommendation will include customer & item numbering schemes to make sure you get the required reporting, perhaps a chart of accounts to easily track revenue & expenses, and specialized invoices & other forms to meet other business requirements."
"When you move up, it is necessary to budget around 20 percent of the purchase cost of the software for an annual maintenance plan. These plans entitle you to all upgrades & fixes issued for your product throughout the course of the year. Plans are important because they make the necessary software upgrades part of the operating budget."
"Be clear on the total cost of keeping your software current, and make sure to confirm the total annual expense. You will still be expected to pay the maintenance fees for modules that came "free" as part of some promotion. Also, check with your vendor whether you will generally require their services to install any upgrades."