SAP enterprise resource planning (ERP) software is the answer to all your data management and analysis needs, but it doesn’t come cheap. You can rest easy knowing, however, that investing in SAP ERP will truly transform your business for the better, with a guaranteed ROI down the line. Businesses that are not yet reaping the value of digital transformation in the rapidly growing digital economy are bound to be less successful than their competitors, which is why implementing an ERP in your business is no longer a question, but a necessity.
Of course you’re wondering how the implementation process works and what it costs, so we’re here to break it down for you! Read on to find out more.
WHAT IS AN ERP?
ERP software is designed to help organisations manage and analyse business data that is used to optimise business functions and streamline operations with a centralised database and a user-friendly interface. The following ERP modules or applications can be used to manage every area of business:
Accounting and Finance – Stores and tracks finance data to better manage and optimise budget and expense planning, core accounting, revenue management and tax management.
Customer Relationship Management (CRM) – Stores and tracks customer data from sales, marketing and customer services in order to optimise those processes and ensure the best possible customer experiences.
Supply Chain – Stores and tracks supply chain data such as product, manufacturing, warehouse, distributor data to manage and optimise supplier scheduling, purchasing, inventory, claim processing, shipping, tracking and product returns.
Human Resources – Stores and tracks HR data including employee performance, payroll, time and attendance, onboarding, applicant and learning management data to optimise employee experience and HR processes.
Business Intelligence – Enables business users to discover insights from enterprise-wide data in order to make more informed, data-driven business decisions. Some features include customizable dashboards and visualization tools, ad-hoc and scheduled reporting, and real-time data access.
SAP IMPLEMENTATION PROCESS
Every business environment is unique in the way that it operates so there is no one-size-fits-all software solution that can simply be installed at the drop of a hat. A thorough analysis of your business environment, workflows and processes needs to be carried out by a professional SAP implementation consultant in order to tailor a solution that meets your needs exactly.
A typical ERP implementation process will include analysis of an organisation’s current business practices, followed by strategic planning to streamline operating procedures, installing and testing software, cleansing and migrating data, managing change, training users, going live and maintaining support. It’s important to understand that it’s not just a single installation event, but rather a continuous process with ongoing support.
You can expect a SAP implementation to include the following process steps:
- Business process research and solution mapping
- Software installation
- Data migration
SAP ERP SYSTEM PRICING MODELS
There are two pricing models that most SAP consultants offer, depending on whether you are deploying in the cloud or on-premise. These pricing models are as follows:
Perpetual licensing for on-premise deployment: Organisations that house their own servers to host ERP software on-premise typically pay a one-time payment based on the number of users and level of ERP system customisation. Companies that have the existing infrastructure usually have their own IT department so the implementation costs will not include recurring costs for maintenance, support and upgrades.
Subscription plans for cloud deployment – Organisations that do not have existing hardware and infrastructure to host an ERP system can pay a subscription fee to access cloud ERP software which is hosted and maintained on a third-party data server. This software-as-a-service (SaaS) pricing model typically includes monthly or annual fees paid per user.
SAP IMPLEMENTATION COSTS
As mentioned, implementation involves a number of processes, including ongoing support, so there are a number of costs to consider, such as:
- Software/hardware costs based on the chosen licensing type, system type (cloud or on-premise), number of business units ,applications, and users, as well as the level of customisation
- Consulting and training
- Installation, maintenance and upgrades of the ERP infrastructure
- Data backup and storage
- Ongoing IT support staff for hardware and networking maintenance, software upgrades, bug fixes and custom development
A further breakdown of SAP ERP implementation costs include:
Additional modules or features – Depending on your business environment, you may need additional modules or advanced features in an ERP system to support certain business functions. For example, payroll, manufacturing, e-commerce or other industry-specific functionalities. These additional modules are typically charged separately from the base ERP solution.
Customisation – Because every business is different, many organisations require a certain level of customisation in order to complement their specific business processes and workflows. The more complexity required, the more expensive the implementation will be.
SAP-specific consulting – SAP relies on thoroughly vetted third-party vendors to consult clients, analyse their business process and design and implement tailored SAP solutions according to client needs. Costs are charged according to complexity, scale and particular services like customisations, change management and data migration requirements.
Hardware – If you’re planning on an on-premise deployment of an SAP ERP system, you will need to consider the cost of data servers and hardware infrastructure, as well as ongoing maintenance and support to effectively host your ERP system. This typically amounts to a massive up-front investment plus additional recurring costs for maintenance, upgrades and support.
System training – SAP ERP systems can be complex to grasp straight away, so in most cases, user training is necessary and will be carried out on-site by an expert SAP consultant during implementation at an additional cost.
Small to medium-sized enterprises can expect to pay anywhere between $75,000 (AED 275,000) – $750,000 (AED 2,750,000) for implementation. Costs for large enterprises range from $1 million (AED 3,700,000) to $10 million (AED 36,700,000).
CHOOSING THE RIGHT SAP ERP IMPLEMENTATION CONSULTANT
Choosing an experienced and reliable SAP implementation partner is tantamount to your success in realising the full potential of SAP technologies. A good SAP ERP implementation consultant:
- Understands your industry and business processes;
- Knows which software is needed to optimise those processes;
- Has proven experience in the implementation process;
- Is focused on your business goals and aligns them with the implementation project goals;
- Understands the importance of future scalability and solution flexibility;
- Is able to conduct training effectively in a user-friendly way;
- Provides ongoing support and advice to make the most of your solution and realise your ROI as quickly as possible.
As SAP Gold Partners, MDSap offers tailor-made SAP implementation services to accelerate the design, development and deployment of reliable, enterprise-wide database solutions for maximum return on your technology investment. We take it a step further by offering ongoing support and managed services, as well as training to empower your staff to harness the full power of SAP with great efficiency and ease.