The Real Cost of ERP Software

Mark J

Updated · Mar 31, 2011

Different types of ERP software deployments have different costs. This ERP software cost comparison article on ERP Software at Your Service looks at deployment costs associated with between on-premise, SaaS, and hosted ERP.

“Businesses benefit from SaaS when they do not have IT resources to dedicate to installing and managing applications. Even in the hosted scenario, some level of IT expertise is required to install application upgrades. We assumed upgrades occur two times per year and require approximately 5 hours to install. As a result of this assumption, we budgeted $1,000/year for application upgrades in the hosting scenario. In all cases we assumed that the application was web-based so no client software upgrades were required.

“By lowering the SaaS cost by changing the SaaS rule of thumb (discussed earlier), we computed a break even point over a sever year deployment. Holding other assumptions steady, the breakever occured when the cost of the SaaS annual fee is approximately 1/3 of the cost of the license plus one year of annual maintenance. So, if your only concern is out-of-pocket expenses, the option to purchase a $50,000 license + hosting + maintenance is roughly equivalent to a $20,000/year SaaS license.”

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