Enterprise Resource Planning Software

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Question: We're about to evaluate erp systems and are considering both on-premise systems and hosted erp systems. We're looking for accounting software, light distribution, human resources and customer relationship management software. I'm finding it difficult to get clear and complete pricing from a few of the software vendors. Is there a ballpark pricing range for hosted erp systems - and can you comment as to whether the on-demand erp systems generally provide a lower cost than the on-premise ERP and accounting software systems?

Answer: While pricing for software as a service (SaaS) ERP (Enterprise Resource Planning) and accounting software systems varies primarily by vendor, application breadth, user count and contract period length, most SaaS ERP systems are priced in the range of $129.00 to $199.00 per user per month. Some SaaS accounting system providers such as NetSuite have a tremendous number of add-on or up-sell modules and functions which can dramatically (and sometimes unexpectedly) increase the price while other SaaS ERP systems such as Intacct and Aplicor are priced by the suite and much more all-inclusive. Initial setup fees, annual maintenance plans and service level agreements (SLAs) vary by vendor.

Software Pricing

Much research has been done by buyers and analysts comparing the total cost of ownership (TCO) between on-premise ERP applications and on-demand ERP systems. Analyst firm Yankee Group produced a well constructed TCO model which compares non-hosted software with on-demand business software over a five year projection. This model is well documented, widely referred by many reputable sources and clearly shows lower TCO for on-demand business software systems. While cost is generally not the sole advantage cited by most SaaS ERP buyers, it is clearly an important advantage.

Of course every ERP software purchase analysis is unique and we highly recommend that cost decisions are methodically modeled and analyzed within the broader context of a cost/benefit analysis.

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